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The State and Oil Policy

Stephen D. Krasner

• University of California at Los Angeles

“A Statist Interpretation of American Oil Policy toward the Middle East.” Political Science Quarterly 94(Spring 1979):77–96.

Four episodes in American Oil Policy toward the Middle East are examined to illustrate “how a state-centric or statist model can be used to analyze problems associated with foreign economic policy in which concentrated benefits are enjoyed by specific groups and costs are diffused throughout the rest of society.” Treating the state as an independent actor is judged a more accurate analytical approach than either instrumental Marxist or liberal interest group approaches.

The aim of some American policymakers and the oil industry in the Middle East were in conflict as World War II drew to a close. Harold Ickes was the most radical advocate of plans to involve the government in a future oil concession to insure supplies. This approach was opposed by domestic interests in the oil countries and political conservatives in Congress. The fragmentation of the American political system made it impossible for the central policy makers to pursue their view, but members of the government had advocated policies contrary to ideas of private property, policies hardly compatible with Marxist views of the State as the instrument of the capitalist.

By the 1950s policymakers were concerned to preserve conservative noncommunist regimes in the oil producing areas. It was agreed that higher payments for oil should be made to Saudi Arabia. Since the oil companies naturally opposed such measures, an agreement was worked out giving the oil companies a favorable tax treatment to compensate for these payments, and the American taxpayer thus absorbed the added costs.

A third example concerns the Iranians in the early 1950s. Concerned with the radical Massodegh government, the U.S. government pushed reluctant major oil companies into the oil consortium, at the cost of downgrading the antitrust suits then pending.

The final example cited involves the oil crisis of the 1970s. It was the oil companies who wanted early on to take a hard line against the oil price increase introduced first by Libya's Qadhofi and later by others such as the Shah of Iran. But government policymakers undercut this approach and accepted the Shah's demands as a part of larger geopolitical considerations.

These cases tend to substantiate the interpretation which sees the state as an independent actor in international discussions.