Posted on 23 September 2013
The legacy of colonialism may have had a significant bearing on the build-up to the 1973 oil shock.
Described as “a seminal moment of transition” by Professor Federico Romero of the EUI – the shock saw OPEC nations restrict output and led to queues at petrol stations around the world, a global price hike, and a reconfiguration of the West’s relationship with oil, and the Middle East.
A fall in US and Venezuelan oil production in preceding years undoubtedly contributed to the events of 1973, however, speaking at the conference “Pivotal Year: The 1973 Oil Shock and its Global Significance” held at the EUI, Professor Jeffrey Byrne of the University of British Columbia said “the embargo should be seen in the context of anti-colonialism and anti-imperialism” not simply economics and supply.
Byrne used the example of Algeria who, following independence from France in 1962, sought trade with the US “as part of diversification of the economy away from French influence” according to Bryne. The US desire for oil saw the global superpower sign deals with Algeria despite not receiving guarantees that in the case of nationalisation US companies would be suitably compensated, which strengthened the Algerian hand.
Independence and growing oil revenues saw Algeria grow in confidence exemplified by the renaming of the hill upon which the US embassy stands in Algiers ‘Salvador Allende Hill’, following the US's suspected involvment in the Chilean coup.
As early as the 1950’s the rhetoric of some Arabian diplomats was preparing the ground for the later embargo. According to Professor Christopher Dietrich of Fordham University “This group—led by Abdul Rahman Pazhwak of Afghanistan and Jamil Baroody of Saudi Arabia—argued that political self-determination was meaningless unless a state was the master of its own resources”
In 1952, the Iranian representative to the United Nations, Djalal Abdoh declared, “Every state had an unlimited right to dispose of its resources as it saw fit.” Professor Dietrich says they were making a clear link between colonialism and their natural resources: “Abdoh and the Latin American delegates explicitly introduced a link between territorial control, natural resource development, and the doctrine of self-determination.”
Dietrich argues this “imprint of imperialism” had a direct effect on the 1973 oil shock as countries asked questions “about the laws governing the relationships between multinational companies and states. [They] believed that decolonisation remained incomplete if the logic that had driven imperial [era] economic structures still held sway”
In 1970 Libya, under its new revolutionary leader Colonel Muammar Gaddafi, became the first country to force the renegotiation of trade terms. After forcing production down by nearly a million barrels a day for four months new contracts were signed leading to the Shell’s chief negotiator to declare, with great foresight, that Libya would “demonstrate to the world [who could] dictate the price of oil.”
The conference "Pivotol Year: The 1973 Oil Shock and its Global Significance" was sponsered by the Department of History and Civilization at the EUI, the Robert Schuman Centre for Advanced Studies, University of Oslo, Forum for Contemporary History, and University of Padua, FIRB Engines of Growth.