This piece is Part 1 of a 4 Part series – A Tale of Oil and Fire

What happens when you mix religion, oil, and foreign interventions?

Of course you know – The Middle East.

The Kingdom of Saudi Arabia and the Islamic Republic of Iran have been at odds for decades now, but it isn’t so much their citizens who have felt the wrath of opposing nations; it is nations such as Iraq, Iran, Lebanon, Syria, Yemen, etc… caught in the crossfire that has turned sand to glass across a holy land.

Both nations have forged alliances and fired off silos of propaganda to sway public opinions and gain the high ground. But beyond the smoke and mirrors, there lies a complex tale. A story filled with the a battle of beliefs, a shifting of friends, a pummeling of foes, and lust for black gold.

A clash of civilizations is manifesting before our eyes. Now let’s get the whole story.

The Prophet

Iran and Arabia have been powerful players in the great game of the Middle East. The Persian Empires of Iran were dominating in their spread across the region. While Arabians were much more decentralized and occupied what many deemed as the wastes of the desert. The peninsula was occupied with warring Bedouins, trade caravans, and Biblical legends along with Pagan fables.

This would all change when Islam sprang forth from the Hejaz (western Arabia).

Islamic armies would sweep across the Middle East and obliterate all opposition. The Persians had just finished an exhausting war with the Byzantine of Europe, so territories folded like paper. Muslim Arab armies would conquer all of Iran up till the western edges of India. The largely Zoroastrian Persians would gradually convert due to economic pressure (jizya tax on non-Muslims), force, or social upheaval. A number of Zoroastrians, later known as the Parsis, would escape to India to flee persecution evidencing the harshness of the Caliphate. However, it must be pointed out that Muslim Iranians would create era defining art, science, and literature during the Islamic Golden Age all while retaining most of their language and culture; something that many other Islamized regions did not retain.

The Center of Islam, the Kaaba – Mecca, Saudi Arabia

Another integral piece to understand in our tale is the split between Sunni and Shia Islam. After the Prophet Muhammed’s death, a conflict over succession would engulf the Islamic world. Those backing Muhammed’s close friend, Abu Bakr, would be known as the Sunnis. Those backing Muhammed’s cousin and son-in-law, Ali, would be known as the Shias. We’ll explore specific flashpoints later, but keep this difference in mind as this simple disagreement over succession would morph into differences in belief, practice, and theology along with plenty of unfortunate blood spilt.

White Robes and Black Gold

Centuries would pass as empires would rise and fall with the ebb of dunes. We now arrive in the 1700s, where a fateful meeting of the minds would change the destiny of the Middle East.

A hardline Islamic scholar, Muhammed ibn Abdul-Wahhab, would parley with a tribal leader, Muhammed ibn Saud in 1744. Saud admired Wahhab’s ideology which emphasized a (supposed) return to traditional Islam. Wahhab abhorred what he saw as “innovations” in Islam such as saint reverence, Shia Islam, and even fellow Sunnis who didn’t adhere to his disciplines. Prior to meeting Saud, Wahhab would lead inquisitions including instances of demolishing the tomb of a Prophet’s companion (viewed it as idolatry and polytheism) and stoning a woman for adultery.

Saud had a dream to unite the Arabian peninsula under a singular state and a singular version of Islam. The meeting was concluded with an oath: Saud’s kingdom would be Wahhabi, and Arabia would be Saudi.

Saud and Wahhab’s family would intermarry as their forces combined to decimate the peninsula. They would also confront and push back the Turkish Ottomans. In the process, they would capture the holy Shia city of Karbala. Karbala contained the Shia’s holiest shrine – the site of the martyrdom of Hussain, the grandson of the Prophet who was brutally killed by Sunni forces in early Sunni-Shia religious wars. Saudi forces would fulfill Wahhabism and demolish the shrine of Karbala along with slaughtering 5000 Shia civilians.

Massive Saudi Expansion Post Wahhabi Alliance

As the Saudis would gradually consolidate the majority of the desolate Arabian peninsula, they would happen upon a miracle – oil. As a frenzy developed over this magic substance and its uses, international eyes would shift to the Middle East. In 1901, British speculators would establish an agreement with our other player – Iran.

The British would explore and develop Iran’s oil resources with the creation of a private company, the Anglo-Iranian Oil Company (AIOC). AIOC proved an excellent investment as oil spilled across Iranian territory, and the British government would soon purchase a majority of shares in the company. Thereby, the United Kingdom would gain control over Iran’s oil. Not a good deal for the Iranians.

A seething Iranian government would have enough in 1950 and nationalize the AIOC after years of negotiations and half measures. The UK and USA would promptly respond in 1953 with a sponsored coup d’état overthrowing the regime that enacted the nationalization. A deal would be struck where oil would be jointly managed and profited between the foreign AIOC and the local NIOC. The NIOC would be dealt a subpar hand as its territory was much less productive than the AIOC. This economic humiliation would pave the way for our next chapter – revolution; but not before a small prelude involving another important character in this game, Israel.

Shifting Sands

During the month of Ramadan and day of Yom Kipper, Egypt launched a surprise invasion into the Israeli-occupied Sinai peninsula. Israel was in constant conflict with its surrounding states ever since its independence in 1948. Originally the issue was Palestine; but as a US-backed Israel would win successive wars against an Arab coalition, Israel would go on to capture Egyptian, Syrian, and Jordanian territories in addition to supplanting the Palestinians. Reclamation was the primary Arab goal of the Yom Kipper war.

However once again, Israel would move from strength to strength with minimal gain and loss to territory overall but very important strategic acquisitions in both Syrian Golan Heights and Egyptian Sinai.

The defeated Arab coalition was incensed and would respond with an economic tantrum – an oil embargo of Israel and its allies. One of whom was of course the United States, a nation that had recently taken its currency off the gold standard and was experiencing the shock of a new free-floating fiat currency along with the inflation it was supposed to combat. The dollar was very dominant in the previous gold standard system that many other nations partook in, but now found itself rapidly depreciating with a horizon of recession caused by the Arab oil embargo.

The US had to act fast – and it did, changing the course of the Middle East forever and paving the way for the gilding of the American sword of foreign policy. The petrodollar was born.

America would approach Saudi Arabia, an influential member of the Organization of Petroleum Exporting Countries (OPEC), to negotiate a new world order. The Saudis would persuade fellow OPEC members to begin trading oil in US dollars causing the US dollar to return as the world’s dominant currency in a way never before seen. Countries would be forced to hoard American dollars in order to buy oil, the most precious resource on the planet, and America would discover a whole new definition of economic dominance.

Here’s the catch and a very important plot device in our story – in return of this petroleum-backed dollar, the US would:

Provide military assistance on behalf of Saudi Arabia in an increasingly volatile Middle East and the prospects of increasing Soviet influences across the Muslim world. Intercede and thaw Israeli-Arab conflicts. Build a US-Saudi alliance based on dependence and development that would influence geopolitics for decades to come.

Click here for Part 2: Revolutions & Revelations