Hot, Flat, and Crowded

A month after the U.S.-led coalition invaded Afghanistan in 2001, I visited the frontier town of Peshawar, a hotbed of Islamic radicalism near the Afghan border. You needed only to spend an afternoon walking through the Storytellers’ Bazaar in Peshawar to understand that this was not Mr. Rogers’s neighborhood. What made the visitor feel that way? Maybe it was the street vendor who asked me exactly what color Osama bin Laden T-shirt I wanted—the yellow one with his picture on it, or the white one simply extolling him as the hero of the Muslim nation and vowing “Jihad Is Our Mission”? (He was doing a brisk business among the locals.) Or maybe it was the wall poster that my Pakistani traveling companion translated as saying, “Call this phone number if you want to join the ‘Jihad against America.’ ” Or maybe it was the cold stares and steely eyes that greeted the obvious foreigner. Those eyes did not say, “American Express accepted here.” They said, “Get lost.”

Welcome to Peshawar. Oh, and did I mention that Peshawar is in Pakistan? These guys were on our side.

On the way into Peshawar, I had gone with my Pakistani friend to visit the Darul Uloom Haqqania, the biggest madrasah, or Islamic school, in Pakistan, with 2,800 live-in students—all studying the Koran and the teachings of the Prophet Muhammad with the hope of becoming spiritual leaders or just more devout Muslims. I was allowed to sit in on a class of elementary-school-age boys who sat on the floor, learning the Koran by rote from texts perched on wooden holders. This was the core of their studies. Most of them will never be exposed to critical thinking or modern subjects. It was at once impressive and disquieting. It was impressive because the madrasah provided room, board, education, and clothing for hundreds of Pakistani boys who would otherwise have been left out on the streets because of the erosion of Pakistan’s secular state education system. (In 1978, there were roughly 3,000 madrasahs in Pakistan; today there are over 30,000, large and small.) It was disquieting because their religious curriculum was largely designed by the Mogul emperor Aurangzeb Alamgir, who died in 1707. There was one shelf of science books in the library—mostly from the 1920s.

The air in the Koran class was so thick and stale you could have cut it into blocks and sold it like cakes. The teacher asked an eight-year-old boy to chant a Koranic verse for us, which he did with the beauty and elegance of an experienced muezzin. What did it mean? It was a famous verse, he said through a translator: “The faithful shall enter paradise and the unbelievers shall be condemned to eternal hellfire.”

It was disquieting because when I asked one of the students, an Afghan refugee, Rahim Kunduz, age twelve, what his reaction was to the September 11 attacks, he said: “Most likely the attack came from Americans inside America. I am pleased that America has had to face pain, because the rest of the world has tasted its pain.” And his view of Americans generally? “They are unbelievers and do not like to befriend Muslims, and they want to dominate the world with their power.”

The Darul Uloom Haqqania madrasah is notorious because the Taliban leader Mullah Muhammad Omar once attended classes there, as did many other top Taliban figures. Mullah Omar never graduated, our host explained, “but we gave him an honorary degree anyway, because he left to do jihad and to create a pristine Islamic government.” What I remember most about my visit, though, was a sign that was hanging high on the wall in that Koran classroom where those boys were studying. It was in English, and it said that this classroom was “a gift of the Kingdom of Saudi Arabia.”

And why not? In 2006, members of the OPEC oil cartel earned $506 billion from oil exports. In 2007, OPEC income rose to roughly $535 billion, according to the London-based Centre for Global Energy Studies. In 1998, OPEC earned $110 billion for selling roughly the same quantity of oil at much lower prices. Saudi Arabia’s oil income is expected to climb from $165 billion in 2006, and about $170 billion in 2007, to around $200 billion in 2008.

In my view, the mass murder on September 11, 2001, of nearly 3,000 people—perpetrated by nineteen men, fifteen of whom were Saudis— was one of those big events that illuminate a whole set of underlying trends that had been building for a long time. What it illuminated was that our oil addiction is not just changing the climate system; it is also changing the international system in four fundamental ways. First, and most important, through our energy purchases we are helping to strengthen the most intolerant, antimodern, anti-Western, anti–women’s rights, and antipluralistic strain of Islam—the strain propagated by Saudi Arabia.

Oil and Islam

Islam has always been practiced in a variety of forms. In the modern era, some are more embracing of modernity, reinterpretation of the Koran, and tolerance of other faiths—like Sufi Islam or the urban-centered, populist Islam still found in Cairo, Istanbul, Casablanca, Baghdad, and Damascus. Some strands, like the Salafiyyah movement in Islam—followed by the Wahhabi ruling family of Saudi Arabia and by al-Qaeda—believe Islam should be returned to its purest roots, an austere “desert Islam” supposedly practiced in the time of the Prophet Muhammad. It is a version of Islam that never fully embraced modernity because its roots were premodern and it never aspired to evolve. The term “As-Salaf us-Salih,” or “the Salaf” for short, refers to the Prophet Muhammad’s immediate companions and the two generations that followed them, who supposedly set the best example for how Islam is to be practiced. Today’s followers of this fundamentalist path are called Salafis.

Before the twentieth century, the fundamentalist Salafi version of Islam had little appeal outside the Arabian Desert. Not anymore. Salafi proselytizers, funded by petrodollars from Saudi Arabia, have made a big impact on the way many mainstream Muslims interpret their faith today, as well as how they relate to the faiths of others and to both less orthodox Muslims and non-Sunni Muslims, particularly Shiites. In the hands of Muslim extremists, this oil-funded Salafism has served as the ideological justification for violent jihadism, which aims at restoring the seventh-century Islamic caliphate, and it has energized groups such as the Taliban, al-Qaeda, Hamas, and the Sunni suicide bomb squads of Iraq, Palestine, and Pakistan.

The Saudi drive to export Salafi Islam went into high gear after radical fundamentalists challenged the Muslim credentials of the Saudi ruling family by taking over the Grand Mosque of Mecca in 1979—a year that, by coincidence, coincided with the Iranian revolution and a huge spike in oil prices. As Lawrence Wright notes in his definitive history of al-Qaeda, The Looming Tower:

The attack on the Grand Mosque … awakened the royal family to the lively prospect of revolution. The lesson the family drew from that gory standoff was that it could protect itself against religious extremists only by empowering them … Consequently, the muttawa, government subsidized religious vigilantes, became an overwhelming presence in the Kingdom, roaming through the shopping malls and restaurants, chasing men into mosques at prayer time and ensuring that women were properly cloaked.

Not content to cleanse its own country of the least degree of religious freedom, the Saudi Government set out to evangelize the Islamic world, using the billions of riyals at its disposal through the religious tax—zakat—to construct hundreds of mosques and colleges and thousands of religious schools around the globe, staffed with Wahhabi Imams and teachers. Eventually, Saudi Arabia, which constitutes only 1 percent of the world Muslim population, would support 90 percent of the expenses of the entire faith, overriding other traditions of Islam. Music disappeared in the Kingdom. Censorship smothered art and literature, and intellectual life, which had scarcely had the chance to blossom in the young country, withered. Paranoia and fanaticism naturally occupy minds that are closed and fearful.

There are roughly 1.5 billion Muslims in the world, living in every major city. Because Saudi Arabia has enormous oil resources and is the keeper of Islam’s two holiest mosques, in Mecca and Medina, it has both a unique legitimacy in the Muslim world and a unique level of resources to advance its ultraconservative brand of Islam. Never has so much wealth been given to such an extreme minority of one of the world’s biggest religions, with so many long-term consequences.

Fifty years from now, when we look back at this onset of the Energy-Climate Era, we may conclude that the most important geopolitical trend to come out of it was this shift in the center of gravity of Islam—away from a Cairo-Istanbul-Casablanca-Damascus urban/Mediterranean center of gravity in the nineteenth and twentieth centuries, which tended to be softer-edged, more open to the world and other faiths, and toward a Salafi Saudi/desert-centered Islam, which was much more puritanical, restrictive toward women, and hostile to other faiths.

The rise of this more fundamentalist strain of Islam in the past two decades is by no means entirely attributable to Saudi money. A broader backlash against globalization and Westernization is also at work in the Muslim world, as well as a rejection of all the previous failed ideologies—Arab nationalism, Arab socialism, and Communism—by a new generation of Muslim youth. But Saudi money has certainly helped to fuel and consolidate this upsurge in rigidly orthodox Islam, which comes at a time when, as the Financial Times reported (June 4, 2008), nearly two-thirds of the Middle East’s population is under the age of twenty-five and more than one in four are unemployed. Many of these frustrated, unemployed youth are finding succor in faith.

The writer William G. Ridgeway, who penned a thoughtful and provocative series of “Letters from Arabia” for the iconoclastic British research institute the Social Affairs Unit, argued in an essay (August 22, 2005) that this shift is in some ways a modern version of a long-running struggle between a puritanical desert Islam, represented by sects like the Saudi Wahhabis, and a much more cosmopolitan, woman-friendly, and open-to-ideas “urban Islam.”

“Encroaching modernity has resulted in an increase in the place and power of Desert Islam in everyday society,” wrote Ridgeway.

Contrary to widespread Western beliefs about the trajectory of the Middle East as a hesitant but inevitable climb to liberal democracy, the region is actually going the other way—fast. Academics call this “Islamicisation,” the spread of radical Shi’a and Wahhabi beliefs and practices throughout the region. Because of this trend, the Middle East one sees nowadays is nothing like it was, say, fifty years ago. Around the 1950s, about the time oil was being discovered in the Gulf, many Muslim nations were relatively liberal by today’s standards. Alcohol flowed freely, women went uncovered and there was lively public debate about “Ataturk’s way,” the separation of Islam and state, modernization, and dialogue with the West. The Middle East seemed to be going in the right direction.

The explosion of oil wealth in Saudi Arabia served to change all that. “Oil meant that the Saudis now had the means to change the world to more resemble them,” said Ridgeway. “The mountain would come to Mohammed … In true puritanical style, Desert Islam has taken the spice and color out of Arab life, and it looks like doing so for a long time yet. The joys of flirtation or provocative self-expression through dress, or lack of it, are gone—all replaced by black.” Ridgeway argues that the now oil-funded Saudi Wahhabi version of Islam represents “an attack on liberal urban Islam by a desert sect that was peripheral in the golden age of Arab culture or, indeed, filmmaking. Perhaps the best symbol of all that has been lost is the coquettish, slightly tipsy Arab woman so beloved of old Arab comedies. Then she was laughed at. Now she would be stoned to death.”

In addition to Saudi Arabia, other conservative Gulf states—Kuwait, Qatar, and the United Arab Emirates—have also enjoyed a massive influx of oil funds, which have also found their way to more conservative charities and religious institutions, at home and abroad.

Here is what a professor friend of mine, an Egyptian who teaches in a Persian Gulf state, told me over breakfast in the Gulf in August 2007. For personal security reasons, he could not let his name be used. Saudi Arabia, he said, has had a huge impact on Islamic life all across the Muslim world. “Look at the relations between men and women. Men and women in the same family used to sit with each other in the same room. Now they are separate. Today in [the Persian Gulf] the relationship between the two sexes is sensitive. You don’t know if you should shake a woman’s hand or not … This Saudi Islamization of the region has left a very bad impact and it will take decades to fix it. If you go to university in [a Persian Gulf state] there is no mixing in education. When I was a student in Egypt, I used to sit next to a girl in class. Now both sexes exist in the same classroom, but they tend to divide [on their own]. This is not Egyptian Islam. It is the Saudi way. The worst thing is that the Saudis had the money, but Egypt was the body that practiced their ideas … We imported the Saudi way of life into Egypt, the dress, the books sold at the doors of mosques—these carry the same Wahhabi interpretation of Islam. Unfortunately, Egypt did not have the resources to fight back.”

And it still doesn’t. A story from Cairo by Newsweek’s Middle East correspondent, Rod Nordland (June 9, 2008), made this clear:

Abir Sabri, celebrated for her alabaster skin, ebony hair, pouting lips and full figure, used to star in racy Egyptian TV shows and movies. Then, at the peak of her career a few years ago, she disappeared—at least her face did. She began performing on Saudi-owned religious TV channels, with her face covered, chanting verses from the Qur’an. Conservative Saudi Arabian financiers promised her plenty of work, she says, as long as she cleaned up her act. “It’s the Wahhabi investors,” she says, referring to the strict form of Sunni Islam prevalent in Saudi Arabia. “Before, they invested in terrorism—and now they put their money in culture and the arts.”

Egyptians deplore what they call the Saudization of their culture. Egypt has long dominated the performing arts from Morocco to Iraq, but now petrodollar-flush Saudi investors are buying up the contracts of singers and actors, reshaping the TV and film industries and setting a media agenda rooted more in strict Saudi values than in those of freewheeling Egypt. “As far as I’m concerned, this is the biggest problem in the Middle East right now,” says mobile-phone billionaire Naguib Sawiris. “Egypt was always very liberal, very secular and very modern. Now …” He gestures from the window of his 26th-floor Cairo office: “I’m looking at my country, and it’s not my country any longer. I feel like an alien here.”

At the Grand Hyatt Cairo, a mile upstream along the Nile, the five-star hotel’s Saudi owner banned alcohol as of May 1 [2008] and ostentatiously ordered its $1.4 million inventory of booze flushed down the drains. “A hotel in Egypt without alcohol is like a beach without a sea,” says Aly Mourad, chairman of Studio Masr, the country’s oldest film outfit. He says Saudis—who don’t even have movie theaters in their own country—now finance 95 percent of the films made in Egypt. “They say, here, you can have our money, but there are just a few little conditions.” More than a few, actually; the 35 Rules, as moviemakers call them, go far beyond predictable bans against on-screen hugging, kissing or drinking. Even to show an empty bed is forbidden, lest it hint that someone might do something on it. Saudi-owned satellite channels are buying up Egyptian film libraries, heavily censoring some old movies while keeping others off the air entirely.

Some Egyptians say the new prudishness isn’t entirely the Saudis’ fault. “Films are becoming more conservative because the whole society is becoming more conservative,” says filmmaker Marianne Khoury, who says Saudi cash has been a lifeline to the 80-year-old industry. From a peak of more than 100 films yearly in the 1960s and ’70s, Egyptian studios’ output plunged to only a half dozen a year in the ’90s. Thanks to Saudi investors, it’s now about 40. “If they stopped, there would be no Egyptian films,” says Khoury.

At least a few Egyptians say Saudi Arabia is the country that’s ultimately going to change. “Egypt will be back to what it used to be,” predicts the single-named Dina, one of Egypt’s few remaining native-born belly dancers. And it was a Saudi production company that financed a 2006 drama that frankly discusses homosexuality, “The Yacoubian Building.” Sawiris has launched a popular satellite-TV channel of his own, showing uncensored American movies. He’s determined to win—but he’s only one billionaire, and Saudi Arabia is swarming with them.

An America addicted to oil has never figured out how to deal with this phenomenon. During the Cold War, notes the former CIA director Jim Woolsey, Americans got used to dealing with Soviet totalitarians, whose secular, economic-based ideology, inspired by a long-dead nineteenth-century thinker, could be contained. There weren’t too many Marxists, said Woolsey, who really wanted to commit suicide for the idea “from each according to his ability and to each according to his needs.” The ideology that our energy purchases are indirectly fueling today is much more malevolent and openly embracing of suicide. Wahhabi teachings, as articulated in the fatwas of their imams, are extremely hostile “with respect to Shiites, Jews, homosexuals and apostates, and horribly repressive with respect to everyone else, especially women,” notes Woolsey. “They are essentially the same basic beliefs as those expressed by al-Qaeda.” In other words, in purely ideological terms there is very little difference between the reigning religious tenets in Saudi Arabia (a key U.S. ally) and those of al-Qaeda (a key U.S. enemy). It’s their means that differ. “Indeed,” said Woolsey, “the fundamental argument between the Wahhabis and al-Qaeda is not about underlying beliefs. It is rather a struggle, a bit like that between the Stalinists and Trotskyites of the twenties and thirties, over which of them should be in charge. The hate-filled underlying views of both, however, point in the same overall direction. Many Wahhabi-funded madrasahs, worldwide, echo and perpetrate this hatred and thus promote its consequences.”

No one has chronicled the impact that Saudi oil money has had in Muslim communities beyond the Middle East better than Greg Mortenson and David Oliver Relin in their classic book Three Cups of Tea: One Man’s Mission to Promote Peace … One School at a Time. The book details how this American mountain-climber-turned-educator built the Central Asia Institute, and constructed more than fifty progressive schools across rural Pakistan and Afghanistan, to fight Islamic extremism by trying to alleviate poverty and improve access to education, especially for girls. (The number of schools is now up to seventy-eight, and counting.)

“ ‘I’d known that the Saudi Wahhabi sect was building mosques along the Afghan border for years,’ ” Mortenson says in the book.

“I was amazed by all their new construction right here in the heart of Shiite Baltistan, [Pakistan]. For the first time I understood the scale of what they were trying to do and it scared me.” …

In December 2000, the Saudi publication Ain-Al-Yaqeen reported that one of the four major Wahhabi proselytizing organizations, the Al Haramain Foundation, had built “1,100 mosques, schools, and Islamic centers,” in Pakistan and other Muslim countries, and employed three thousand paid proselytizers in the previous year.

The most active of the four groups, Ain-Al-Yaqeen reported, the International Islamic Relief Organization, which the 9/11 Commission would later accuse of directly supporting the Taliban and Al Qaeda, completed the construction of thirty-eight hundred mosques, spent $45 million on “Islamic Education,” and employed six thousand teachers, many of them in Pakistan, throughout the same period.

Mortenson said the resources he had to build his little network of progressive schools across Pakistan and along the Afghan border

“were peanuts compared to the Wahhabi. Every time I visited to check on one of our projects, it seemed ten Wahhabi madrassas had popped up nearby overnight.”

Pakistan’s dysfunctional educational system made advancing Wahhabi doctrine a simple matter of economics. A tiny percentage of the country’s wealthy children attended elite private schools … [but] vast swaths of the country were barely served by Pakistan’s struggling, inadequately funded public schools. The madrassa system targeted the impoverished students the public system failed. By offering free room and board and building schools in areas where none existed, madrassas provided millions of Pakistan’s parents with their only opportunity to educate their children. “I don’t want to give the impression that all Wahhabi are bad,” Mortenson says. “Many of their schools and mosques are doing good work to help Pakistan’s poor. But some of them seem to exist only to teach militant jihad.”

Mortenson was very clear-eyed about the extent that this phenomenon was being subsidized by our energy purchases.

“This wasn’t just a few Arab sheikhs getting off Gulf Air flights with bags of cash. They were bringing the brightest madrassa students back to Saudi Arabia and Kuwait for a decade of indoctrination, then encouraging them to take four wives when they came home and breed like rabbits … They’re churning out generation after generation of brainwashed students and thinking twenty, forty, even sixty years ahead to a time when their armies of extremism will have the numbers to swarm over Pakistan and the rest of the Islamic world.”

If desert Islam overwhelms urban Islam, thanks in part to our energy purchases, it will have a profound impact on the geopolitics of the Energy-Climate Era. According to the Egyptian scholar Mamoun Fandy, the author of (Un)Civil War of Words: Media and Politics in the Arab World and senior fellow for Gulf security in the Middle East program at the International Institute of Strategic Studies in London, it will push Islam toward the Red Sea and the Persian Gulf.

I like to say that there is the “Islam of the Mediterranean” and the “Islam of the Red Sea.” As Islam’s center of gravity moves toward the Mediterranean, which is a universe of shipping and trade and interaction, the world of Beirut, Istanbul, Alexandria or Andalusia, the religion and its community becomes more cosmopolitan, outward-looking and engaging. As Islam moves toward the Red Sea, close to the harsh, isolated desert and the sources of crude oil, it becomes more frightened, inward-looking and xenophobic.

Lately, there is good news and bad news from Saudi Arabia. The good news is that the ruling al-Saud family has begun taking real steps to try to rein in their most virulent jihadist preachers, religious scholars, and youth, and to crack down on Saudis who either join domestic terrorist organizations or volunteer for suicide missions abroad. The bad news is that the Salafist-Wahhabi ideology is so deeply embedded in the Saudi religious/education system that trying to dial it down is no easy task. The Saudi ruling family never worried that much about the violent jihadists as long as their militancy was directed abroad. But in recent years, as the jihadists have launched attacks against Saudi institutions at home, the regime has taken the threat much more seriously.

On March 20, 2008, the BBC quoted the Saudi-owned newspaper Asharq Alawsat as saying that the kingdom “is to retrain its 40,000 prayer leaders—also known as imams—in an effort to counter militant Islam.” That is the equivalent of a remedial course for the country’s entire top clerical leadership. It also gives you some idea how deep the problem had become when you read that these same Saudi prayer leaders have been expressly called upon to stop cursing Christians and Jews. In the government-directed newspaper Al-Riyadh (February 1, 2008), the columnist Dr. Sa’d Al-Quway’i wrote, “The call to destroy all Christians and all Jews contravenes divine law.” He added that curses “should not be directed at the infidels as a collective, but only at those who hurt the Muslims and fight them.”

Are petrodollars fueling more positive trends? One does have to note that this massive influx of wealth is also stimulating some powerful forces of modernization in every oil-rich state. More women are getting educated, and not only in religious schools. Many more men and women are able to study abroad. New universities are being opened. More media are being started in the Arab-Muslim world, including some new, reasonably independent and progressive television channels and newspapers. Arab Gulf states are rapidly globalizing, hosting international conferences and inviting American and European universities to open branches in their countries. Have these American academic seedlings taken root? Not yet. But the whole trend needs to be watched.

Particularly in Saudi Arabia. Having reported from Saudi Arabia, I can say without hesitation that there are moderate and even emphatically pro-Western Saudis, who have studied in America, visit regularly, and still root for their favorite American football teams. I’ve met with them. I’ve argued with them. I enjoy their company. They deeply love their faith and are embarrassed by the excesses of Salafi-Wahhabi ex tremists, who have given Saudi Arabia a black eye in the world—most grotesquely in 2002, when fifteen Saudi schoolgirls died after the Muttawa would not let them out of their burning school building, or allow firemen in, because the girls’ faces and bodies weren’t covered according to Saudi tradition. I am ready to believe that many Saudis would prefer to see a more open Islamic nation. But they are not the ones setting religious policy and it is not their progressive outlook that is being exported to the madrasahs of Pakistan, London, Mosul, and Jakarta.

More is at stake here than how many women have to wear veils. In Iraq, young Sunni Muslims from Saudi Arabia, North Africa, and across the Arab world, who were inspired by Saudi Wahhabi imams or their ideology, have become the heart of the suicide bombing corps that has done more to hold the U.S.-led forces to a stalemate in the war in Iraq, and to poison relations between Sunnis and Shiites there, than any other factor.

“If I could somehow snap my fingers and cut off the funding from one country, it would be Saudi Arabia,” Stuart Levey, the Bush administration’s undersecretary of the treasury, told ABC News (September 12, 2007).

Two months later (November 22, 2007), The New York Times reported that data taken from a cache of documents and computers found during a raid on a tent camp in the desert near Sinjar, Iraq, near the Syrian border, had revealed that

Saudi Arabia and Libya, both considered allies by the United States in its fight against terrorism, were the source of about 60 percent of the foreign fighters who came to Iraq in the past year to serve as suicide bombers or to facilitate other attacks … The raid’s target was an insurgent cell believed to be responsible for smuggling the vast majority of foreign fighters into Iraq. Saudis accounted for the largest number of fighters listed on the records by far— 305, or 41 percent—American intelligence officers found as they combed through documents and computers in the weeks after the raid. The data show that despite increased efforts by Saudi Arabia to clamp down on would-be terrorists since Sept. 11, 2001 … some Saudi fighters are still getting through.

The article quoted senior American military officials as saying that they also believed that Saudi citizens provided the majority of financing for al-Qaeda in Mesopotamia, in order to prevent Shiites from dominating the Baghdad government. The article noted that the Sinjar documents “indicate that each foreigner brought about $1,000 with him, used mostly to finance operations of the smuggling cell. Saudis brought more money per person than fighters from other nations, the American officials said.”

On a visit I made to Kurdistan in August 2007, a senior Kurdish security official remarked to me: “The Saudis are exporting their terrorists. It works two ways for them: One, they get rid of their terrorists, and two, in Iraq, [the terrorists] are killing people [the Saudis] hate, like Shiites.” All that the Sunni al-Qaeda types in Iraq have to do, he added, is make “one trip to Qatar or the UAE or Saudi Arabia and they come back with bags of money.”

Petropolitics helps to lubricate this whole process. The Institute for the Analysis of Global Security, a Washington-based think tank that tracks the impact of oil on geopolitics, explained how in a paper entitled “Fueling Terror,” authored by IAGS’s codirectors, Gal Luft and Anne Korin:

Take Saudi Arabia, for example … Many of [its] charities are truly dedicated to good causes, but others merely serve as money laundering and terrorist financing apparatuses. While many Saudis contribute to those charities in good faith, believing their money goes toward good causes, others know full well the terrorist purposes to which their money will be funneled. What makes penetration and control of money transactions in the Arab world especially difficult is the Hawala system—the unofficial method of transferring money and one of the key elements in the financing of global terrorism. The system has been going for generations and is deeply embedded in the Arab culture. Hawala transactions are based on trust; they are carried out verbally, leaving no paper trail. The Saudi regime has been complicit in its people’s actions and has turned a blind eye to the phenomenon of wealthy citizens sending money to charities that in turn route it to terror organizations.

“If not for the West’s oil money, most Gulf states would not have had the wealth that allowed them to invest so much in arms procurement and sponsor terrorist organizations,” argued the IAGS, noting that Saudi Arabia’s oil revenues make up 90–95 percent of total Saudi export earnings and 70–80 percent of state revenues. “Most wealthy Saudis who sponsor charities and educational foundations that preach religious intolerance and hate toward the Western values have made their money from the petroleum industry or its subsidiaries. Osama bin Laden’s wealth comes from the family’s construction company, which made its fortune from government contracts financed by oil money.” When I visited Pakistan and Afghanistan in the summer of 2009, U.S. military officials made it quite clear that one reason that the Taliban was still able to successfully recruit in both countries was in part thanks to drug money and in part thanks to donations coming from Saudi Arabia and elsewhere in the Gulf.

While Saudi Arabia provides the financial fuel for the global spread of Salafi fundamentalist Islam, Iran, since the toppling of the shah in 1979, has done the same for its brand of revolutionary Shiite Islam. Indeed, the two states see themselves as rivals for the role of authentic leader and model state for the Muslim world. In other words, the year 1979 gave birth to the first modern global religious arms race between an oil-rich Saudi Salafi state (Saudi Arabia is OPEC’s largest oil producer) and an oil-rich Shiite revolutionary Islamic republic (Iran is OPEC’s second-largest oil producer) over who would most influence the direction of the Muslim world.

Immediately after Hezbollah launched a reckless war against Israel from Lebanon in the summer of 2006, Hezbollah’s leader, Hassan Nasrallah, declared that Hezbollah would begin paying out cash to the thousands of Lebanese families whose homes were destroyed by Israeli retaliations. “We will pay compensation, a certain amount of money for every family to rent for one year, plus buy furniture for those whose homes were totally destroyed,” said Nasrallah. “These number 15,000.” Nasrallah also vowed that his organization would help rebuild damaged houses and businesses, promising those affected that they will “not need to ask anyone for money or wait in queues” to get relief funds. To paraphrase the Allstate commercial, “You’re in good hands with Hezbollah.”

But wait—where would Hezbollah get the $3 billion–plus needed to rebuild Lebanon? The organization doesn’t manufacture anything. It doesn’t tax its followers. The answer, of course, is that Iran would dip into its oil income and ship cash to Nasrallah, so that he would not have to face the wrath of the Lebanese for starting a war that reaped nothing but destruction. Yes, thanks to then $70-a-barrel oil, Hezbollah could have Katyusha rockets and butter at the same time. When oil money is so prevalent, why not? Hezbollah and Iran were like a couple of rich college students who rented Lebanon for the summer, as if it were a beach house. “C’mon, let’s smash up the place,” they said to themselves. “Who cares? Dad will pay!” The only thing Nasrallah didn’t say to the Lebanese was “Hey, keep the change.”

For all these reasons, George W. Bush’s refusal to do anything significant after 9/11 to reduce our gasoline consumption really amounted to a policy of “No Mullah Left Behind.” The former CIA director Jim Woolsey put it more bluntly: “We are funding the rope for the hanging of ourselves.”

Oil and Freedom

This massive transfer of wealth for oil is tilting not just the Muslim world, but also global politics at large. Wherever governments can raise most of their revenues by simply drilling a hole in the ground rather than tapping their people’s energy, creativity, and entrepreneurship, freedom tends to be curtailed, education underfunded, and human development retarded. That is because of what I call the First Law of Petropolitics.

I started mulling the First Law of Petropolitics after 9/11, reading the daily headlines and listening to the news. When I heard Venezuela’s president, Hugo Chávez, telling British prime minister Tony Blair to “go to hell” and telling his supporters that the U.S.-sponsored Free Trade Area of the Americas coalition “can go to hell” too, I couldn’t help saying to myself: “I wonder if the president of Venezuela would be saying all these things if the price of oil today were $20 a barrel rather than $60 or $70 a barrel and his country had to make a living by empowering its own entrepreneurs, not just drilling holes in the ground!”

As I followed events in the Persian Gulf during the past few years, I also noticed that the first Gulf state to hold a free and fair parliamentary election, in which women could run and vote, was Bahrain, the tiny island state off the east coast of Saudi Arabia. Bahrain was also the first Gulf state to hire McKinsey & Company to design an overhaul of its labor laws to make its people more productive, more employable, and less dependent on imported labor, and the first Gulf state to sign a free-trade agreement with the United States. Bahrain’s king and his advisers minced no words about the objectives: to break the culture of dependency on the oil welfare state that had dominated their economy since independence in 1971, to link wage increases to increases in productivity, and to put an end to the practice of starting a manufacturing business by importing five hundred low-wage workers from India or Bangladesh—which meant that a Bahraini factory was supporting the owner’s family very well, along with the families of five hundred workers from South Asia, but not supporting any Bahraini workers or their families. Bahrain, which is a constitutional monarchy with a king and an elected parliament, also overhauled its education system, creating a program to retrain all its teachers and establishing a new system of polytechnics to impart vocational skills to young Bahrainis who might not want to go to college. Bahrain also opened itself more than ever to foreign direct investment from abroad and privatization of state-supported industries at home in order to stimulate real competition between firms within Bahrain—and to differentiate its economy from the forms of economic “competition” elsewhere in the Gulf, which usually consists of two government-financed companies supposedly competing with each other.

Now why was all this happening in Bahrain in the middle of the 2007 oil boom? Because Bahrain was not only the first Persian Gulf country to discover oil, in 1932; it was, more important, the first Gulf oil state to start running out of oil, around 1998. Not surprisingly, Bahrain’s first public debate about corruption was in 1998, when crude oil prices fell to below $15 a barrel.

Unlike all its oil-rich neighbors, Bahrain in the 1990s could practically mark the day on the calendar when it would have no more oil revenue to rely upon, so it had no choice but to nurture and exploit the talents of its people instead. I couldn’t help asking myself: “Could that just be a coincidence? The first Gulf state that runs out of oil is also the first to explore all these political and economic reforms?” I don’t think it was a coincidence at all. Also, when I looked across the Arab world, and saw a popular democracy movement in Lebanon evicting Syria’s occupying army, I couldn’t help saying to myself: “Is it an accident that the Arab world’s first and only real democracy—Lebanon—also happens to be one of the few Arab states that never had a drop of oil?”

The more I pondered these questions, the more it seemed obvious to me that there must be a correlation—a literal correlation that could be measured and graphed—between the price of oil and the pace, scope, and sustainability of political freedoms and economic reforms in certain countries. One afternoon over lunch with Moisés Naím, the editor of Foreign Policy magazine, I laid out my napkin and drew a graph showing how there seemed to be a rough correlation between the price of oil, between 1975 and 2005, and the pace of freedom in oil-producing states during those same years. When one went down, the other went up.

Think about it, I told Moisés: In 2001, when oil was $25–$30 a barrel, George W. Bush looked into Russian president Vladimir Putin’s soul and saw a friend of America there. “I looked the man in the eye. I found him to be very straightforward and trustworthy … I was able to get a sense of his soul.” But you look into Putin’s soul with oil topping $100 a barrel and you’ll see the Gazprom and Lukos oil companies, the Izvestia and Pravda newspapers, the parliament, and every other democratic institution in Russia that Putin has swallowed courtesy of $100-a-barrel oil. Or as one world leader, who asked not to be named, remarked to me during an interview, “When oil was $20 a barrel, Putin had 20 percent of the Russian vote; when it was $100 a barrel he had 100 percent of the Russian vote!” When oil dipped below $20 a barrel in 1997, Iran elected the reformer Mohammed Khatami as president, and he called for a “dialogue of civilizations.” In 2005, with oil selling around $60–$70 a barrel, Iran elected Mohammed Ahmadinejad, who said the Holocaust is a myth.

“I guarantee you,” I told Moisés, “at $20 a barrel, the Holocaust won’t be a myth anymore.” Moisés took the napkin, went back to his office, and showed it to his staff. An hour later he called me and asked that I turn my napkin into an article for Foreign Policy, which I did (May–June 2006).

On one axis, I plotted the average global price of crude oil going back to 1979, and along the other axis I plotted the pace of expanding or contracting freedoms, both economic and political—as measured by the Freedom House “Freedom in the World” report and the Fraser Institute’s “Economic Freedom of the World Report”—for Russia, Venezuela, Iran, and Nigeria. This included free and fair elections held, newspapers opened or closed, arbitrary arrests made, reformers elected to parliaments, economic reform projects started or stopped, companies privatized and companies nationalized, and so on. (I would be the first to point out that this is not a scientific lab experiment, because the rise and fall of economic and political freedom in a society can never be perfectly quantifiable or interchangeable.) Here’s the way the graph came out:

While the correlations were rough, they were also unmistakable enough for me to offer the First Law of Petropolitics, which posits the following: In oil-rich petrolist states, the price of oil and the pace of freedom tend to move in opposite directions. That is, the higher the average global crude oil price rises, the more that free speech, free press, free and fair elections, freedom of assembly, government transparency, judicial independence, rule of law, and the formation of independent political parties and nongovernmental organizations are eroded. All these negative trends are also reinforced by the fact that the higher the price goes, the less petrolist leaders care about what the world thinks or says about them. They have more disposable income to build up domestic security forces, bribe opponents, buy votes or public support, and resist international norms.

Conversely, according to the First Law of Petropolitics, the lower the price of oil goes, the swifter the pace of freedom: Petrolist countries are forced to move toward a politics and a society that is more transparent, more sensitive to opposition voices, more open to a broad set of interactions with the outside world, and more focused on building the legal and educational structures that will maximize the ability of their citizens (men and women) to compete, start new companies, and attract investments from abroad. And, naturally, the lower the price of crude oil falls, the more petrolist leaders are sensitive to what outsiders think of them.

I define petrolist states as authoritarian states (or ones with weak state institutions) that are highly dependent on oil production for the bulk of their exports and government income. In virtually every case, these states accumulated their oil wealth before they established sound and transparent institutions of governance. High on my list of petrolist states would be Angola, Gabon, Nigeria, Iran, Russia, Egypt, Kazakhstan, Kuwait, Uzbekistan, Azerbaijan, Indonesia, Venezuela, Qatar, United Arab Emirates, Syria, Equatorial Guinea, Sudan, Burma, and Saudi Arabia. Countries that have a lot of crude oil but were well-established states, with solid democratic institutions and diversified economies, before their oil was discovered—Norway, the United States, Denmark, Great Britain—are not subject to the First Law of Petropolitics.

As the accompanying graphs of four petrolist states indicate, as oil prices went down in the early 1990s, competition, transparency, political participation, and accountability of those in office all tended to go up in these countries—as measured by free elections held, newspapers opened, reformers elected, economic reform projects started, and companies privatized. But as oil prices started to soar after 2000, free speech, free press, fair elections, and the freedom to form political parties and NGOs tended to erode in these countries.

In a country like Bahrain, where the leadership used the fact that it was gradually running out of oil as a “burning platform” to drive its reform agenda, the steep run-up in oil prices from 2006 to 2008 was actually something of a problem. It forced the Bahraini reformers to reframe their argument, Sheikh Mohammed bin Essa Al-Khalifa, the CEO of the state-appointed Bahrain Economic Development Board, told me. “We had to change our argument about why we needed to reform from a ‘need’ to an ‘aspiration.’ ” It was a much harder sell. One-hundred-dollar-a-barrel oil has not stopped Bahrain’s reform process, said Al-Khalifa, “but it slows you down.” The parliament is just a little slower in approving laws that require more open competition and less government intervention.

To be sure, professional economists have long pointed out that an abundance of natural resources can be bad for a country’s economy and politics. This phenomenon has been variously diagnosed as “Dutch disease” or the “resource curse.” Dutch disease refers to the process of deindustrialization that can come about as a result of a natural resource windfall. The term was coined in the Netherlands in the early 1960s, after the Dutch discovered huge deposits of natural gas in the North Sea. What happens in a country with Dutch disease is this: First the value of the currency rises, thanks to the sudden influx of cash from oil, gold, gas, diamonds, or some other natural resource discovery. The strong currency in effect raises the price of the nation’s goods to foreign buyers, making the country’s manufactured exports very noncompetitive and imports very cheap for its citizens. The citizens, flush with cash, start buying cheaper imported goods without restraint; the domestic manufacturing sector gets wiped out; and, presto, you have deindustrialization.

IRAN: FREEDOM TO TRADE INTERNATIONALLY VS. CRUDE OIL PRICES

Sources: BP Statistical Review of World Energy 2005 and IEA; and Fraser Institute “Economic Freedom of the World Report.”

The “resource curse” can refer to the same economic phenomenon, as well as to the way a dependence on natural resources can skew a country’s political, investment, and education priorities, so that everything revolves around who controls those resources and who gets how much money from them. Very often in petrolist states, the public develops a distorted notion of what development is all about. The people conclude that their country is poor and the leaders, or some other group, are rich— not because the country has failed to promote education, innovation, rule of law, and entrepreneurship, but only because someone is stealing the oil money and depriving them of their due. Often, they are right. Someone is stealing. But people start to think that in order to become prosperous all they have to do is stop those who are stealing—not build a society, brick by brick, on the foundations of better education, rule of law, innovation, and entrepreneurship.

RUSSIA: FREEDOM HOUSE “NATIONS IN TRANSIT” RANKINGS VS. CRUDE OIL PRICES

Sources: BP Statistical Review of World Energy 2005 and IEA; and Freedom House “Nations in Transit.”

“If Nigeria had no oil, then the entire political equation would be different,” Clement Nwankwo, one of Nigeria’s leading human rights campaigners, told me during a visit to Washington in March 2006. “The income would not be coming from oil, and therefore the diversification of the economy would become an issue and private enterprise would matter more and people would have to expand their own creativity.” Nwankwo’s remarks reminded me what a Westernized Iranian woman reporter in Tehran once said to me as we were walking down the street: “If only we didn’t have oil, we could be just like Japan.”

VENEZUELA: FREEDOM HOUSE “FREEDOM IN THE WORLD” RANKINGS VS. CRUDE OIL PRICES

Sources: BP Statistical Review of World Energy 2005 and IEA; and Freedom House “Freedom in the World 2005.”

The First Law of Petropolitics tries to build on such arguments but also takes the correlation between oil and politics one step further—proposing that not only does the presence of excessive oil revenues in petrolist states tend to have broad negative effects on democratization, but so does the actual price. The actual price of oil and the actual pace of, or retreat from, democratization are roughly correlated.

NIGERIA: LEGAL SYSTEM AND PROPERTY RIGHTS VS. CRUDE OIL PRICES

Sources: BP Statistical Review of World Energy 2005 and IEA; and Fraser Institute “Economic Freedom of the World Report.”

One of the most incisive analyses that I have come across as to why this correlation exists was a study, “Does Oil Hinder Democracy?,” by the UCLA political scientist Michael L. Ross (World Politics, April 2001), in which he provides a detailed explanation of how and why massive oil exports and democracy usually do not mix. Using a statistical analysis from 113 states between 1971 and 1997, Ross concluded that “a state’s reliance on either oil or mineral exports tends to make it less democratic; that this effect is not caused by other types of primary exports; that it is not limited to the Arabian Peninsula, to the Middle East, or to sub-Saharan Africa; and … it is not limited to small states.”

What I find particularly useful about Ross’s work is his list of the precise mechanisms by which excessive oil wealth impedes the growth of democracy. First, he argues, there is the “taxation effect.” Oil-rich governments tend to use their revenues “to relieve social pressures that might otherwise lead to demands for greater accountability … from— and representation in—their government.”

The way I like to put it is: The motto of the American Revolution was “No taxation without representation.” The motto of the petrolist authoritarian state is “No taxation, so no representation, either.” Oil-backed regimes that do not have to tax their people for revenue—because they can just drill an oil well and sell the oil abroad—also do not have to listen to their people or represent their wishes.

The second mechanism through which oil dampens democratization, argues Ross, is the “spending effect.” Oil wealth leads to greater patronage spending, which in turn dampens pressures for democratization. The third mechanism he cites is the “group formation effect.” When oil revenues provide an already nondemocratic or weak state with a cash windfall, “the government will use its largesse to prevent the formation of social groups that are independent from the state,” Ross writes. In addition, he argues, an overabundance of oil revenues can create a “repression effect,” because it allows governments to spend excessively on police, internal security, and intelligence forces that can be used to choke democratic movements. Finally, he argues, there might also be an antimodernization effect at work. This refers to the fact that massive oil wealth in a society tends to diminish pressures for occupational specialization, urbanization, and the securing of higher levels of education— trends that normally accompany broad-based economic development and also produce a public that is more articulate, free to organize, and endowed with multiple autonomous economic power centers of its own.

In a later study, based on data from 169 countries, Ross demonstrated why women in Middle Eastern countries continue to be undereducated, underrepresented in the workforce, and politically disempowered: oil.

“In the Middle East,” Ross wrote in his essay “Oil, Islam, and Women” (American Political Science Review, February 2008),

fewer women work outside the home, and fewer hold positions in government, than in any other region of the world. According to most observers, this troubling anomaly is due to the region’s Islamic traditions … Some even argue that the “clash of civilizations” between the Islamic world and the West has been caused,in part, by the poor treatment of Muslim women … This paper suggests that women in the Middle East are underrepresented in the workforce and in government because of oil—not Islam … The failure of women to join the nonagricultural labor force has profound social consequences: it leads to higher fertility rates, less education for girls, and less female influence within the family. It also has far-reaching political consequences: when fewer women work outside the home, they are less likely to exchange information and overcome collective action problems; less likely to mobilize politically and to lobby for expanded rights; and less likely to gain representation in government. This leaves oil-producing states with atypically strong patriarchal cultures and political institutions.

In other words, Ross is arguing, the same high oil prices that lead to overvalued currencies, drive massive imports, and kill domestic manufacturers—aka Dutch disease—keep women subordinate in society. In particular, he notes, jobs in the textile and garment industries—the sort of entry-level work that represents the first rung of the economic ladder for poor and less educated women—disappear, as do export industries in general, when citizens spend oil money on cheap imports. Meanwhile, oil booms tend to lead to more construction and construction jobs, and therefore more employment and more power, for men. Ross’s study offers data indicating that when a nation’s oil income goes up, the number of women in the workforce and the number of women who gain political office both go down—other factors being equal. “These results are consistent with the claim that oil production reduces female political influence by reducing the number of women who work outside the home,” he writes.

Some ask why low oil prices, or no oil incomes at all, in the 1960s didn’t lead to more democratization in the Arab world back then. (Actually, countries like Egypt, Syria, Lebanon, and Iraq were much more politically liberal in the 1940s and early 1950s, before oil, than they are today.) Answer: Between 1950 and 1989, the Cold War often worked against democratic trends everywhere, since America was much more interested in whether a country was pro-American or pro-Soviet outside than democratic or nondemocratic inside. Moreover, the dominant ideology and political culture in the Arab world at the time was not liberal ism but Arab nationalism and Arab socialism, and women’s empowerment was weak to nonexistent. Also, many of the Arab military cliques that seized power in the post–World War II Middle East were propped up by an outside resource, like oil: “foreign aid” during the Cold War from either the Soviet Union or the United States.

All that started to change in the 1980s, with population bulges, large numbers of unemployed youth, a global information revolution, and a real global democracy movement after the collapse of Communism. That was when high oil prices made it much easier for regimes to buy off their people, and low oil prices made it much more difficult.

It is hard for me to imagine that the military regimes in Egypt and Syria could have held on as long as they have were it not for the combination of “diplomatic oil”—foreign aid from Moscow and Washington in the Cold War—followed by aid and real estate investments from oil-rich Gulf states and finally their own oil and gas discoveries in the 1980s and 1990s. That surplus cash has surely helped to sustain President Hosni Mubarak in office for over twenty-five years of economic and political stagnation in Egypt. This fact triggered a joke about Mubarak that made the rounds in Cairo, but could have been told in many oil capitals. It was reported by my New York Times colleague Michael Slackman and went like this: “President Hosni Mubarak is on his deathbed when an aide comes to his side and says, ‘Mr. President, aren’t you going to give a farewell speech to the people?’ The President opens his eyes and replies, ‘Really? Why? Where are the people going?’ ”

When money can be extracted from the ground, people simply don’t develop the DNA of innovation and entrepreneurship. The Jerusalem Report (February 4, 2008) quoted an essay from the Kuwaiti daily Al-Siyasa by Dr. Ahmed al-Baghdadi, a rare outspoken government critic: “What do we actually produce?” Dr. al-Baghdadi asked his fellow Kuwaitis. “Our oil is produced and marketed by expats. The vegetables we produce in greenhouses are cultivated and looked after by expats. The Kuwaiti owners of these greenhouses get huge amounts of subsidies from the government for products, which, if we imported, would cost one-tenth of the price produced locally … We produce nothing, we import everything, and we consume a lot.”

That is surely one reason that there is not a single world-class university or scientific research center in the entire Arab world or Iran today. A leading Arab businessman I know, someone who has built a services company that actually does compete globally, once remarked to me that because of the perversions of oil money, and the way that enables governments to dominate every Arab economy, “there are many Arab entrepreneurs today, but there is no entrepreneurship in the Arab world … Entrepreneurs in this part of the world live off [income] coming from oil or fighting terrorism … There is no nurturing of talent. We imported cheap labor and exported our people. We exported white collar and imported blue collar. How do you create new wealth here? It is all still made in real estate and on government contracts. The whole process of privatization only hit when the price of oil hit $10 a barrel.”

This isn’t all that complicated. If you are living in a society where the easiest way to make a dollar is to steal it, or to stick a pipe in the ground, or to sit on top of a government-granted monopoly, or to get ahold of the biggest government contracts through cronyism, your smartest and most talented people will get drawn to precisely those endeavors. In short, if you make a lot of nonproductive, quasi-corrupt activities the lifeblood of your economy, you will suck the life out of it. That is precisely what we can see happening in so many petrolist states, and why so much talent there goes to waste or just picks up and goes away.

It is true in the Middle East and it is true in Russia, which, despite its huge population, has only two universities rated among the world’s top five hundred. “When oil prices became higher, the reforms became slower,” Vladimir Ryzhkov, a liberal Russian Duma member from Altay (and one of the few in the Duma still willing to speak out), told me on a visit to Moscow in February 2007. “Russia became a more closed country with a more state-oriented economy. Last year we saw record oil prices and not one reform. [That is the] reason Freedom House last year proclaimed Russia a ‘nonfree’ country. The question for you Americans is: ‘When will prices go down?’ It is the only hope for us Russian democrats.”

Oil and Geopolitics

We thought the fall of the Berlin Wall was going to set loose an unstoppable tide of free markets and free people, and for about a decade it did just that. The proliferation of free elections around the world in the decade after 1989 made that tide very concrete. But those years coincided with oil priced in the range of $10 to $40 a barrel. As the price of oil surged into the $50–$120 range in the early 2000s, it trig gered a countertide—a tide of petroauthoritarianism—from Russia to Venezuela to Iran to Sudan to Angola all the way over to Turkmenistan. The elected or self-appointed elites running these states used their oil windfalls to ensconce themselves in power, buy off opponents, and counter the post–Berlin Wall freedoms.

It is a key reason why the world is facing a “democratic recession” today, says Larry Diamond, the Stanford University democracy specialist and author of The Spirit of Democracy. According to Diamond, of the twenty-three nations in the world that derive a clear majority of their export income from oil and gas, not a single one is a democracy. Record high oil prices only feed that trend.

When she was Secretary of State, Condoleezza Rice would never admit that the Bush team was in any way responsible for strengthening the petroauthoritarian trends, but she was candid about how much petropolitics affected her job. As she testified to the Senate Foreign Relations Committee (April 5, 2006), “I can tell you that nothing has really taken me aback more as secretary of state than the way that the politics of energy is—I will use the word warping—diplomacy around the world. It has given extraordinary power to some states that are using that power in not very good ways for the international system, states that would otherwise have very little power.

The “warping” of geopolitics would certainly include China’s embrace, in order to secure access to oil and gas, of the authoritarian government in Sudan, which has been involved in a murderous policy of repression in Darfur. It would include America’s reluctance to talk frankly with Saudi Arabia about the role of its mosques and preachers in supporting suicide bombers in Iraq. Addicts never tell the truth to their pushers, I like to say. It would include Russia’s attempts to plant its flag in oil-rich areas underneath the Arctic. It would certainly include the decision by the British government (December 14, 2006) to drop its Serious Fraud Office investigation into whether bribery was involved in BAE Systems’ massive arms deal with Saudi Arabia. BAE is the world’s fourth-largest weapons manufacturer. Under the deal, BAE sold fighter jets worth $80 billion to the Saudi air force. In the process, though, it was alleged that BAE paid almost $2 billion—yes, $2 billion—in bribes to Saudi officials, reportedly including Prince Bandar bin Sultan, the former Saudi ambassador to the United States, to help secure the huge arms contract. Then prime minister Tony Blair justified the decision to shut down the corruption investigation on “national security” grounds, explaining: “I have no doubt at all that had we allowed [this investigation] to go forward we would have done immense damage to the true interests of this country, leaving aside the fact that we would have lost thousands of highly-skilled jobs and very, very important business for British industry.” This seemed to be a diplomatic way of Blair’s government saying: “The Saudis told us if this investigation exposing which Saudis got which bribes went ahead, they would never buy another bullet from BAE systems. So we shut it down.” It may have been the biggest, baldest oil-driven perversion of justice in a Western democracy of all time.

It is worth noting that the Saudis were not threatening to cut off oil to Britain. They were threatening to turn off the money tap—threatening not to invest in the U.K. or to bank there. And the higher oil prices are, the more money comes out of that tap. Which is why, at a minimum, perpetually high oil prices will result in a shift in the balance of economic power from the West toward the oil- and gas-producing countries—be it Russia, Venezuela, Iran, or the Persian Gulf states. Up to now, Persian Gulf–based sovereign wealth funds have played a relatively helpful role in stabilizing the Great Recession, by buying substantial stakes in some of the biggest, but most troubled, Western financial instutitions—like Citigroup—and industrial companies—like Porsche. But it is hard to imagine over time that their economic clout will not get translated politically. After all, that’s what America and Britain did when they had financial clout: They used their money to advance their national interests abroad.

Post-Iraq

So what I am saying? That we need to bankrupt all these oil producers? No, I don’t want to bankrupt Saudi Arabia or Kuwait or Egypt or Syria or Russia or Indonesia. That would only cause a different kind of destabilization, born of impoverishment. Besides, the price of oil is not going to drop to zero any time soon, even if we all drive plug-in hybrids. We will need petroleum-based products—from plastics to fertilizers—for as far into the future as anyone can see. But the world will be a better place politically if we can invent plentiful renewable energy sources that eventually reduce global demand for oil to the point where even oil-rich states will have to diversify their economies and put their people to work in more innovative ways.

Up until 9/11, America treated the Arab world basically as a collection of big gas stations—the Saudi station, the Libyan station, the Kuwaiti station. “Guys,” we told them—it was only guys we talked to—“here’s the deal: Keep your pumps open, keep your prices low, and don’t bother the Jews too much, and you can do whatever you want out back. You can treat your women badly. You can deprive your people of whatever civil rights you like. You can print whatever crazy conspiracy theories about us you like. You can educate your children to be intolerant of other faiths as much as you like. You can preach from your mosques any venom that you care to … Just keep your pumps open, your prices low, don’t hassle the Israelis too much—and do whatever you want out back.”

Well, on 9/11 the United States got hit with the distilled essence of all the pathologies going on out back. That is what al-Qaeda and Osama bin Laden personify. Alas, in trying to bring democracy to Iraq, an effort I supported, the Bush administration was actually trying to collaborate with Iraqis to change what was going on out back.

Unfortunately, Mr. Bush did virtually nothing to reduce our dependence on oil, or reduce the price of oil, as part of a strategy to weaken those forces of tyranny out back and beneath the surface. He bet everything on the quick success of the Iraq invasion. No one knows how the Iraq saga is going to end. But there are two things I know for sure: One is that the need to drive reform in the Arab-Muslim world is as vital as ever—educational reform, empowerment of women, religious modernization, and more consensual politics. The other is that no matter what happens in Iraq, we, the United States, are not going to invade another Arab Muslim country in the name of reform any time soon. We need to find another way to partner with people there to change the context out back.

I believe that the best post-Iraq strategy for driving reform in the Persian Gulf is to bring down the global price of oil and keep it down—by developing clean power alternatives—and then to count on the forces of globalization from outside, and economic pressures inside, to push the leaders of these countries to change. That’s the combination of forces that stoked the reform process in Bahrain. If the price of oil were half of what it is today, these regimes would not be able to resist political and religious modernization so easily. As the Johns Hopkins University foreign policy expert Michael Mandelbaum observes: “People don’t change when we tell them they should. They change when they tell themselves they must.” Falling oil prices would make them tell themselves they must.

We know from history that this can work. Consider the Soviet Union.

In February 2007, I went to Moscow to give a lecture at the U.S. embassy on the subject of globalization and energy politics. Afterward, I was chatting with Vladimir Mau, the director of Russia’s Academy of National Economy. I asked him if he thought that I was correct in arguing that it was $10-a-barrel oil, not Ronald Reagan, that brought down the Soviet regime. (Actually, the oil price on Christmas Day 1991, when the Soviet Union collapsed, was $17.)

Professor Mau did not hesitate. He shook his head. No, he told me, I was wrong. It was $70-a-barrel oil followed by S10-a-barrel oil that killed the Soviet Union. It was, he explained, the sharp rise in oil prices in the 1970s, due to the Arab oil embargo and the Iranian revolution, that deluded the Kremlin into propping up inefficient industries by overextending economic subsidies at home, into postponing real economic reforms, and into invading Afghanistan abroad—and then it was the collapse of prices in the 1980s and early 1990s that brought down the overextended, petrified empire.

Here’s the exact story: The inefficient Soviet economy survived in its early decades, Professor Mau explained, thanks to cheap agriculture, grown by peasants forced into collective farms, and cheap prison labor, used to erect state industries. Beginning in the 1960s, however, even these cheap inputs weren’t enough, and the Kremlin had to start importing, rather than exporting, grain. Things could have come unstuck then for the Communists. But the 1973–74 Arab oil embargo and the sharp upsurge in oil prices—Russia was the world’s second-largest producer after Saudi Arabia—gave the Soviet Union a fifteen-year lease on life from a third source of cheap resources: “oil and gas,” Professor Mau said. The oil windfall gave the Brezhnev government “money to buy the support of different interest groups, like the agrarians, import some goods, and buy off the military-industrial complex,” said Professor Mau. “The share of oil in total exports went from 10 to 15 percent to 40 percent.” This made the Soviet Union only more sclerotic. “The more oil you have, the less policy you need,” he noted.

In the 1970s, Russia exported oil and gas and “used this money to import food, consumer goods, and machines for extracting oil and gas,” Professor Mau said. The Soviet state extended itself and its subsidies into more and more areas, based almost entirely on oil revenues, not real manufacturing or agricultural productivity gains or tax revenues. By the early 1980s, though, global oil prices had started to sink—thanks in part to conservation efforts by the U.S. “One alternative for the Soviets was to decrease consumption [of other goods], but the Kremlin couldn’t do that—it had been buying off all these constituencies,” Professor Mau explained. So the Kremlin “started borrowing from abroad, using the money mostly for consumption and subsidies, to maintain popularity and stability.” Oil prices and production kept falling as the Soviet premier Mikhail Gorbachev tried reforming Communism, but by then it was too late.

Yegor Gaidar, currently director of the Institute for Economies in Transition in Moscow, saw this change firsthand. Between 1991 and 1994, he was acting prime minister of Russia, minister of economy, and first deputy prime minister. In a November 13, 2006, speech to the American Enterprise Institute entitled “The Collapse of an Empire: Lessons for Modern Russia,” Gaidar noted that “the timeline of the collapse of the Soviet Union can be traced to September 13, 1985. On this date, Sheikh Ahmed Zaki Yamani, the minister of oil of Saudi Arabia, declared that the monarchy had decided to alter its oil policy radically. The Saudis stopped protecting oil prices, and Saudi Arabia quickly regained its share in the world market. During the next six months, oil production in Saudi Arabia increased fourfold, while oil prices collapsed by approximately the same amount in real terms. As a result, the Soviet Union lost approximately $20 billion per year, money without which the country simply could not survive.”

There is an obvious parallel between the Soviet Union at the height of its oil folly and today’s Iran, argues Professor Mau. After the OPEC-led oil shock of 1973–74, the shah used Iran’s oil windfall to push major modernization onto a still-traditional Iranian society. The social backlash against forced modernization produced the Islamic revolution and the ayatollahs of 1979. The ayatollahs used Iran’s oil revenues to lock themselves into power by extending the state and state subsidies into all areas of life.

All of Iran’s oil wealth, though, couldn’t keep pace with the country’s population explosion—there were about thirty million Iranians in 1979 when the Islamic revolution toppled the shah and there are over seventy million today—thanks largely to the economic mismanagement of the regime. President Ahmadinejad so mangled the Iranian economy, passing out subsidies and failing to invest in innovation and export industries, that unemployment in Iran spiraled toward 20 percent—even when global oil prices were over $140 a barrel. Because of insufficient refining capacity, Iran also found itself having to import gasoline.

From 2008 to 2009, Iran went from exporting about 2.4 million barrels of oil a day at close to $140 a barrel to exporting 2.4 million barrels a day at around $60 to $70 a barrel, and the huge drop in revenue had to have crimped the Iranian regime’s spending power. According to a Dow Jones Newswire report (September 9, 2008), the International Monetary Fund has concluded that Iran needs to earn about $90 a barrel for the government to pay its bills. “Iran’s break-even price is $90 a barrel,” Mohsin Khan, Middle East and central Asia director at the IMF, told the Dow Jones reporter. “If prices dip below $90 a barrel … they would have to tighten their public expenditure policy, and probably cut subsidies, which would be an issue for the government there—the public would not be content,” he added, speaking about nine months before Iran’s explosive June 2009 election. (Iran is not alone with this problem. Khan forecasted a break-even price of $56 per barrel for Algeria, while the figure stood at $49 for Saudi Arabia, $33 for Qatar, and $23 for the United Arab Emirates.)

No, it was no accident that the popular “green revolution” in Iran against the country’s incompetent clerical leaders—after the Ahmadinejad government stole the June 2009 election—coincided with this prolonged dip in crude oil prices as a result of the Great Recession. It was not the only reason for that post-election uprising, but it was surely a factor. Unfortunately, the same oil wealth had enabled the Islamic regime and its Revolutionary Guards to build up a very powerful domestic security apparatus and a broad network of state-owned corporations and economic collaborators, which together managed to smother the popular revolution, at least enough for Ahmadinejad and his cronies to stay in power. Yes, the revolutionaries were empowered with new technologies to organize, inform, and mobilize—Twitter, blogs, and Facebook—but the regime had the guns, and, as of the publication of this book in the fall of 2009, “bang-bang” had beaten “tweet-tweet.”

I am convinced, though, that if we were able, over time, to bring the price of oil down sharply, and keep it there, the ayatollahs would face the same impossible choices that the Soviet leadership faced and that led to the collapse of Communism.

Iran’s hard-line Islamists would either have to start taking subsidies away from more and more of their supporters and opponents, which would only make the ruling ayatollahs more unpopular, or have to empower Iran’s human talent—men and women—and give them free access to the learning, science, trade, and collaboration with the rest of the world that would enable this once great Persian civilization to thrive without oil. Such a fundamental shift would almost certainly give birth to an “Ayatollah Gorbachev” and undermine the regime and its ideology from within. We know how that ends. “Just look at the history of the Soviet Union,” Professor Mau said.

So let’s be serious: Iranian democrats and reformers don’t need our praise. They need the one thing we could do, without firing a shot, that would truly weaken the ruling theocrats and force them to unshackle their people: End our addiction to the oil that funds Iran’s Islamic dictatorship. Yes, it would take time. It takes a lot to influence global oil prices. But America consumes roughly 25 percent of global output, so what we do really matters.

That is why launching a real green revolution in America would, over time, be the best way to support the “green revolution” in Iran. An American green revolution to end our oil addiction—to parallel Iran’s green revolution to end its theocracy—helps us, helps them, and raises the odds that whoever wins the contest for power there will have to be a reformer.

And that is also why going green is no longer simply a hobby for high-minded environmentalists or some “personal virtue,” as Dick Cheney once sneered. It is now a national security imperative. Any American strategy for promoting democracy in an oil-rich region that does not include a plan for developing renewable energy alternatives that can eventually bring down the price of oil is doomed to fail.

Today, you cannot be either an effective foreign policy realist or an effective democracy-promoting idealist without also being an effective energy-saving environmentalist. That’s the Second Law of Petropolitics …