Iran News ...


5/5/03

Petroleum: The Black Curse

By: Vahid Isabeigi, Ottawa, Canada
vahid_agha@canada.com

This miraculous product, often referred to as black gold, has been in use for thousands of years. Oil is recorded to have been in use by the Chinese for about 2000 years. Subsequent to the invention of the combustion engine and later the first motorised car in the last portion of the 19th century, the usage and value of petroleum culminated profoundly. Consequently, the newly independent Middle Eastern countries, which had long been suffering from exploitation by colonial forces, started fostering their economy and state structure through petroleum.

The discovery of oil in 1908 in Masjed Soleyman by the British Petroleum marks the beginning quest of the for petroleum in Iran. Iran was followed by other Persian Gulf States and Iraq[1]. These discoveries gradually intensified the voracity of the British, who undertook the task of extracting petroleum from Iran and other Persian Gulf States. The discovery of petroleum in Iran, where the main livelihood of people used to be agriculture and farming, and in Persian Gulf States, where the populace lived on pearl fishing, created a new era in the history of the Middle East. This historical piece of land, which had forfeited its importance gradually after renaissance in Europe, shifted into a new focus of geopolitical attention. Meanwhile, the immense wealth brought about by the discovery of petroleum was amongst the main reasons delaying the independence of such states as Kuwait, United Arab Emirates, Qatar, who achieved independence only in the last half of the twentieth century.

In the mean time, the swift change within the Iranian polity, state structure, and the economy are all indicative of the unprecedented impact of petroleum on our society. As the trends have demonstrated, Iran, a country with a tremendous industrial capacity apart from petroleum, has never had an enduring stability in its soil ever since the discovery of petroleum. Despite the assertions of many that the lack of petroleum would have plunged us into abject poverty, the truth is that it has undermined our political and social stability since the presence of the country's highly valued resource has proliferated Iran's regional importance. The Consequent saga of episodes have shown what a black cloud this "black gold" has indeed been and how it has instigated the outbreak of the century's notable events such as the coup d'etat of 1953 and the revolution of 1979, both of which have left indelible scars on every Iranian. Given the extent of convulsions which have plagued us due to being endowed with one of the most precious resources of the 20th century, the question arises, could we have done better in the absence of petroleum?

Ever since drilling petroleum in Iran during the first quarter of the 20th century, the revenues, which were shared between the British and the ruling Iranian dynasty, have constituted the backbone of the Iranian Economy. This contingency on petroleum reached immeasurable levels during the reign of M. Reza Pahlavi, who surged the production rate in order to finance the grandiose projects he had launched. However, throughout his reign, despite an unprecedented boost in industries to meet the internal demand such as cement, automotive, and food-processing, petroleum and its by-products still constituted 99% of the export revenues, which equaled the ratio in such countries as Saudi Arabia, Qatar, Oman, and Kuwait. The post-revolutionary period saw a steady, but insufficient growth in the percentage of non-oil products; all the same, this period witnessed an appreciable economical slump, which resulted in the stagnation of domestic industries. While the country's population almost doubled within the 2 decades following the revolution, there occurred a sharp decrease in GDP per capita from $2200 to $1.640 [2], which was instigated by the dwindling petroleum production. At the current production rate, which stands at 3.6 million barrels per day [3], half of which is consumed domestically, the task of generating the required amount of cash appears to be a long haul. Meanwhile, the bulk of Iran's non-oil exports are still composed of hand-woven carpets, pistachio, dates, raisins, and caviar whose percentage in the share of exports saw a steady increase. However, given Iran's immense economical and social potential, the fact that petroleum incomes have always formed the kernel of the export revenues is indeed a great shame. Yet, the regime's reluctance, bequeathed from the preceding one, to focus on the country's non-oil potential, is an outright invitation to havoc. Iran isn't a desert kingdom like Saudi Arabia, where 95% of the country is littered with deserts and only a tiny percentage of the country is arable and inhabitable. Nor can Iran's unutilised potential can be juxtaposed with a country like Kuwait, whose existence is attributable to petroleum. However, when one investigates the portrait of the foregoing countries' export records, it will be rather easy to remark on the similarity of their economies: dependence on oil. Iran, at current production rate, will have run out of its petroleum resources within the next 70 years. Considering the fact that petroleum in Iran has been extracted since 1912 (namely for 90 years now) and that Iranian economy has been totally contingent on petroleum throughout this lengthy period, who can guarantee that the same trend will not persist within the next 70 years? At its current growth rate, 1.2 %, Iran's population will have exceeded 152 million within 70 years. If a viable and self-sufficient economy is not created and if the long-lasting inadvertence that has been displayed over the decades still continues, then chaos will ultimately set in.

Iran's long neglected industrial potential, which could have been advanced through the extensive usage of copper, iron ore, and chromium, all of which are highly abundant within the confines of the country, could have been pivotal at turning the country into an industrial giant, given Iran's educated potential. As the decades-long lax stance of the state has continued, we Iranians have gradually grown lazier and consequently the petroleum by-products started to occupy greater space in our daily life. Today, 94% of Iran's energy production comes from fossil fuels, notably, petroleum while other alternatives such as solar and even natural gas (another fossil fuel), which is known to be cleaner and more environmentally friendly, is in seldom use despite the fact that Iran is second to Russia in natural gas reserves. The high incidences of petroleum in urban areas and its easy availability have been the instigators of another large-scale disaster: air-pollution. Cities like Tehran and Mashad have been experiencing the direct effects of this curse cast by petroleum, and this trend is only exacerbating due to the government's uncaring attitude to improve these cities' air quality, which should bring in entrenched rules about the usage of petroleum.

As we are all aware, Iran has never had a distinguished ranking in any industry. Our textile industry (centered in Isfahan), food-processing, automotive, and cement have always been designed to meet the internal demand. However, due to the ubiquitous nature of smuggling, the country's industries, currently operated by state-owned bonyads, are on the brink of collapse. Moreover, the lack of competition inside the country has made industry more susceptible to fluctuating trends in the world. While Iran's dependence on petroleum seems to have retarded the true development of industry throughout the entire century, Iran's neighbour, Turkey, which has always been noted for its bleak economical state, has been aspiring to come up with new ways of encouraging the flow of capital inside the country to help the country's ailing economy. Interesting to say, despite being devoid of petroleum, Turkey's recent export records, which stood at $37.6 billion comparing to Iran's $22 billion [3] display the endeavour made by our neighbour trying to stay alive. Whether Turkey will be successful in its crusade or not is an imponderable. However, one thing is certain: The Turkish Economy, which has been (and still is) suffering from the lack of cash, has grown more adaptable unlike the Iranian Economy, which has invariably been dependent on petroleum. At least, Turks have already started to compete with Europe in their textile industry while we cannot even properly refine our God-given petroleum.

In the meantime, tourism, an area in which Iran boasts considerable potential, has never been bestowed the importance it deserves. Of course, despite so-called auspicious developments in the realm of tourism in Iran, whereby the total number of visitors visiting the country has risen to 1 million (generating some $800 million for the country)[5], not many westerners would sanction the idea of paying a visit to Iran due to the unstable political conditions of the country and the rules imposed on tourists themselves. On the other hand, even when Iran was supposedly being conceived as an island of stability by Jimmy Carter during the reign of the shah, the total number of tourists visiting the country and the bed capacity of Iranian hotels were appallingly low. This could be imputed to the shah's excessive emphasis on the generation of revenues purely from petroleum incomes, while totally ruling out the other more important potentials Iran possessed. Iran, on the grounds of the different extensive climactic regions it is endowed with, presents one of the most splendorous and unique experiences for tourists. It is not unusual for one to feel the apogee of spring on the Caspian Coast, while some other person could be skiing on the slopes of the Alborz Mountains and at the same time it would be possible to get soaked under the sun of the desert. What is more, given the remnants of Iran's thousands of years old historical treasures scattered all over the country, Iran's cultural heritage could have been used to generate billions of dollars while, simultaneously, introducing our rich history to the world community, whom we often excoriate for mistaking us for Arabs.

Has petroleum shown its disastrous fašade only in our economy? Absolutely not. The curse cast over us by petroleum has been more widely felt in politics and society. It was our petroleum that lured the British into the area causing them to orchestrate secret stratagems that left substantial social and political effects on Iran. Despite having commenced our pursuit for democracy much earlier than many nations, we Iranians' intense and enduring quest for democracy has still not reached fruition and the current status quo of the country evinces that the acquisition of democracy would prove very exacting in the presence of the current sombre trends. Almost every single Iranian discerns that it was our petroleum that instigated the demise of Iran's fleeting democracy in 1953. Having made these remarks, I really wish we didn't have that black curse, which is referred to as black gold in the west; we would have had much more time to concentrate on a better future rather than opting for the easiest option: laziness.

Endnotes

[1]. Daniel R. Brower, The World in the Twentieth Century-From Empires to Nations (Prentice Hall, 2000), 322.

[2] "Payvand's Iran News

[3] Farhangsara, 2002

[4] CIA-The World Fact Book, (19 March 2003).

[5] Payvand's Iran News, (03/15/2000).

... Payvand News - 5/5/03 ... --



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