Oil wealth — a curse or a blessing?: The Middle East's trade-off with American power

Oil has been shaping the destiny of the Middle East for over a century. But in the last two decades, a pattern has emerged — one that proves and indicates the political calculus behind development, destruction and diplomacy in the region.

Countries that aligned themselves with the US have used oil as a jump-start to global economic status. But those who resisted American influence have seen their infrastructures destroyed, governments fall, and societies torn apart — all under the banners of democracy, human rights, and counterterrorism.

But in truth, it was always about oil. And the pattern is too consistent to ignore.

Deal with the superpower

The rise of Gulf states such as Saudi Arabia, the United Arab Emirates and Qatar is not simply the result of strategic economic management or futuristic vision.

Their transformation into economic powerhouses — with skyscrapers, state-of-the-art infrastructure and sovereign wealth funds — has been supported by one constant, close alignment with the US.

After the 9/11 attacks and the subsequent invasions of Afghanistan and Iraq, the US shifted its focus to ensuring stability and continued access to oil in the Gulf. For nations willing to play along, the rewards were immense.

The UAE's GDP soared from $104 billion in 2003 to over $500 billion in 2023. Saudi Arabia's economy grew sixfold, hitting $1.1 trillion by 2023. Qatar, leveraging its liquefied natural gas (LNG) reserves and US military cooperation, reached one of the highest GDP per capita figures in the world, exceeding $84,000, according to the International Monetary Fund.

Unlike the Gulf states, countries like Syria, Libya and Iraq paid dearly for their independence. After resisting US influence, they were subjected not just to bombs and bullets, but also to punishing economic sanctions and diplomatic isolation.

In exchange, these countries opened their markets to Western interests, hosted US military bases, and often compromised on foreign policy autonomy. Al Udeid Air Base in Qatar remains the largest US military base in the Middle East.

The UAE hosts thousands of US troops and its airspace and ports are strategically vital for American operations. Saudi Arabia, once sceptical of foreign troops on its soil, has deepened military and intelligence cooperation with Washington, receiving over $100 billion in US arms sales since 2009.

The late Emir of Qatar, Sheikh Hamad bin Khalifa Al Thani, once stated, "Strategic partnership with the United States is not just about security — it's about survival in a volatile region."

Indeed, for Gulf monarchies, siding with the US brought not only protection from external threats but also immunity from Western-led "regime change" campaigns.

Those who refused to bow

But what of those who resisted the American order? What is the cost of defiance?

Iraq, under Saddam Hussein, tried to move away from the petrodollar system in 2000, seeking to trade oil in euros. By 2003, the country was under US occupation. 

The official reason? Weapons of mass destruction — none of which were ever found. The invasion led to the deaths of over 500,000 people, according to the Costs of War Project by Brown University, and plunged the country into sectarian chaos.

Libya, under Muammar Gaddafi, was pursuing an African gold-backed currency and had nationalised much of its oil industry. 

In 2011, NATO — led by the US — launched an air campaign under the pretext of protecting civilians. Gaddafi was brutally killed, and Libya collapsed into a failed state. Its oil production dropped from 1.6 million barrels per day in 2010 to less than 400,000 by 2015. Rival governments and warlords now fight over what remains of the country's natural wealth.

In Syria, Bashar al-Assad rejected Western-backed pipeline proposals and leaned heavily on Russian and Iranian alliances. After the Arab Spring, Syria was engulfed in a brutal civil war that only ended last year.

The US funded various rebel groups, and while ISIS was used as a justification for intervention, American forces quietly secured control over key oil-rich regions in eastern Syria, particularly Deir ez-Zor.

US President Donald Trump bluntly admitted in 2019, "We did leave soldiers behind because we're keeping the oil. I've always said that — I like oil, keep the oil."

Such statements confirmed long-standing suspicions that American involvement had less to do with democracy and more with hydrocarbons.

Sanctions and sabotage

Unlike the Gulf states, countries like Syria, Libya and Iraq paid dearly for their independence. After resisting US influence, they were subjected not just to bombs and bullets, but also to punishing economic sanctions and diplomatic isolation.

Iraq suffered a decade of crippling sanctions in the 1990s before the 2003 invasion. Syria has faced US sanctions since 2011, under the Caesar Act, which has devastated its economy. Libya's post-Gaddafi instability has ensured its oil exports remain vulnerable and its institutions fractured.

After the brutal wars, these nations never saw the kind of post-conflict reconstruction the US offered its allies. Instead, their resources were often fragmented, outsourced or redirected through US-friendly mediators.

To gain US favour, Gulf allies have made substantial trade-offs — politically, economically, and socially. They ensure policy alignment with US interests in global forums, often at the expense of regional autonomy.

Then there is security dependence, where countries like Saudi Arabia and the UAE are reliant on American intelligence, weapons, and military presence. Cooperation also stretches to the opening of financial and real estate sectors to US investors, particularly in Dubai and Doha.

But while these nations enjoy modern skylines and high GDP figures, political freedoms remain very limited. The West's silence on domestic repression in these allied nations is in stark contrast to its vocal concern over the authoritarianism of Iraq, Libya or Syria.

The petrodollar trap

Among all these, there is a centre point — the petrodollar system, i.e., the agreement that oil will be traded globally in US dollars. Countries that agree to this system are rewarded; those that threaten it are punished.

Saddam Hussein and Muammar Gaddafi both attempted to bypass the dollar, and both met violent ends. Meanwhile, the Gulf states continue to uphold the system, reinforcing American economic dominance in exchange for protection and prosperity.

According to economist Michael Hudson, "The global dollar standard is not merely a currency system — it's a political weapon."

The Middle East is a region of contradictions — immense wealth beside immense suffering, glittering towers beside bombed-out ruins. But these outcomes are not the result of geography or luck. They are the result of geopolitical allegiance.

For those who shook hands with Washington, oil became a blessing, a passport to modernity. For those who refused, it became a curse and the very reason for their downfall.