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Petroleum: Iran's black
curse
By Vahid Isabeigi
Petroleum, a 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 2,000 years. Subsequent to the
invention of the internal-combustion engine and later
the first motorized car in the late 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 British Petroleum marks the beginning of the quest
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 Gulf states. The discovery of petroleum in Iran,
where the main livelihood of people used to be
agriculture and farming, and in Gulf states, where the
populace lived on pearl fishing, created a new era in
the history of the Middle East. This historic piece of
land, which had forfeited its importance gradually after
renaissance in Europe, shifted toward a new focus of
geopolitical attention. Meanwhile, the immense wealth
brought about by the discovery of petroleum was among
the main factors delaying the independence of such
states as Kuwait, the United Arab Emirates, and Qatar,
which achieved independence only in the last half of the
20th century.
In the meantime, the swift change
within the Iranian polity, state structure, and 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
enduring stability since the discovery of petroleum.
Despite the assertions of many that the lack of
petroleum would have plunged Iranians into abject
poverty, the truth is that it has undermined their
political and social stability, since the presence of
the country's highly valued resource has proliferated
Iran's regional importance. The consequent series of
episodes in this Iranian saga has shown what a black
cloud this "black gold" has indeed been and how it has
instigated the last 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 the convulsions that have plagued Iranians
as the result of being endowed with one of the most
precious resources of the 20th century, the question
arises, could they have done better in the absence of
petroleum?
Ever since drilling for petroleum
began in Iran during the first quarter of the 20th
century, the revenues, which were at that time shared
between the British and the ruling Iranian dynasty, have
constituted the backbone of the Iranian economy. This
reliance on petroleum reached immeasurable levels during
the reign of Muhammad Reza Pahlavi, who boosted the
production rate 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
percent of 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 two decades
following the revolution, there occurred a sharp
decrease in gross domestic product (GDP) per capita from
US$2,200 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,
pistachios, dates, raisins, and caviar, whose percentage
in the share of exports has seen a steady increase.
Given Iran's immense economical and social
potential, the fact that petroleum incomes have always
formed the kernel of the export revenues is a great
shame. Furthermore, the government's reluctance,
bequeathed from the preceding one, to focus on the
country's non-oil potential is outright invitation to
havoc. Iran is not like Saudi Arabia, where 95 percent
of the country is littered with deserts and only a tiny
percentage of the country is arable and inhabitable. Nor
can Iran's unutilized potential 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 the
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 (that is, for 90 years) and that
Iranian economy has been totally contingent on petroleum
throughout this lengthy period, who can guarantee that
the same trend will not persist for the next 70 years?
At its current growth rate, 1.2 percent per year, Iran's
population will have exceeded 152 million within 70
years. If a viable and self-sufficient economy is not
created, 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
grown lazier and consequently petroleum by-products have
occupied greater space in our daily life. Today, 94
percent 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 seldom in use despite the fact that Iran is
second only 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 such
as Tehran and Mashad have been experiencing the direct
effects of this curse cast by petroleum, and this trend
is being exacerbated by the government's uncaring
attitude toward improving these cities' air quality,
which needs entrenched rules about the usage of
petroleum.
As we are all aware, Iran has never
had a distinguished ranking in any industry. Its textile
(centered in Isfahan), food-processing, automotive, and
cement industries have always been designed to meet only
internal demand. However, because of rampant 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 neighbor, Turkey, which has always been noted for
its bleak economic state, has been aspiring to come up
with new ways of encouraging the flow of capital inside
the country. Interestingly, despite being devoid of
petroleum, Turkey's recent export records, which stood
at $37.6 billion compared with Iran's $22 billion [4],
display the results of the endeavor made by Iran's
neighbor. Whether Turkey will be successful in its quest
to revive its economy or not is an imponderable.
However, one thing is certain: the Turkish economy,
which has been (and still is) suffering from lack of
cash, has grown more adaptable than the Iranian economy,
which has invariably been dependent on petroleum. The
Turks have already started to compete with Europe in
their textile industry while Iran cannot even properly
refine its 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 has risen to 1 million
(generating some $800 million) [5], not many Westerners
would sanction the idea of paying a visit to Iran
because of the unstable political conditions and the
rules imposed on tourists. On the other hand, even when
Iran was supposedly conceived of as an island of
stability by US president Jimmy Carter during the reign
of the shah, the total number of tourists visiting the
country and the occupancy of Iranian hotels were
appallingly low. This could be imputed to the shah's
excessive emphasis on the generation of revenues purely
from petroleum, while totally ruling out the other
important potentials Iran possessed.
Iran,
because 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
millennia-old historical treasures scattered all over
the country, its 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.
The curse cast over Iran by petroleum has been
widely felt in politics and society. It was Iran's
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
demonstrates that the acquisition of democracy will
prove very exacting. Almost every single Iranian
discerns that it was petroleum that brought about the
demise of Iran's fleeting democracy in 1953.
If
we Iranians had not had this 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 choosing the easiest option: laziness.
Notes
1. Daniel R Brower,
The World in the Twentieth Century: From Empires to
Nations (Prentice Hall, 2000), p 322.
2.
Payvand's Iran News.
3. Farhangsara, 2002.
4.
CIA: The World Fact Book.
5. Payvand's Iran News
(March 15, 2000).
Vahid Isabeigi can
be reached at vahid_agha@canada.com
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