Subject: Goldberg & Vitalis: The Arabian Peninsula: Crucible of Globalization
Date: Thu, 15 Aug 2002 14:57:05 -0400 (EDT)

EUROPEAN UNIVERSITY INSTITUTE  ISTITUTO UNIVERSITARIO EUROPEO
ROBERT SCHUMAN CENTRE FOR ADVANCED STUDIES
Second Mediterranean Social and Political Research Meeting
Secondo Convegno di Studi Socio-politici sul Mediterraneo
Florence, March 21-25, 2001   Firenze, 21-25 Marzo 2001
The Arabian Peninsula: Crucible of Globalization
Ellis Goldberg and Robert Vitalis
University of Washington at Seattle and University of Pennsylvania
Workshop VIII
New Research Agenda in Saudi and Arabian Peninsula Studies:
Comparative and Transnational Perspectives on the Twentieth Century
©Ellis Goldberg and Robert Vitalis. All rights reserved.
For any query or information, please contact the author(s):
goldberg@u.washington.edu or rvitalis@sas.upenn.edu
No part of this paper may be distributed, quoted or reproduced in any form
without permission by the
author(s).

For authorized quotation(s) please acknowledge the Mediterranean Programme
as follows: "Paper presented at the Second Mediterranean Social and
Political Research Meeting, Florence, March 21-25, 2001, Mediterranean
Programme, Robert Schuman Centre for Advanced Studies, European University
Institute.



 The Arabian Peninsula: Crucible of Globalization

  Ellis Goldberg and Robert Vitalis

 The broad features of the contemporary world encapsulated in the two, now
ubiquitous ideas of "globalization" under American "hegemony" have moved
North American intellectuals in two different directions. One current
operates on the principle that you don't look back. The rush of events
captures the imagination and absorbs the energies of countless idea
entrepreneurs across a range of "new" issues from democratic transitions
to humanitarian intervention to refugee movements. The moment appears ripe
to set disciplinary agendas, refashion fields of inquiry, displace
outmoded methods and epistemologies and, not least, restructure economies
and polities.

 Much writing about the Arabian Peninsula and the wider Middle East in the
decade since the Gulf war reflects this tendency. Here we include all
those who seek to explain why the region lags in the race to liberalize
and transform "traditional" etatist structures and rent-seeking
coalitions. We include those hopeful advocates of economic reform who tell
of Middle East entrepreneurs struggling slowly but surely to topple the
monuments to Arab socialism. And we include those who have written books,
lectured Congress, and made movies about the coming democratic storm that
would one day sweep the realm of dictators and emirs. But we also include
all those stalwart comrades who, somewhat paradoxically it seems, write of
America's recent project of complete dominance or hegemony in the region,
of the Middle East's capitulation to global liberalism, local tyranny, and
Hollywood's relentless campaign of cultural conquest.

 We identify ourselves instead with the "historic turn" in the social
sciences and with those scholars who comprise a broad, alternative current
in contemporary American intellectual life. Historically-oriented inquiry
and analysis provide the counterweight to the myriad "new" and "post"
languages and descriptions of the global security problematique in the
late twentieth century, and to the proliferating accounts of imminent
crises and incipient transformations. Thus, we situate the moment in which
we find ourselves within a somewhat longer trajectory. Today's so called
"Washington round" of trade liberalization and global integration is, in
reality, the second such effort in this century and the third in the last
century and a half.. In some earlier work (Vitalis 1995, 1996 and 1996a,
and Vitalis and Heydemann 2000) we began to explore the rich politics of
the earlier moment of A.I.D.- and World Bank-assisted "structural reform"
that actually created the so called "traditional" public sectors and
import substitution industries in Egypt and elsewhere. In this paper we
extend the analysis to the Arabian Gulf.

 The conventional, increasingly commonsense understanding of the idea of
"globalization" is that of a world economy undergoing increased
integration of production, finance, and trade. We argue that any such
story about the course of the world economy in the 1940s (or the '60s or
the '70s) and about the politics and culture of "hegemony" must begin with
oil and in particular with oil in the Middle East. Knowledge that was once
possessed when these processes were first set in motion and that
constituted political economy as a "critical" discourse has since been
lost both to globalism's champions and to the new generation of
anti-globalization activists and postcolonial theorists. This paper might
therefore be thought of as a kind of salvage archeology of knowledge. The
first step is to back away a little bit from the current terms of debate:
What does globalization entail? How far have these processes gone? Are the
effects exaggerated? Do states still matter? And so on. With just a little
digging one finds a good deal of evidence to suggest that these arguments
have been rehearsed continuously in the United States each decade of the
twentieth century. It appears to us therefore to be a kind of ritual.
Taking part in it will add to the already countless artifacts piled on
library shelves, in newspaper morgues, in public record office files, and
university archives. This aspect of the debate is hard to see while one is
a part of it, and when one's knowledge of the past is based on the
invented traditions of seminar reading lists and literature reviews. We
can illustrate what we mean by way of analogy. In Egypt, a debate
continues across the twentieth century about the underlying reality of
"Egyptianness." This is conventionally portrayed as a debate about the
Pharaonic versus the Arabo-Islamic roots of national identity. Many smart
people work hard to resolve a question that is, viewed from our vantage,
unanswerable. This fact has not stopped other very competent historians
from stepping in and trying to sort out the problem for Egyptians,
separating fact from myth, staking out a middle ground, and so on. Once we
saw that an argument about globalization is as ubiquitous within the
American academy and society as the debate about Pharaonicism is in
Egyptian intellectual life, we decided our time was better spent on other
questions.

 So we shift the discussion from globalization to hegemony, both an idea
and a debate that seems more clearly defined.  Part One of this paper
reviews the emergence of the concept of hegemony and argues that it
provides a way to conceptualize contemporary debates that is useful in the
present and that establishes clear links to arguments about trade and
strategic conflict that animate politics and political science for most of
the twentieth century. Making the political science accessible to educated
non specialists is possible but it will take some effort to check the
power that the word now exercises over the minds of some oppositional
intellectuals.

 Part Two develops the argument about the Gulf's centrality to the
developments in the world economy that are more typically discussed in
terms of globalization. Stated baldly, the post-World War II energy
economy is the framework underlying globalization, understood here as
integration, and the Middle East is the crucial factor in European
recovery. We analyze American efforts to integrate Middle East, Asian and
European energy markets. We also consider the course of liberalization.
The American economy in the 1950s and '60s was, paradoxically, one of the
most powerful drags on the pace of, and a core of the resistance to,
globalization, when viewed through sectoral (energy) lenses. We discuss
the efforts by Saudi Arabian and other oil producing states to open up the
American market and, in light of this failure, to create "freer" global
energy markets by nationalizing the holdings of US firms.

 Hegemony, we propose, rests on more than the dominance of some states or
even a state system by one especially powerful state.  It also rests on
the ability of elites within that dominant state to re-structure the
subordinate societies and even its own to retain a position of power and
privilege in markets that cross societies.  The "decline" of American
power in the 1970s and early 1980s was an echo of the decline of European
power in the 1950s and had much to do with the re-structuring of global
energy markets and consequently with the social frameworks within which
production and distribution of energy occurred.  Despite talk about the
"arc of crisis" and plans to detach Hasa province from Saudi Arabia, there
was neither a pressing security rationale nor a crucial economic one for
the United States to intervene because as Benjamin Shwadran noted long
ago, the crisis was never one of physical undersupply but only the
requirement to buy oil on a free market (Shwadran, 382).

 Gulf states gained a great deal in the course of the first Washington
round. Potential empire builders were deterred from turning Hasa or Kuwait
into provinces of one or another greater Arab state. The hegemon's other,
coercive or imperial face was softened. The 1990 war reminds us of the
alternatives--then and now.

Hegemony for Beginners

 "No doubt it is a glorious ambition which drives Prussia to assert her
 claim to the leadership, or as that land of professors phrases it, the
 'hegemony' of the Germanic Confederation." (Times, May 5, 1860, p. 9)

 In the land of professors, the term "hegemony" has served for about a
hundred years to anchor discussions of hierarchy in what we now call the
discipline or field of international relations (IR). International law,
historians of ancient empires, students of nineteenth century German and
Italian state formation, and analysts of great power expansion all used
the term.  American scholars of "foreign policy" and "inter-American
relations" conventionally described US or North America as exercising
hegemony over the Caribbean. Great Britain appeared to have exercised
"world-hegemony" until around the time of World War I. And the Austrian
émigré historian of City College, Hans Kohn, could claim in 1937 that the
rise and industrialization of Japan, "which seem to threaten the economic
and political hegemony of the white races, have been discussed in many
studies" (262). In the wake of the Nazi conquests, the Soviet
incorporation of Eastern Europe, and American postwar expansionism, the
professors turned to thinking harder than ever about hegemony, and today
teachers in introductory college courses in IR treat it as a basic concept
in the field akin to "balance of power" or "national interest." The word
may now be just as popular with educated readers and writers outside the
academy, but it took a while for its use to catch on, to judge from a
Lexis/Nexis search of major U.S. newspapers. The word did not appear in
the New York Times or in other papers in the mid 1960s, whereas in a dozen
or so academic journals it is found over 100 times. In 1969-1970, it is
found 8 times in newspapers, but between 1971-1975, it appears in 89
stories. Use of the term exploded in the mid 1980s. In 1986-1990 it
appears 365 times, in 1991-1995, 730 times, and in 1996 until now, 983
times. The earliest references report Chinese foreign policy
pronouncements denouncing Russian hegemony. As the Nixon administration
pursued its rapprochement with the PRC the word entered the official
vocabulary of American diplomacy, leading the Soviets to protest. Chinese
premier Chou en-Lai was also first in the New York Times to describe
Nixon's August 1971 decision to suspend convertibility of the dollar as a
sign that the U.S. was "losing its imperialist position of hegemony"
(August 29, 1971, p. 19). Foreign affairs columnist C. L. Sulzberger
agreed, analyzing the decline in hegemony of the dollar two months later
(October 10, 1971, p. 4).

 The Oxford English Dictionary defines hegemony as "leadership" but the
connotation in the bulk of the articles retrieved in the Lexis/Nexis
search is "domination" rather than "leadership." While the term is used
most often in accounts of national and international politics and
economics it may refer to other forms of domination. Lebanese complain of
Syrian hegemony. The Catholics criticize Protestant hegemony in Ireland.
The French denounce U.S. hegemony in Europe and German hegemony in the
EEC. Americans oppose Saddam Hussein's attempt at hegemony in the Gulf (as
the New York Times once did the Shah's). Giant entertainment companies
exercise hegemony over the independent record labels in the pop music
market. A music critic calls the word "jazz" the means to maintain
European hegemony in music. The same sense of domination is often conveyed
by the professors when they use the concept.  We know it to be true above
all for those "progressive" and "radical" social movements and tracts that
continue to refer to U.S., capitalist, western, neo-liberal, etc. hegemony
today, but our focus is on vocational political science and IR theory.

 A strand of 1960s Chinese strategic discourse may well represent an
unrecognized influence on contemporary American intellectual discourse.
There is little doubt that De Gaulle's campaign in the same period against
the "hegemony of the dollar" was familiar to those writing on post-World
War II American economic expansion.  Such sources, along with the earlier
twentieth century ones, go unrecognized in the anthologies, however, which
credit the concept and, more accurately, the "theory of hegemonic
stability" to two eclectic scholars: Charles Kindleberger an economist at
MIT and Robert Gilpin, a political scientist at Princeton, and before
them, to the Greeks! Kindleberger's The World in Depression (1973) refers
to leadership rather than hegemony of the international economic and
monetary system and explores the consequences of states' refusing the
mantle of leadership, an analysis famously extended in Gilpin's U.S. Power
and the Multinational Corporation (1975). To these twin canonical cites we
should probably add a third by James Kurth, a political scientist at
Swarthmore, who presented a paper "Modernity and Hegemony: The American
Way of Foreign Policy" at Harvard's Center for International Studies in
1971.  In 1973 the New York Times business writer Leonard Silk and the
columnist Anthony Lewis were also dissecting the decline of American
hegemony in international finance. The professors (and graduate students)
would follow this lead through the rest of the 1970s and '80s.

  "International political economy" or IPE, an entire new field of
specialization and identity for American academics, emerged in the 1970s
in the shadow of upheavals in the postwar international order, the rise of
OPEC, and the U.S. defeat in Vietnam, driven, in fact, by these challenges
to American preponderance in world affairs. For us, and we suspect for
others who began reading "theory" in the late 1970s and who were focused
on the Third World, it comes as a surprise to learn that it was American
"economic invasion," "penetration," "conquest," and "domination" of Europe
that was at the center of a disciplinary defining debate. "The United
States in 1970 was", as Gilpin notes, "in the throes of the Vietnam War,
and anyone who linked U.S. foreign policy to overseas economic expansion
was considered almost by definition a Marxist" (1997, p. xii). At that
moment, however, the red baiting was most often aimed at "revisionist"
historians of U.S. foreign policy, most famously, Wisconsin's W.A.
Williams.

 Various neo-marxist schools and scholars in the social sciences would
flourish, briefly, later, in the late 1970s and 1980s, particularly within
sociology. We include in this category dependency theory, world systems
analysis, which was the most influential tendency inside American
political science and IR/IPE, and third worldism. The field of IR in the
United States was, however, much less affected by this insurgent moment
than were other parts of the social sciences. Thus, to clear up one
potential source of confusion, when most colleagues and graduate students
write about hegemony today in IPE, it is not a sign that the ideas of
Antonio Gramsci have somehow become part of the common sense of the
discipline. True, marxists were being read more in seminars in the 1970s
and '80s (than they were before or since). And today there is a small
number of mostly European-trained scholars who bring Gramsci more
centrally into theorizing about world order, although there is little
prospect that these newest forms of structural marxism will win many
adherents inside the US.  What we can say is that as Gramsci's work has
become better known in the Anglo-Saxon world, some IR theorists are more
likely to reflect on the nonmaterial dimensions of hegemonic power.

 The Highest Stage of Globalization?

 Returning to the moment when the idea of hegemony made its way from
vocational international relations to American newspapers daily press also
shows that the "new" issue of globalization in the 1990s was a phenomenon
that scholars were already concerned with in 1970. Like today,
globalization was related explicitly to the issue of US power and the
prospects for world order during a time of upheaval. Only, instead of
globalization, two other terms were used: "transnationalism" and
"interdependence." Thus, the editors of the collection Transnational
Relations and World Politics sought to understand the significance of
"contacts, coalitions, and interactions across state boundaries that are
not controlled by the central foreign policy organs of of governments."
"To what extent and how have governments suffered from a "loss of
control?" (Keohane and Nye 1972, p. xi) Gilpin's own contribution to the
volume makes clear that multinational capital was already widely held to
be undermining the nation- state-a claim that he wanted to refute (Keohane
and Nye 1972, pp. 48-69) Finally, consider the view of the world informing
the once controversial Trilateral Commission Report on The Crisis of
Democracy (1975): "There has been an explosion of human interaction and
correlatively a tremendous increase of social pressure. The social texture
of human life has become more complex and its management more difficult.
Dispersion, fragmentation, and simple ranking have been replaced by
concentration, interdependence, and a complex texture."

 Today, globalization is, likewise, defined in simplest terms as "an
increasing interdependence of national markets" (Siebert 1999, p. 8).
These debates rehearse the claims about economic forces "serving to
integrate important aspects of material life on the planet, whilst
simultaneously disintegrating other forms of state and material and social
organization" (Gill 1993, p. 246). The Atlantic magazine version of this
dialectic puts it in terms of Jihad Versus McWorld. Each, breathless
account of a new borderless world invites another rejoinder that states,
politics, place and so on still "matter." And while Paul Krugman baits
Lester Thurow, others, more hard-headed and cold-hearted still, warn of
the Coming Anarchy , the Clash of Civilizations (recall that Huntington
was the primary author of the Crisis of Democracy).

 Cast in part using slightly different language and in part in the same
language, today's debate about globalization in fact goes back a century
or more. Harvard's Raymond Leslie Buell, not Robert Keohane, in 1925, not
1971, first proposed the concept of "complex interdependence" to explain
how both markets and ideas challenge assumptions from an earlier day about
the inviolability of sovereignty. The argument is found In International
Relations (p. 5) the first textbook with that title in the United States.
Buell organized the entire book around the problem of nationalism and
internationalism. A decade later, even as the free trade system of the Pax
Britannica had collapsed, Eugene Staley's War and the Private Investor
(1935) showed how "the growth of international capital investment" was
pushing toward "increased integration of the world." And a decade later,
the Republican Wendell Willkie was popularizing the same arguments in the
widely read One World (1944) while American designers (one worldists,
internationalists) were developing a new international architecture in
support. A decade after Willkie, the founders of the International Studies
Association were insisting that the statecentric view was "now reactionary
and obsolete."

 Given what amounts to a ritualistic profession decade after decade that
markets, capitalism, technology, etc. are drawing the world closer
together, we should also expect to find examples of the Coming
Anarchy/Clash of Civilizations genre produced as well, which, indeed,
turns out to be the case. Reporting the arguments of geopolitical
strategists like Mahan and Ellsworth Huntington, of patricians like
Madison Grant, and many others, Buell's International Relations discusses
the challenges to and resulting reassertion of the "principle" of "White
Supremacy" in the post World War I North Atlantic and Pacific Rim settler
colonial states. The principle challenge was the revolt of the non-white
peoples against white domination and control, and the reassertion was
evident in a flood of new writings and theorizing in the 1920s on the
coming global race war. These were the terms that self-identified Anglo
Saxons used to portray unchecked labor migration, on the one hand, and the
break up of the Austrian and Ottoman empires ("fragmentation"), on the
other, as fundamental threats to world order. Such arguments continued to
be produced through the era of decolonization in Africa and Asia. Since
the 1960s, the concepts of "ethnicity" and "culture" and "civilization"
have substituted for "race" in this century old tradition of inveighing
against the dark side of globalization.

 There are intellectuals and movements identified with resistance to these
supremacist ideologies and the global hierarchies of wealth and power that
such ideas sustain. We see ourselves as part of this tradition, in fact.
We believe, however, that solidarity theory consistently confuses the
concept of hegemony with that of empire or imperialism. Apparently,
Immanuel Wallerstein thought so too, because in his very first writings on
the topic in the early 1970s he emphasized how hegemony and empire were in
a fundamental sense opposed rather than related forms of political order.
If anything, the confusion has deepened since then, for three reasons. As
we have noted, use of the term is now ubiquitous in and out of the academy
in many different contexts. Second, as the word becomes part of the
discursive arsenal to be arrayed against the US sanctions regime in Iraq
or the operation of the National Endowment for Democracy in Nicaragua or
in resistance to the spread of "global liberalism" everywhere, the
distinctions we are eager to hold onto here are likely to seem arcane or,
worse, proof that we are ourselves agents of a new, more insidious mode of
domination. And, finally, adding to the confusion, we would point to the
increasingly rigid and self imposed line that segregates those who do
political economy and international relations from those who do
postcolonial, cultural" and area studies.

 Hierarchies

 In IPE, the idea of hegemony most often refers to the hierarchical order
among rival great powers. To reproduce one frequently cited definition,
hegemony is "a situation in which one state is powerful enough to maintain
the essential rules governing interstate relations, and willing to do so"
(Keohane and Nye, 1977, p. 44). This idea of an order among states
represents a challenge to those who instead imagine international
relations more as a kind of anarchy or else governed very loosely and
fitfully via shifting alliances (the balance of power). An empire is
another form of hierarchical international order, in which one state
effectively seizes power and rules the subordinate societies. "The domain
of empire is a people subject to unequal rule. One nation's government
determines who rules another society's political life" (Doyle 1986, p.
36). One might consider the differences in the domain and degree of
influence or control by the United States over France and by Russia over
Hungary in 1956 in deciding whether or not it is helpful to distinguish
types and degrees of international inequality.

 Some will argue that hegemony is not so much a restrained and episodic
form of interventionist politics by the US "in" France or Britain or Japan
as it is benevolent (or not) domination over the institutions that were
established after World War II: NATO, GATT, the World Bank, and the IMF.
The hegemon uses its power specifically in order to secure the cooperation
of other states in building and maintaining the political architecture to
support an open and integrated ("liberal") world economy. There has always
been some dissembling about the objectives of an expansionist project of
this type, particularly when, as Gilpin notes, such arguments were hard to
disentangle from the political challenge of new left social movements and,
we would add, later, the force of opposition of declining northeast and
rust belt regions. Still it is not particularly controversial today to
claim that hegemony served broad class and regional interests in the US
(Trubowitz 1997). At the same time, those who defend postwar American
hegemony as an example of "enlightened self interest" together with those
who began to condemn it as a costly campaign on behalf of a misguided
"ideological vision" point to important dimensions of a hegemonic order.
Other states and classes consent because they gain more than token
benefits in doing so, the hegemon pays a significant share of the costs of
rule and acts with restraint rather than predatorily (Gilpin 1984, Cox
1987, Burman 1991, Ikenberry 1999, Hall and Paul 1999). Thus, the growing
European protests against American expansion in the late 1960s, which we
alluded to above, reflected a moment when US macroeconomic policies were
attempting to shift more of the costs of hegemony to others.

 Hegemony typically explains the two great periods of liberal market
expansion in the mid nineteenth century (the Pax Britannica) and again in
the mid twentieth century (the Pax Americana). In both periods, a single
power builds and sustains a free trade regime that enmeshes its major
rivals. The British case makes it easy to see the distinction we make
between hegemony and empire in the capitalist world economy. First, no one
who writes on the nineteenth century would treat any of the rival great
powers-Russia, France, Austria, Prussia, the Ottoman state, and more
distantly the US and Japan-as part of Britain's "informal empire." Second,
there were multiple imperial complexes coexisting at the time of the Pax
Britannica. And third, the decline of the first liberal order coincides
with the "imperial scramble" of the late nineteenth century, when these
rival powers turned to increased exploitation and intensified ("formal")
control over peripheral zones. "Informal empires" quickly hardened into
"blocs."

 This view of the nineteenth century is a revisionist one, which we have
come to believe as a consequence of others trying to make sense of the
politics of the world economy between the 1940s and the 1970s. The study
of the dynamics of American hegemony in the sense that we use it
throughout this essay follows, as far as we can tell, from the original
arguments about American hegemonic "decline" vis a vis its capitalist
rivals. These claims about decline produced not only new views of the past
but a continuing argument about the present, specifically, about the
extent and nature of America's decline. It is in the course of this debate
that the concept of hegemony became part of the every day way of talking
about international relations.

 In the 1980s some scholars had returned to the earlier use of hegemony in
analyzing various "spheres of influence," for example, the US in Caribbean
and Central America and the Soviet Union's domination of East Europe. Amid
the clash of ideological anticommunists and the new left in the 1960s,
empire and imperialism had been discredited and were not proper "words for
scholars" (Doyle 1984, p. 11). Bringing the term hegemony in apparently
made it somewhat more legitimate to compare modes of domination among the
superpowers.  It serves for some as a way to distinguish our own era from
a time when territorial conquest and the legal transfer of sovereignty
were conventions of empire building. For others it stands for a less
extensive form of domination than found in empires past and present.  For
still others, like Kurth, hegemony is a unique mode of conquest and
domination of client states that is a consequence of America's original
antiimperial identity.

 Those on the left whose antiimperial identities mattered more than their
vocational ones were unlikely to have been impressed by any of these
particular emerging academic conventions. We would guess instead that the
use of the term hegemony interchangeably with "neoimperialism" or
"neocolonialism" reflected tendencies and party programs in Managua,
Johannesburg, Cairo, San Salvador, Hrare, Lima, Mexico City and other
places where a new generation of activist scholars traveled, studied,
wrote, taught, and did field work, and where It has became common coinage.
In Morningside Heights and Palo Alto, however, new trends in "theory" and
cultural studies lists moved the professors in the same direction. We
leave it to others to trace these currents in more detail. The
"traditional" or "realist" approach to hegemony as order among great
powers contains important insights into the politics of the contemporary
world economy. It draws our attention to "core" concerns of post World War
II American policymakers to reorder the political economies of Europe and
Japan, build a new liberal architecture, and prevent the rise of new rival
expansionist powers (McCormick 1995). The continuity in this global
strategic conception in the wake of the Soviet Union's collapse is
revealed in the leaked classified Pentagon planning document in 1992.
"America's political and military mission after the demise of the Soviet
Union should be preventing the emergence of a rival superpower in Western
Europe, Asia, or the Soviet republics." What is the focus of this
"benevolent domination"? Other "advanced industrial nations" that have the
capacity to challenge US leadership or "overturn the established political
order" (Tyler 1992, Brilmayer 1994, p. 1).

 When one shifts perspectives from global strategists to global investors
or "internationally mobile capital" or "giant transnational corporations"
the projections of what places matter and what places do not (as viewed
from investment banks in New York or Bonn or Tokyo) do not really change
that much. The three largest integrated markets in terms of both trade and
investment flows are North America, Western Europe and Japan, and both
kinds of flows are growing more rather than less concentrated in the
North. Direct investment (FDI) is actually declining as a proportion of
total long term investments, and the major part of FDI is not in
manufacturing, but in services, banks, speculative real estate ventures,
hotels, golf courses and the like. Trade, too, is still a small share of
GNP in most countries (Berger and Dore 1996, Weiss 1997, Dormus et. al
1997). The idea that the "globalization of production" is now transforming
the world would seem no more true today than it was for each previous
decade of the twentieth century, the claims of past, equally earnest
generations of one worldists notwithstanding. What we outline is by no
means secret, obviously. Versions of this argument can be found in
writings by historians, sociologists, geographers, political scientists,
and, outside the academic markets, by Chomsky, who actually does read more
in and out of our fields than any of us do. Still, many very smart people
appear unaware of these basic elements of the post 1945 world order else
are unconvinced of the relevance of this history to the newest new world
order. There are true intellectuals of statecraft who dissemble or produce
different kinds of knowledge "on" and "off" the record. Others are simply
too close to whatever the issue is inside the beltway in any one year or
administration-dual containment, the Saudis' treasury woes, Osama bin
Laden, promoting democracy, the Oslo process, and so on-to see beyond
their own position papers and op ed pieces.

 To the extent that area studies is a gathering place of various tribes of
dissident intellectuals, other dynamics work in part to produce the same
end. We have already specified one, namely the cultural studies turn. We
are confident that most postcolonial critics and third cineastes are not
reading Foreign Affairs and that Social Text does not fill the gap.  Yet
dissenters are no less prone than are intellectuals of statecraft to error
and exaggeration under the assumption that "where one stands is governed
by where one sits." How many of us followed the lead of University of
Chicago historian Rashid Khalidi in predicting that war with Iraq would
unleash forces that would undermine America's most vital interests? Others
argue since then that the war has led to "total American hegemony over the
Middle East" (Vitalis 1997) If true, we ask, then what kind of authority
was being exercised by the United States in the region in the 1940s and
1950s? (Vitalis 2001) We begin to answer this question here by providing
an account of the nature and limits of American domination in the Gulf and
its relation to pursuit of US hegemony, even though it means having to let
go of the idea that the power of the US state or American firms is a
single and fully coordinated entity and that it can be measured on as a
scalar quantity.  The US was able to ensure expanding markets for Arabian
crude oil without, at least initially, damaging interests of politically
powerful economic actors at home.  Hegemony, as leadership, is never
neutral but it is always political and always requires attention to the
care, feeding, and pruning of coalitions. We offer up an idea in trade for
dissidents' conceding the force of this argument, because our work
underscores one way in which international inequality or hierarchy is
reproduced over time. To put it in the simplest terms, a particular set of
norms-call it hegemony-applies in relations among a superior caste of
states and another set of norms-call it empire or dominion or dependency,
terms used by North American scholars since the 1920s-applies when dealing
with the weaker, subordinate, inferior caste of states. Before World War
II this international caste system was defended by policy makers,
intellectuals, and the white working class as a natural order among
"races." Recall W. E. B. Du Bois, who was perhaps America's most trenchant
critics of global hierarchy, identifying the "color line" as the problem
of the twentieth century (Du Bois 1903, Vitalis 2000). Now it is more
common to find international inequality explained as a natural order among
"states" rather than races, "The strong do what they will, the weak do
what they must." It may even be more common to act as if inequality did
not exist.

 Consider the exemplary explications of American "liberal hegemony" by
John Ikenberry and his colleagues over the past dozen years (Ikenberry
1989 and 1999, Ikenberry and Kupchan 1990, Duedeney and Ikenberry 1996).
"A remarkable aspect of world politics at century's end is the utter
dominance of the United States" (1999: 124). Ikenberry argues that it is
the particular liberal characteristics of American hegemony that explains
it's durability. He describes the American century as a "restrained" and
"penetrated" order, where western allies had an unusual degree of "voice"
in American domestic politics, and where over time institutions came to
"lock in" the partners. He contrasts this liberal "settlement" (that is,
the creation of a new order after World War II) with the "containment
order" or settlement with the Soviet Union.

 What is thus truly remarkable in this account of world politics is the
complete disappearance of what were once known as the "inferior races."
Thinkers like Mahan, Bryce, and Adams, who Ikenberry describes as the
intellectual sources of American liberal hegemony, were also outspoken
racial supremacists.  A color- or third world- blind analysis today hides
not only a herrenvolk democracy's old ruling ideas but the reality of
international inequality, the missing third "postcolonial" settlement. One
has to read these works carefully to realize that rules of liberal
hegemony apply to industrialized states only. We don't doubt that if
Ikenberry would give some thought to America's dependencies and how they
matter, he would acknowledge that different rules of world order apply
across the entire twentieth century. After all, the varieties of
"embedded" or "structural liberalism" theory that describe the postwar
order are, it would seem, extensions of Hartz's influential beliefs about
American culture applied to the "western world" as a whole, and Hartz
himself accepted that illiberal institutions were a paradox that required
explanation (Hartz 1964: 49-50). A standard explanation is that slavery or
colonialism or racism are atavisisms, foreign imports, a reflection of
antiquated modes of production, and so on.

 A defining characteristic of left approaches to international relations
theory is, in contrast, an abiding concern with inequality and hierarchy
(Brilmayer 1994: 11-14). What is a paradox for liberals is more
convincingly understood as an enduring feature of world order. And the
more one emphasizes American hegemony's essentially consensual dimensions,
the easier it is to draw the boundaries beyond which more prosaic
mechanisms-invasion, assassination, torture, bribery, segregation,
etc.-reflect the exercise of power. We think it important to keep this
border zone firmly in our sights as long as investors or soldiers or
states continue to operate unhindered inside it. In many ways, however,
the left makes it harder rather than easier to see the dividing line.
Various forms of "transnational" class analysis, romantic anticapitalism
and antiglobalization ideologies, and the turn to criticizing
"imperialist" global culture industries should be considered from this
angle. Those who work on the "Global South" can end up with a map of world
politics as distorted as those who, like Ikenberry, work on the West. In
Promoting Polyarchy: Globalization, US Intervention, and Hegemony (1996),
William Robinson uses Gramcian international relations theory to make
sense of the turn by recent American administrations from supporting
dictatorships in Latin America to promoting democracy. A one time resident
of Nicaragua, Robinson explains, and critiques, the shift as part of the
process of securing "consensual domination" or hegemony by "a
transnational elite which is the agent of transnational capital." We leave
this familiar sociology to the side. What concerns us is his explanation
for the new US foreign policy, namely, "the shift in the locus of world
tensions from East-West to North-South, and the emergence of a truly
global economy" (3-4). Similarly, in his exposition of the earlier cold
war era of dictatorship promotion, he says that behind "East-West
relations...North- South relations were always intrinsic and central to
the whole Cold War era (14-15).West- West relations thus disappear as an
analytical problem in this neo neo marxian framework in ways analogous to
the disappearance of North-South relations in Ikenberry's liberal
framework.

 Viewed from Managua, which was treated like a protectorate by the
American state for decades prior to World War II and the design of "grand
area" plans for European reintegration and cold war containment strategy,
Europe loomed slightly less large, perhaps. We know this not to be true
for investors in the agroexport sector and so we doubt that it holds for
the Somoza regime. But in the 1970s, surely, the Sandinistas were
developing strategies based on assumptions about American relative
hegemonic decline vis a vis its capitalist rivals.

 The blindspots typically found in these competing approaches to the
political economy of hegemony will become obvious once we move from the
world of the professors to the world of firms and states, shifting our
vantage point to Dhahran, the New York headquarters of Exxon and Mobil and
the Secretary of War's Office in Washington.

 Advanced Hegemony

 Crucial to the emergence of American hegemony after World War II and to
the origins of globalization was forging a new, secure quasi-market
relationship between the Middle East supplies of crude oil and European
demand mediated by American firms. This, well-known and essentially
accurate, description is a set of stylized facts that have no causal or
dynamic relationship.  We analyze this relationship by giving equal weight
to the role of firms as well as markets and states, by placing US foreign
policy in its appropriate domestic context, and by placing the social and
economic transformations in Europe that US hegemony required in sharper
focus than international relations specialists generally do.

 We conclude that US hegemony does not necessarily maximize the strategic
concerns of US policymakers nor the economic advantage of powerful US
interest groups over time. Specifically US hegemony and the transformation
of world energy trade allowed for a transition from a regime of bilateral
global trade to one of global markets. Hegemonic restructuring of the
global economy created the necessity for American firms to re-adjust
nearly constantly to the outcomes of hegemony as a dynamic process.  The
most important single way in which our analysis differs from the existing
analyses is by placing firms as independent rather than subordinate actors
with states in the global economy. Firms have their own organizational
structures distinct from those of states or markets, their own policies,
and even their own international relations. Nearly as important as the
focus on firms, however, is our related insistence on the specificity of
the oil economy: it is not simply one form of capital investment but a key
to the transformation of Europe's market, transport and social structures
unparalleled since the emergence of the contemporary state structure in
the middle of the nineteenth century. European and Japanese dependence on
Middle East oil transformed their economies away from autarchy toward
highly complex patterns of global trade.  American firms were themselves
pushed to develop far more complicated organizational structures to link
supply and demand outside the country in which they were nominally
domiciled and consequently the emergence of far more complex structures of
recruitment and control than any earlier firms that engaged in
international trade to link metropolitan economies with colonial ones.

 One important feature of any discussion about American hegemony is that
it must do more than describe.  It must, for example, explain why American
hegemony over Europe, Japan and the Middle East looked different than each
of three contrasting cases:

    1. American dominance of Central America (or Soviet dominance of
Eastern Europe);
    2. European dominance of North Africa and South Asia and Japanese
dominance of Taiwan and Korea;
    3. Independent Europe from 1870-1945.

 In short, an explanation must tell us why the mechanisms that produced
direct colonial rule or "indirect" "informal" modes of empire did not work
in the Persian Gulf, why the Gulf states were allowed significant
sovereignty (including nationalization) in contradistinction to the
so-called banana republics; and how was Western Europe transformed from a
zone of destructive and total war to one of peace and economic growth?
 Our argument is quite simply by design US policymakers wielded the tools
of hegemony to deny other Powers sufficient autarchy to wage war and in
the process transformed a global trade regime into a global market regime.
Unlike Bromley or the neo-marxists we do not argue that the oil trade was
simply one example of capital export because such models fail to explain
why the Persian Gulf countries were never fully subordinated to American
political control.  We believe the oil trade was a very different kind of
trade than the bilateral monopolies that characterized colonial trade.
However, unlike Krasner, we do not believe that the oil trade was trade in
a necessarily strategic commodity.  On the contrary, we believe the
dramatic increase in oil trade transformed it from being a strategic good
to being a commercial good.  The volumes of trade necessary to create a
global economy cannot rest on strategic concerns.  Lastly, unlike Robert
Keohane we do not believe that the oil is best characterized by the
efforts of its institutions on the supply side to construct an oligpoly;
on the contrary we believe that the use of market models to identify the
pressures and strains on global oil trade and the incipient pressures to
create a market best explain the political dynamics.

 We advance a concept of "neotriangular trade" as a way of linking
institutional changes that transformed bilaterial trade into global
markets.  In using this term we deliberately seek to refer to the
triangular trade the undergirded the creation of the Atlantic economy in
the 18th century:  slaves, sugar and rum.  We are aware that the Atlantic
economy was, like the global economy and neotriangular trade, a far more
complex historical entity than the triangle trade.  What matters is the
existence of trade patterns that link different regions of the world
without the necessity of strict political subordination of the entire
trade network.  In the creation of the oil economy, firms linked the
Middle East to Europe and Japan, thereby requiring those regional
economies to earn dollars and more closely tie their economies to the US,
while not (at least initially) selling much oil from the "triangle" to the
US itself.  Consequently the structures of global oil markets differed in
many ways from those for other products produced in the third world.

 The political consequences of how commodity trade is organized differ
significantly over time and place.  It is instructive to compare two
different kinds of commodities: oil and bananas.  Interventions by the
United States in Central American producers of bananas were frequent in
the first half of the twentieth century and European powers engaged in
protracted periods of direct colonial rule over the banana producing
countries of West Africa.  Like other commodities, including oil, bananas
require extensive fixed investments in shipping and access to retail
networks to dispose of the products to consumers.  So tightly linked are
agricultural interests that the banana trade, unlike the oil trade,
remains almost entirely bilateral.  It has proven almost impossible, for
example, for American firms to gain entry to banana markets in Europe that
are primarily supplied from Africa.  There is therefore no true world
market in bananas; nor are there secondary markets (futures).  It would be
difficult, however, to apply the functionalist arguments about US
domination of energy to the banana trade. How sensible would it be to
insist that the banana trade is of so much more strategic importance than
oil that states that could not maintain energy independence have
nevertheless retained autonomy in regard to tropical fruit?

 The energy trade is not simply one example among many of dominance.  It
is constitutive of the contemporary global market and the global trade in
oil made possible a transition from a world of autarchic trading states to
a world of interdependent economic sectors. This becomes more apparent
when we recall that coal was the historical source of energy outside the
United States from 1870-1945.  As the authorized history of Standard Oil
is titled, the first 50 years of the oil trade were "the age of
illumination." Until the second decade of the twentieth century the
world's navies powered by coal and access to coal was crucial to the
construction of a modern industrial economy.  The dominant coal economies
of the early twentieth century (especially in Great Britain, Germany, and
Japan) sought energy autarchy through coal production and had social
structures dominated by the production of coal.  They had relatively large
mining sectors and an extensive trade union structure as well as socialist
parties based in mining communities. In Germany and Great Britain, the
coal-based energy sector of the economy was one of the largest employers
of labor.  So strong were the political interests tied to these economic
sectors that before Margaret Thatcher, not even the British government
(which owned a controlling interest in the company that later became
British Petroleum) made much of an attempt to transform a coal-based
economy into one based on oil.

 Fuel oil and gasoline were, until 1945, rarely used fuels in Europe and
Japan (Bamberg 268).  For the most part they were strategic fuels that
powered the transport mechanisms of war rather than being widely used to
promote the domestic economies of peace.  The U.S. contained more cars and
trucks than the rest of the world combined in 1937 and had the world's
smallest per capita ratio of people to cars (5.3:1).  Germany had about 9
% the number of trucks as the US and about ten times as many people per
truck. The degree to which the US had become the pre-eminent oil economy
is even more stunning when compared to Britain.  Although Britain had
nearly twice the gross registered tons of shipping as the US (roughly 17.5
million to 10 million), the US merchant nearly totally oil fuelled (85
percent as opposed to 50 percent for Britain).  Consequently US
oil-fuelled tonnage was almost equal to that of Britain, the dominant
naval and merchant marine power of the period (Mejcher 28-30).

 Access to oil (Iran for Britain, Rumania for Germany, China for Japan)
was far more crucial to military preparation than for economic growth and
oil fit well into the strategic notions of bilateral and tied trade that
characterized the colonial empires of the period. The reliance on coal
continued despite the increasingly high levels of investment needed to
produce coal and decreasing productivity on every measure during the
1930s.  Coal allowed states in the neomercantilist world to live off their
own resources while procuring just enough oil to make war. Before World
War II, the major European powers (Germany, France and Italy) sought to
enlarge their strategic stockpiles of petroleum products and to secure
hydrogenation and other schemes to convert coal to oil.  In response as
with Japan, the Entente powers "aim was to keep both Germany and Italy
dependent on foreign controlled oil" (Mejcher, 47).

 Ruhr coal was central to the Germany economy but German coal was also
crucial for the French economy: "Its potential to inflict economic damage
was immense: without coal nothing ran and when it became too expensive
nothing could be sold" (Gillingham [1985] 5).  Agreements before World War
II between German and French steel makers as well as much of the
reparations burden depended on the Ruhr producers as a silent partner in
the creation of a European cartel (Gillingham [1985] 21).  Germany's
inability to produce enough coal was a critical factor in the failure of
Third Reich (Gillingham [1991] 45). The revival of the European economy
and the French proposals for tentative steps toward European integration
arose in part out of attempts by industrialists to find a new Franco-
Germany solution to the revival of the coal fields and to ensure their
return from control by the Occupation authorities to private hands
(Gillingham [1985] 166).

 American Policy Choice

 It is easy to forget today that the problem faced by American
policymakers between 1944 and 1948 was not the extension of US hegemony.
It was to ensure that neither Germany nor Japan could re-arm; in other
words, it was to pursue the policies of the Entente powers before the war.
Even as the focus of US policy makers shifted to containing the Soviet
Union, they understood that anti-Soviet policy had to be accomplished by
re- integrating these two former enemies into the circuits of world trade
while still denying them the possibility of re-arming.  In 1944 President
Roosevelt embraced the Morgenthau Plan which "demanded.quite literally the
dynamiting of all factories and the flooding of all mines.no choice
remained but to restore the economic conditions of 1860" (Gillingham
[1991] 101).  At least briefly, the Morgenthau Plan was the official
policy of the United States and Great Britain and it would certainly have
made the imposition of American sovereignty on post-war Europe very
different from what actually emerged.

 There was disagreement with the Morgenthau Plan but not with the concerns
about a plausible threat a revived German military machine held.  Thus
Harold Moulton and Louis Marlio produced a study for the Brookings
Institution that clearly exposes the dilemmas already perceived by
policymakers before the end of the war. Because modern war preparation
involves a lead time authors suggest that prevention rather than sanction
is crucial (Moulton and Marlio, 7) and two guiding principles "the
economic devices must not be permitted to throttle the economic life of
the country against which they are imposed" and "the economic control
measures selected must be administratively feasible-relatively easy to
enforce" (Moulton and Marlio, 8). Crucial to denying Germany the
possibility to re-arm was to limit her ability to get the fundamental
materials of war:  the petrochemical and metallurgical industries.

 Petroleum is of course indispensable for a mechanized war of high
mobility and vast movement.  It is essential for the operation of naval
vessels, airplanes, tanks, and other vehicles.  At the same time, fuel oil
consumption in war and peace industries alike must be continued at a very
high level.The prohibition of synthetic oil production upon which Germany
now relies for more than 40 percent of her supplies would seriously
restrict a war mobilization program.  In the future, moreover, it would
doubtless cripple such a program since geologists foresee the gradual
exhaustion of natural oil and a consequent greater dependence upon
synthetic products.  The number of synthetic plants is not great and such
establishments can be readily detected.  Hence the administrative problems
would be relatively simple.  Moreover, synthetic oil is very costly, and
it would be cheaper for Germany, at least for some decades, to use
imported natural oil (Moulton and Marlie 41).

 Thus they proposed prohibiting plants to synthesize oil from coal but not
refineries as such.  At the time refined products were more usually
imported than crude oil but the crucial concern they voiced was the
effectiveness of the oil trade for making it possible to swiftly limit
access.  Thus "this type of control [over refineries] would not, however,
be very important so long as Germany is obliged in any case to import the
larger part of the crude oil required" (Moulton and Marlie, 42).  The
arguments about Japan were quite similar although Japan was understood to
be even more closely linked to international trade (Moulton and Marlie,
Bromley, Bamberg 268, Yergin 427).

 As is well-known, the initial steps toward European integration required
solving the complex problems of linking the German and French economies
through the coal and steel industries and the most important institutional
breakthrough was the Schuman Plan and the creation of the European Coal
and Steel Community.  The plan solved the problem for Washington of how to
extend its influence to Europe and, in brief, allowed Germany to return to
European economic dominance without the use of military force (Gillingham
[1991] 365).

 Global Petroleum Trade

 There was not, strictly speaking, a global oil market before 1975
although there was global trade in petroleum.  International trading in
oil was carried out almost entirely by a small number of firms that
integrated the entire process of production and marketing. Consequently
international prices in oil, unlike those of most other commodities, were
highly stable.  Domestic economies varied greatly in the degree to which
markets in oil existed. The United States was the one country with the
largest demand for oil was also the world's largest producer and had the
most nearly complete set of physical goods markets in oil.  The large
capital requirements for oil production and the oligopoly firms that
traded it made for a highly regulated market in oil as a physical good,
relatively small inventory capacity.  Consequently not until the 1980s did
futures and options markets in oil and related products develop-long after
similar markets in other major commodities (Goldberg and Rojas,
forthcoming).  US production and marketing were shared by the majors
(primarily from the Standard Oil trust) with a relatively large number of
smaller ("independent") firms.

 Despite the claims of many international relations theorists such as
Bromley and Keohane that oil prices were relatively low before 1975 and
that price stability was necessary for economic growth, firms saw a very
different picture.  The dominant concern of firms between 1945 and 1975
was price and sectoral competition.  There was every reason to expect
energy prices to fluctuate while tending generally downward.  The energy
sector was one of potentially fierce price competition:  the price of a
British thermal unit extracted in the Persian Gulf was a fraction of the
price of a BTU extracted from longwall mining in Germany or Great Britain
and only a slightly larger fraction of the price of a BTU extracted from
the United States.  Yet what is most remarkable about the price series for
so crucial a commodity as oil in the years after World War II is its
remarkable stability.  No other commodity could have shown such stability
nor did oil show such stability before the war.  The reason is that no
other commodity was produced under such tight oligopolistic control.  Of
course in no other sector could a plausible argument be made that
preserving price stability was in the interest of the consumer.

 The most important conflict to integrate Germany and Japan into a global
market structure under US hegemony was therefore to ensure that the
effects of market competition did not destroy the European or Japanese
social structures through the elimination of the mining industries.  Both
the large oil companies and the Arab oil producing countries would have
welcomed opening European markets to free trade in energy far more rapidly
than in fact occurred.  The speed with which European energy markets
opened, however, also depended on the level of capital investment
available to shift from a coal-based to an oil-centered economy.  As long
as the US market was closed to imports prices for Middle East oil in
Europe were below average global prices which further intensified the
shift to oil.

 The projection of American hegemony which would have profound social as
well as political effects on the rest of the world through increasing
trade and the prominence of markets required a sharp limitation on how
efficient those markets could actually become. The projection of American
hegemony required that America itself not be affected by the institutions
that instantiated that hegemony.  Because non-US oil was much cheaper than
US oil, imports began to rise as early as 1954 when they were 15 percent
of production to 19 percent in 1957.  Independent oil producers demanded
tariff and quota protection and were rewarded in 1957 with explicit
voluntary controls that were replaced by mandatory controls in 1959.  The
US oil industry after 1959 resembled the fabled "import raj" of India more
than a market between 1959 and 1970 as a brisk market in tickets (the
right to import oil) developed that ensured relatively high and stable
prices (Yergin, 539). Security of Supply

 Maintaining a steady supply of oil to Europe has been a concern of US and
European policy makers since 1945. The United States has never been
particularly concerned about its own dependence for energy or even for oil
on the Middle East.  Rather "the principal source of U.S. concern about
its energy situation is the dependence of US allies upon Middle East Gulf
sources" (Conant, 15).  As soon as it became clear that Europe would be
dependent on oil from the Middle East and that North Africa would be made
up of independent states, these concerns increased (Bamberg 80-81).
Nevertheless the United States never took any significant steps on its own
to lessen European dependence on Middle Eastern oil nor to preserve the
European colonial links that would have encouraged European autarchy in
regard to liquid fuel.  The development of nuclear capacity was seen as an
expensive but useful way to develop increased security of supply for
European countries but nuclear power is a way of producing electricity
which has no strategic implications for European independence.  One
obvious and frequently discussed possibility to increase European
strategic independence was through coal. Even if European deep mining was
threatened, it would nevertheless have been possible to increase coal
imports from the US but this was not a preferred response whether due to
domestic opposition from within Europe (Lubell 1961) or because domestic
US freight rates made it noncompetitive (Adelman 1966).  Supplying Europe
with coal met neither the strategic needs of ensuring European dependency
on imported oil and of course it had no support from those particular
domestic interests most concerned with US foreign policy: the oil
companies.  Neither railroads nor coal companies had sufficient awareness
of the possible markets abroad to pursue them by seeking changes in US
regulatory policy.

 The revival of the European economy after World War II required the
revival of the coal industry, and for the first decade after the war coal
was economically and politically the dominant fuel.  By June 1955, the
Hartley Report made it clear that the emergence of an energy gap and the
inability of Europe to be self-sufficient would require increased imports
of oil (Jensen 39).  Not surprisingly in Germany and Great Britain,
petroleum consumption increased very slowly while in the rest of Europe it
made rapid headway (Jensen 44) but already by the time of the Suez crisis
Europe was sufficiently dependent on imported oil that global energy
integration had been achieved.  Europe, a continent that had been a net
energy exporter in the 1920s, now needed increasingly large imports of
energy-especially petroleum-to maintain the economic miracle of the
postwar era and in the process it became more tightly tied to the United
States and more like the United States.

 Oil Companies as Models of Globalization

 The oil companies were the carriers of a new form of trade: neotriangular
trade.  Before World War II, oil was a strategic commodity and states
sought to achieve hegemony over the sources of the oil they imported.
Even when they could not obtain oil in this way, they obtained oil from
countries with which they had direct positive trade balances when
possible.  Immediately after World War II such policies were impossible.
The continental European economies were not initially in a position to
have positive trade balances with other economies and even for the British
economy there were significant dangers in entering any trade regime which
required sterling convertability.

 The increased utilization of oil in the European economies were
significant in the economic miracles that the European economies
experienced after World War II.  The oil companies were initially the
instrument for providing Europe with oil, releasing labor and capital from
further investment in coal, and increasing technical efficiencies of
production.  The need to conserve foreign currency coupled with the
expansion of demand, however, also transformed the global economies by
making it feasible to place crude oil refineries near demand rather than
near supply.  Consequently the petrochemical industries in Europe emerged
as the pattern of refining shifted from (for example) Abadan, the world's
largest refinery in 1950, to Germany and Britain.

 Because of the complex financial structure of the oil companies and the
complex technical tasks of transforming a joint product, the oil firms
were the first companies to introduce computers and operations research
into their administrative structure.  They also appear to have been the
first companies to have required staff to serve outside the home office in
order to gain advancement and began the process of recruiting and training
non-nationals relatively earlier than other companies.

 The oil companies did not undertake these tasks out of political
commitment to diversity. Their use of standard operating procedure in
Saudi Arabia, New Guinea, Nigeria, Iraq, Iran as well as Texas, Louisiana,
and Oklahoma led to significant labor conflict over racist, exclusionary
and demeaning employment practices (Vitalis, forthcoming).  Oil is a
capital intensive form of production, especially in terms of labor hours
per British thermal unit, but the amounts of oil (energy) produced is so
large that the oil fields did hire large workforces.  In 1950 there were
about 12,000 Saudi employees of Aramco and some 75,000 Iranian employees
of British Petroleum in and around Abadan almost all of whom held
low-level, unskilled positions while the managers who made up the top 5
percent were expatriates (Shwadran 351; Bamberg 73).  The level of
conflict between an international firm and its domestic labor force was
not higher than the conflict in other areas such as the production of
bananas in Central America, copper in Latin America, or rubber in
Southeast Asia.  It is, however, notable that as most transnational
companies retreated from direct foreign operations under the pressure of
states to hire domestic personnel in management, the oil companies, albeit
with significant variations and often slowly, often took a different route
by acceding to some of the political pressure.  They found ways to
integrate local personnel into the promotion structure itself because
local political leaders insisted on it and very early on the oil companies
understood that acceptance by the local authorities was the surest
guarantee of their property rights:

 We now know that the safety of our position in any country
 depends not only on compliance with laws and contracts, or on the amount
 of our payments to the government, but on whether our whole relationship
 is accepted at any given moment by the government and public opinion as
 'fair.'

 Conclusion

 In the period after World War II the gradual closure of the American
market and the dominance of US firms over the global political economy of
energy was a result of their ability to dominate diversified sources of
supply and find adequate demand. In this way the post-war energy markets
were relatively stable for a longer period of time than at any point in
the early twentieth century.  European integration and American hegemony
were two faces of the same coin and the substitution of oil for coal,
coupled with the forceful US backing of the Schuman Plan (rather than
insistence on the Morgenthau Plan) go far to explaining US hegemony in the
region.  Without access to adequate supplies of energy apart from coal and
without the emergence of multilateral trade in the mid-1950s, neither US
hegemony nor European integration nor the re-emergence of Japan would have
been feasible outcomes and the worst fears of US policymakers in 1945
would, in retrospect, seem far more plausible than they do.

...


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  We are indebted to Joseph Glicksberg, "Arguing Egypt: The Location of
the Nation in Political Discourse," Ph.D. dissertation, political science,
University of Pennsylvania, in progress.
  There are three traceable strands of writing about hegemony: the German
historicist tradition (e.g., Von Ranke) that was most influential in the
emerging discipline of historico-politics in the United States; a parallel
Italian tradition that would have been one of the sources for Gramsci;
together with a third, Russian marxist strand that is the most significant
in the modern, more global geneology. See Lester (2000).
  See the Nixon-Chou En-lai communiqué expressing opposition to hegemony
in the Asia-Pacific region, New York Times, February 28, 1972, p. 16.
  Thus Robert Gilpin (1987) writes ""Hegemony" comes from the Greek word
for political leadership. In the opinion of some writers, however, it has
a pejorative ring and they prefer the term leadership itself" (p. 66, n.
2.).
  In 1967, Jean Jacques Servan-Schreiber published Le Défi américain
(Paris: Denoël, which appeared in an English translation by Ronald Steel,
The American Challenge, with an introduction by Arthur Schlesinger Jr (New
York: Atheneum, 1968). Schlesinger contrasts Servan-Schreiber's more
subtle and profound account of America's "economic invasion of Europe"
with De Gaulle's attacks on a US "bent on the establishment of world
hegemony" (p. viii). Robert Gilpin refers explicitly to De Gaulle's
project "against the hegemony of the dollar," which Gilpin had previously
written on in the essay that first begins to lay out his account of the
political economy of the post-World War II Pax Americana. See "The
Politics of Transnational Economic Relations," in Robert O. Keohane and
Joseph Nye, Jr. Transnational Relations and World Politics (Cambridge, MA:
Harvard University, 1972), p. 64. This collection first appeared in
International Organization in 1971.
  See the discussion in Doyle (1986): 16, n. 16, and 40, n. 54. Kurth was
also the one most likely to be familiar with the late nineteenth century
references to Prussian hegemony. Note too that Keohane was also teaching
at Swarthmore with Kurth at this time.
  The key works in this fin de siecle strand of marxist IR theory include
Cox (1987), Augelli and Murphy (1988), Bromley (1991), Gill ed. (1993),
and Robinson (1996).
  Quoted in Robinson (1996): 13.
  Charles Mclelland to Quincy Wright, September 30, 1960, Box 18, Addenda
1, Quincy Wright Papers, Regenstein Library, University of Chicago.
  Other examples might be cited, chief among them, the continuing and to
our mind pernicious tendency to identify and unmask the foreign agents,
comprador classes and intellectuals, and other "Uncle Toms" of the world
economy. Thus Bromley (1991): 246, denounces the Saudis and others for
serving the hegemon rather than "pan-Arab development." Closer to home,
there is Walter LaFeber's unfortunate and unselfconscious Michael Jordan
and the New Global Capitalism (New York: W. W. Norton, 1999).
  See his essay "Title" written in 197X and reprinted in the widely cited
The Politics of the World Economy: The States, the Movements, and the
Civilizations (Cambridge: Cambridge University Press, 1984).
  The "empire by invitation" arguments have some force here. See Lundestad
(1986).
 As Triska describes a 1981 meeting, "The seminar started in an orderly
manner and stayed on an even keel for a while but ended in bedlam. The
shouting match between those who argued for systematic comparison ("Let's
do it!") and those who were against it ("How dare you compare the United
States and the USSR!" or "Dependencia in Latin America has nothing in
common with Soviet hegemony in Eastern Europe!") was beyond control. The
seminar was a huge success. I became inspired." Jan Triska, ed., Dominant
Powers and Subordinate States: The United States in Latin America and the
Soviet Union in Eastern Europe (Durham: Duke University Press, 1986), p.
x.
  "Control of both foreign and domestic policy characterizes empire;
control of only foreign policy, hegemony." Doyle (1986): 40.
  "In contrast with these other great powers, however, the United States
was "born equal," "born modern"...and born anticolonial, and thus it was
born to become hegemonic, rather than colonial, once it became a great
power. Its colonial possessions (Puerto Rico, the Virgin Islands, the
Philippines) were relatively few. The United States had, not uniquely but
especially, a propensity for hegemony." James Kurth, "Economic Change and
Development," in Triska, ed., Dominant Powers, p. 97.
  In the day, W. E. B. Du Bois and C. L. R. James would read (and in Du
Bois's case wrote for) Foreign Affairs.  Very few scholars who claim them
as influences actually follow in the footsteps of these boundary-defying
critics of international inequality.
  We once asked Ikenberry whether or not he thought his model of liberal
hegemony applies to US-Third World relations. He said that he had never
thought about it. In a seminar given by Vitalis, he also insisted that
Mahan did not think in terms of races when writing about geopolitics. He
has managed to erase the supremacist underpinnings of the turn of the
century ideas about the "Atlantic world." (Ikenberry 1999: 127). This is a
perfect illustration of the operation of what Toni Morrison calls the
"norm against noticing" in postwar American culture. See Vitalis (2000).
  The Chatham House report of 1944 is less clear but lays out a very
similar proposal for "restriction of uneconomic production and the
encourage of the import of cheap raw materials from oversea." (Royal
Institute of International Affairs, London, 1944, The Problem of Germany,
47).
  Between 1959 and 1968, US wellhead crude oil prices rose 4 cents a
barrel to $2.94 while Middle East crude delivered to the East Coast was
about $1.80.
  For the classic statement of how bureaucratic enterprises rely on
standard operating procedure, even at the risk of creating significant
conflict, see Allison.
  Yergin, 448 3 17