Oil and Politics: The Role of Oil Revenues in Shaping Iraqi Political Decision-Making (1952–1979)

Abstract

This research examines the pivotal role oil revenues played in shaping Iraqi political decision-making during the period from 1952 to 1979, a period that witnessed radical transformations in the structure of the Iraqi state and its relationship with its most important strategic resource. The research highlights how oil transformed from a mere source of funding into a tool for internal and external political pressure. The development of major political events, such as the 1958 revolution and the nationalization of oil in 1972, was linked to fluctuations in oil revenues and the way they were managed. Historically, the research shows that the 1952 profit-sharing agreement with foreign oil companies marked a turning point in increasing government revenues. However, the poor distribution of this wealth increased social tension and contributed to the fall of the monarchy. During the republican era, Abdul Karim Qasim attempted to strengthen national control over oil through Law 80 of 1961, but the confrontation with foreign companies led to a decline in production and revenues, weakening his ability to implement his reforms. With the rise of the Ba'ath Party to power in 1968, oil policy entered a new phase characterized by a shift toward Full nationalization in 1972 coincided with the rise in global oil prices following the 1973 crisis. The massive revenues provided the government with vast resources to consolidate its power through development projects and expanded security apparatuses. However, they also deepened the structural distortions in the Iraqi economy, as productive sectors declined in favor of near-total reliance on oil rents. Externally, Iraq's oil wealth enabled it to play a prominent regional role, whether by supporting states confronting Israel or competing with Iran for regional hegemony. However, it also plunged it into a costly arms race. The study concludes that oil was not merely an economic resource for Iraq; it was a decisive factor in shaping its modern political trajectory, transforming it into a tool of both power and conflict.