If global warming is the product of capitalism, then it is the product of imperialism as well. The world’s major fossil fuel reserves were first incorporated into the global economy under terms dictated by Anglo-American imperial power. Britain’s modern relations with the fossil fuel producers of the Middle East are a direct legacy of that period, and play an important role in sustaining our neoliberal economic model and militaristic foreign policy today. Combating global warming will force us to untangle these relationships, the effect will be transformative, and we need to think seriously about what it will involve.
The monarchies sitting on nearly half the world’s oil – primarily Saudi Arabia, Kuwait, and the United Arab Emirates – are in many ways products of Western imperialism. During the crucial years of state formation in the twentieth century, as the oil revenues started to flow in, the British and the Americans provided the protection, arms and training of security forces that built up these regimes and ensured their survival. Today, their ultimate security guarantors are the US above all, and the UK and France as well. In the British case, the wealth accumulated by these regimes – ‘petrodollars’ – are the basis of its modern relationship with the Arab monarchs.
Start with the economy. Britain’s turn to neoliberalism, and its shift from manufacturing to financial services, resulted in a large and growing trade deficit with the rest of the world. To sustain this model, Britain needs to secure lucrative export markets to reduce the trade deficit to some degree, and attract sufficient foreign capital inflows to the City of London to balance what remains. This is where Gulf petrodollars come in.
The Gulf Arab monarchies control around $3tn in sovereign wealth, 40% of the world’s total. Saudi Arabia on its own accounts for a fifth of the net capital inflows into the British economy, while Britain enjoys a decent trade surplus with a Gulf region. So Gulf petrodollars play an important role in sustaining the UK’s neoliberal economic model.
Then turn to foreign policy. A key aim of the British state in the post-war era has been to remain a significant military force in the world, which means maintaining a domestic arms industry. This can be prohibitively expensive, and exporting a proportion of the weapons Britain makes for its own use renders the arms industry far more economically viable. Gulf petrodollars now buy over half of Britain’s arms exports, including the major weapons systems responsible for a series of atrocities in Yemen, alongside the creation of the world’s worst humanitarian disaster.
So British capitalism’s vested interest in the carbon economy goes way beyond BP and Shell. Entire structures of power and wealth from the UK to the Gulf depend on the revenues generated by the continued production and consumption of fossil fuels, irrespective of whether those processes are destroying the prospect for decent life on earth.
What happens to the UK-Gulf petrodollar nexus if the world finally gets serious about tackling global warming? In 2015, scientists at UCL concluded 33% of the world’s oil and 49% of the world’s gas are going to have to stay in the ground just to restrict the global temperature rise to 2C (itself a thoroughly inadequate target constituting a death sentence for millions in the Global South). In other words, even if you’re a fan of British neoliberalism and British military power, the petrodollars that have played such an important role in sustaining them may begin to dry up in the not too distant future (and if they don’t, then it’s game over in any event).
The inescapable challenge therefore is to construct a new political economy that is both zero carbon and petrodollar-free. That means reducing Britain’s trade deficit to negate the effect of a sharp reduction or loss of petrodollar investment, and dismantling a petrodollar-dependent arms industry whose key enabling role in the horrors of Yemen should seal its fate in any event.
Research by Campaign Against Arms Trade indicates the potential for a recalibration of our high-technology manufacturing base away from weapons production and towards the urgently required development of renewables. A significant reduction in domestic military procurement and an elimination of subsidies to the arms industry would save billions that could be reinvested in the development of a green industrial base. For example, many current arms industry jobs could be transferred over to renewable energy generation (particularly marine and wind) and the related supply chains, given the broad overlap in both the skills involved and the geographical areas affected.
To the extent that this results in the production of exportable technologies, this could provide a boost to British exports, helping to narrow the trade deficit, and reduce the UK’s dependence on foreign capital inflows. The dramatic diminishing – perhaps eventually the end – of the arms industry could herald a shift of focus from military power projection to multilateral diplomacy. Instead of fuelling instability, conflict and the conditions that produce terrorism from both state and non-state actors, Britain would be producing the technologies that equip us to meet the single greatest security threat humanity has ever faced. In doing so, it could shift its own domestic economy away from financial services and towards a new high-technology export industry based on secure and skilled employment.
Meanwhile, in Middle East, the drying up of petrodollar wealth would severely undermine the stability of some of the cruellest regimes in the region, weakening these forces of regionwide counter-revolution and enhancing the prospects for those millions across the Arab-majority world who came onto the streets in 2011 demanding ‘bread, freedom, social justice’. The end of the petrodollar could be a positive opportunity not only for Britain, but for the peoples of a region that have long suffered at the hands of British power and its local and international allies. A petrodollar-free future can and must be on its way, and that future could be a bright one. But the process of adaptation has to begin now.
David Wearing is an academic specialist in UK foreign policy and author of AngloArabia: Why Gulf Wealth Matters to Britain.