Summary
The Gulf War redefined the relationship between oil, the most important commodity in the world market, and international politics. Operation Desert Storm was an attempt of the US to prove its dominant world power amid a declining economy. The US' involvement in the Gulf War showed how military power can be used in gaining wealth and protecting a nation's interest in foreign lands. It also showed the tremendous power of oil in controlling global political economy.
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Extract
Oil and the Gulf War: an 'American Century' or a 'New World Order.'
PART I
TOWARD THE END OF REAGAN'S SECOND TERM AS PRESIDENT, the malaise of the American economy became the major topic of heated debates and not so polite discussions. At the beginning of the Eighties, despite the recession aggravated by the second oil shock which followed the fall of the Shah's regime in Iran, the American economy did not appear marooned in a profound structural problem. The Cold War was still on, and Reagan began his first term with the call for the largest ever peacetime build-up of American military and naval forces, while announcing tax cuts as a stimulant to the economy. By the time Reagan left office America, as Kevin Phillips noted, "was weakening in everything from chemicals and electronics to banking and capital markets."(1) The sense of the American economy in trouble was brought home in two sets of figures. At the beginning of the Eighties, America was still a creditor state; by the end of the decade it had become the largest debtor state in the world. During Reagan's second term, military expansion and domestic consumption brought the accumulated American debt to under $2 trillion. By mid-1992 the sum total of debt the American government had accumulated exceeded the $4 trillion mark.(2) The merchandise trade deficit which was about $35 billion when Reagan came to office grew to $170 billion by the end of his administration. The American economy came out of the Second World War as the unchallenged dominant world economy with its GDP representing 50 percent of world output and its trade accounting for over 60 percent of total international trade. By the time Reagan left office, America's GDP had fallen to less than 23 percent of world output and its trade to less than 12 percent of international trade.(3) The effective message was that America had slipped, its dominant position in the world economy challenged by the rising fortunes of Europe and Japan. As Reagan's two terms as president ended, apprehensive voices within America grew louder, expressing concerns about the place of America as the dominant world power given the evidence of a declining economy. While Reagan supervised the growth of the military and initiated an ambitious space program, the Star Wars scheme of making America invulnerable to incoming Soviet missiles, it became clear that the Cold War had run out of steam. The Soviet Union under Gorbachev wanted to basically drop out of the Cold War and, in a complete departure from anything previous in Soviet policy, sought western capitalist assistance to restructure the Soviet economy and its polit...See the full content of this document
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