Copyright by Christopher Roy William Dietrich 2012 The Dissertation Committee for Christopher Roy William Dietrich certifies that this is the approved version of the following dissertation: THE PERMANENCE OF POWER: POSTCOLONIAL SOVEREIGNTY, THE ENERGY CRISIS, AND THE RISE OF AMERICAN NEOLIBERAL DIPLOMACY, 1967 - 1976 Committee: Michael B. Stoff, Supervisor Mark Atwood Lawrence, Co-Supervisor David Oshinsky H. W. Brands Jeremi Suri David Painter THE PERMANENCE OF POWER: POSTCOLONIAL SOVEREIGNTY, THE ENERGY CRISIS, AND THE RISE OF AMERICAN NEOLIBERAL DIPLOMACY, 1967 - 1976 by Christopher Roy William Dietrich, B.A.; M.A. Dissertation Presented to the Faculty of the Graduate School of The University of Texas at Austin in Partial Fulfillment of the Requirements for the Degree of Doctor of Philosophy The University of Texas at Austin August 2012 History was a drama with many acts; it was moved by conflicts of forces in the realms of both ideas and reality. Isaiah Berlin, 19881 1 Isaiah Berlin, “On the Pursuit of the Ideal,” New York Review of Books 35: 4 (March 17, 1988), 11. For Verónica and Emiliano Preface A line from David Lodge’s satire, Small World, provides some insight into the mania of academic life: “Scholars these days are like the errant knights of old, wandering the ways of the world in search of adventure and glory.”2 The sentence drips with irony. Egos aside, scholars rarely lead lives filled with adventure. Only in the most special cases does our work have anything to do with glory. But, Lodge’s mocking tone becomes strangely poignant in the transition from simile to explanation. Scholarship requires one to wander. As often as not, that wandering is errant. The generous backing of the History Department and the Institute for Historical Studies at the University of Texas at Austin, International Security Studies at Yale University, the Society for Historians of American Foreign Relations, the American Historical Association, and the National History Center allowed for long research trips and dedicated writing time. I have been privileged with excellent mentors. At the University of Texas, Mark Lawrence and Michael Stoff provided sage advice, sharp critical eyes, and good humor as advisers. At Yale, Paul Kennedy and John Lewis Gaddis encouraged me to tackle important issues with clarity. These scholars, each in his way, surely represent what is good about academic life. Other scholars provided valuable input on several chapters. Thanks to David Painter, Jeremi Suri, H. W. Brands, Ryan Irwin, Laurie Green, Brandon Wolfe- Hunnicutt, Christopher Phelps, Maximilliano Trentin, Bevan Sewall, Maria Ryan, Nate Citino, Douglas Little, James Goode, Yoav Di-Capua, Roham Alvandi, Carole Fink, John 2 David Lodge, Small World: An Academic Romance (London: Secker and Warburg, 1984), 63. vi Darwin, Jason Parker, Philippa Levine, Nick Cullather, Erez Manela, and Wm. Roger Louis for reading and commenting. Young historians I consider friends—from the University of Texas, Yale, the National History Center, and the Society for Historians of American Foreign Relations, and elsewhere—are too many to list. Eli Wood and Asher Burk hosted me on research trips. My grandparents and little brother provided great encouragement. My parents, Rick and Robin Dietrich, were models of support. Verónica Jiménez Vega is the most spirited person I have ever met, with the possible exception of our son, Emiliano Dietrich-Jiménez. Without their presence my wandering would have been more errant and less fun. To them I dedicate this dissertation. All mistakes are my own. vii The Permanence of Power: Postcolonial Sovereignty, the Energy Crisis, and the Rise of American Neoliberal Diplomacy, 1967 - 1976 Christopher Roy William Dietrich, PhD. The University of Texas at Austin, 2012 Supervisors: Michael B. Stoff, Mark Atwood Lawrence The dissertation addresses the causes and consequences of the 1973-1974 energy crisis. A new postcolonial concept of sovereignty, “permanent sovereignty over natural resources,” challenged the structure of the international economy in the early 1950s. The proponents of permanent sovereignty identified the relationship between the industrial nations and raw material producers as a vestige of empire. By gaining control over national resources, Third World leaders hoped to reset the relationship between the developing and developed nations. The concept of permanent sovereignty authenticated new definitions and goals of decolonization and statehood. A new middle ground between U.S. diplomacy and Third World economic thought emerged in international oil politics. Chapters on the 1967 Arab oil embargo, Saudi and Iranian demands in the wake of imperial Britain’s Persian Gulf withdrawal, the legal battles over the Iraqi Ba’ath regime’s nationalized oil, and the reverberating effects of newly radical Libyan politics, explain how members of the Organization of Petroleum Exporting Countries (OPEC) remade permanent sovereignty between 1967 to 1972. viii OPEC underscored the salience of permanent sovereignty in the international political economy, but it also undermined it. The built-in tension culminated in the 1973- 1974 energy crisis. The final chapters discuss how the impregnable sovereignty preached by OPEC and its transnational backers in the New International Economic Order engendered a strategic response from the United States: neoliberal diplomacy. OPEC’s cartel politics became a scapegoat for policymakers who simplified and codified neoclassical economic ideas. Market-centered reform developed into an analytical refuge in the political-economic wreckage of the energy crisis. American strategy toward the International Monetary Fund and the United Nations reveal that neoliberal diplomacy became widely influential in U.S. foreign policy. ix Table of Contents Introduction The Energy Crisis in History..............................................................1 The Energy Crisis in Historiography..............................................................4 The Politics, Economics, and Ideas of the Energy Crisis .............................15 The (Narrative) Arc of Crisis........................................................................18 The Energy Crisis and the Long 1970s.........................................................24 Prologue Prelude to Crisis, 1939-1960 .................................................................35 World War II and Energy Security ...............................................................38 A Center and a Periphery..............................................................................51 Iran and the United Nations ..........................................................................62 A Pillar of Pan-Arabism ...............................................................................76 From Permanent Sovereignty to OPEC ........................................................82 Economic Self-Determination ......................................................................88 Chapter 1 Crisis Forestalled: The 1967 Arab Oil Embargo..................................91 Dire Straits in the Shadow of Suez ...............................................................94 A Bleak Verdict ............................................................................................99 Permanent Sovereignty and Pan-Arabism ..................................................101 The Arab Oil Weapon.................................................................................115 Gone the Wine Fumes.................................................................................126 A Doomsday Scenario?...............................................................................130 Longer Patterns in a Moment of Crisis.......................................................135 Chapter 2 In the Wake of Withdrawal, 1967-1971.............................................137 Petro-pounds and the British Vacuum ........................................................140 Creeping Anxiety........................................................................................150 Oil and Arms Sales .....................................................................................159 Paradise Lost...............................................................................................172 The Leftward-Moving Center.....................................................................176 x Chapter 3 Arab Oil Belongs to the Arabs, 1967-1973........................................179 Permanent Sovereignty and the Cold War..................................................182 OPEC and Permanent Sovereignty .............................................................193 The Multinational Development of a National Oil Company ....................198 Trite Slogans ...............................................................................................204 Saddam Visits Paris ....................................................................................214 Cold War Boundaries..................................................................................220 Chapter 4 Consenting to the Whip Hand, 1969-1972.........................................222 Monarchical Libya......................................................................................224 A Blow for the Third World in General......................................................230 A New Sense of Entitlement.......................................................................240 Leave the Running to Libya........................................................................246