The Petrodollar Economy

Abstract

This chapter addresses the US-led petrodollar economy. This order produced new points of contact and cooperative networks among Americans and Arabs and Iranians, broadening the number of individuals and kinds of actors involved in MENA (Middle East and North Africa)–US relations. Yet petrodollar interdependence also proved to be a double-edged sword. While little appreciated by US leaders at first, the influx of American people and products produced hostility in many MENA communities, particularly when they served the repressive functions of local regimes. In becoming increasingly tied to the oil-rich Arab countries, the United States also became even further tied to the repercussions arising from the Arab–Israeli conflict. When the Lebanese Civil War threatened to ignite another full-scale Arab–Israeli war, US policymakers feared that petrodollars could be used as a financial weapon against the United States and its allies. And while petrodollar aid assisted in the US effort to reform the political and economic orientation of Egypt, it also produced unintended social consequences that undermined Anwar Sadat's regime.