The Rise and Fall of OPEC in the Twentieth Century by Giuliano Garavini (review)

Despite the increasing prominence of transnational affairs within the field of international history, the dearth of scholarly histories of the Organization of the Petroleum Exporting Countries (OPEC) is remarkable. Why is this the case? Perhaps one reason is that, even though it is composed largely of nations that were victims of European imperial ism, there is something unjust about an organization representing monarchies and autocracies seeking to maximize their rents from the extraction of natural resources (p. 6). This is a sentiment the American diplomat George Kennan expressed most crudely during a visit to Latin America in 1950. Of the Venezuelans, he remarked: “The local population had not moved a finger to create this wealth [and] would have been incapable of developing it . . .” (p. 61). Kennan overlooked that the oil companies that developed this nonrenewable resource enjoyed rates of return several times greater than similar investments in developed nations. Much of OPEC’s history can be seen as an attempt by its members — “sovereign landlords,” as Guiliano Garavini calls them — to use their oil to redress socioeconomic imbalances with wealthy consuming nations.

Garavini’s book is not strictly a history of OPEC. The organization is divided between three bodies: the Secretariat, which handles day-to-day affairs; the Board of Governors, which sets the agenda for conferences and oversees the Secretariat; and finally, the Conference, a biannual gathering of delegates from member states that hammers out OPEC policy on matters such as prices, production, and quotas (p. 126). OPEC’s records have historically been inaccessible, which explains why most books about it are written either by insiders or journalists. Garavini managed, however, to secure transcripts of the conferences from OPEC’s founding until 1986. Since OPEC is an organization of sovereign states, the conference resolutions are the result of compromises between members with divergent political, economic, and financial aims. These disagreements are the foundation for the story Garavini does wish to tell: the international history of “petrostates,” which he defines as nations with prolific production that also depend upon export revenues for their well-being (pp. 4ff).

The prologue and first two chapters of the book are devoted to the origins and operation of “concessionary” regime dominated by international oil companies rather than the “petrostates.” Much of it is familiar ground to historians of the oil industry, but it is essential reading for understanding the conditions that made OPEC’s formation possible. Even experts of the industry will benefit from Garavini’s perspective as a scholar of decolonization. He does, for example, a superb job of illuminating the role of Venezuelan officials in advising Middle Eastern governments about how to restructure their concessions with the oil companies to give them a larger share of revenues (pp. 62ff). Garavini makes a few factual errors covering such immense ground, but they are minor compared to the shoddy copy editing throughout the book, which is unbecoming of a venerable publisher.

Chapter 3 examines OPEC’s inauspicious first decade, when it struggled to fulfill the ambition of its founders to seize control over the most important aspect of the oil industry: pricing. Garavini adds a vital nuance to our understanding of OPEC’s internal dynamics. Most analyses of OPEC divide the group between “hawks” seeking high prices and “doves” (p. 260). Garavini suggests that, initially, the division was between countries that cared about increasing their relative share of oil revenues (the Gulf Arabs) and those interested in extending their control over pricing and production to affect, for example, rates of consumption and depletion (the Venezuelans) (pp. 134, 226–28). In a saturated market, Iran and Saudi Arabia were more inclined to cut deals with oil companies to fund modernization, bolster their regimes, and avoid the fate of troublemakers such as Iraq, which had begun the process of nationalization in 1961 and was punished by the oil companies, which deliberately restrained production (pp. 139ff). The low prices of the 1960s nonetheless created...