5.
Chapter Five: Oil, Revolution, and the Rise of Islamism,
1970s–1990s
The period from the 1970s to the 1990s was defined by three interlocking transformations that
fundamentally reshaped the political landscape of the Middle East.
1. First, the post-1973 oil boom produced an unprecedented accumulation of wealth in the
Gulf states, transforming their societies, restructuring regional power hierarchies, and
entangling the Middle East ever more deeply in the global economy.
2. Second, the Iranian Revolution of 1979 demonstrated that a popular revolution could
overthrow an authoritarian modernising state backed by the world's most powerful
military patron, and that the revolution's outcome could be an Islamic republic without
precedent in the modern world.
3. Third, Islamist movements emerged as the primary oppositional force against secular-
authoritarian regimes across the region, displacing the leftist and nationalist
alternatives that had dominated the post-independence period.
Together, these developments constituted a profound reordering of Middle Eastern politics
whose consequences continue to be felt today.
5.1. The Oil Boom and the Transformation of the Gulf
The quadrupling of oil prices in 1973–1974 and the further price increases of 1979–1980
generated a massive transfer of wealth to the oil-producing states of the Persian Gulf. Saudi
Arabia, Kuwait, the United Arab Emirates, Qatar, and (to a lesser extent) Iraq, Iran, Libya,
and Algeria experienced windfall revenues that dwarfed anything in their previous experience.
The consequences of this wealth were transformative.
Scholars have analysed the political effects of oil wealth through the lens of 'rentier state
theory,' developed by Hazem Beblawi, Giacomo Luciani, and others. The theory posits that
states that derive the bulk of their revenues from external rents (such as oil exports) rather than
domestic taxation develop distinctive political characteristics. Because the state does not need
to tax its population, the social contract that links taxation to representation is severed:
citizens receive benefits from the state (subsidised housing, education, healthcare, and
employment) but are not expected to participate in governance. The result, according to
rentier state theory, is a form of authoritarian stability in which the state's distributive
capacity substitutes for democratic legitimacy.
Rentier state theory has been enormously influential, but it has also been criticised for its
determinism and its inability to explain the significant variation among oil-producing states. Not
all oil-rich states are equally authoritarian, and some (such as Kuwait and, for a time, Iran) have
experienced significant periods of political contestation. Scholars such as Steffen Hertog and
Matthew Gray have argued that the relationship between oil wealth and authoritarianism is
mediated by pre-existing institutional structures, historical legacies, and the specific
strategies pursued by ruling elites. The theory is best understood as a starting point for analysis
rather than a comprehensive explanation.
The social consequences of the oil boom were equally profound. The construction boom that
accompanied the influx of petrodollars drew millions of migrant workers from South and
Southeast Asia, Egypt, and the Levant to the Gulf states. The kafala (sponsorship) system, which
tied migrant workers to individual employers and restricted their mobility, rights, and access to
citizenship, created a structural regime of vulnerability that has been widely criticised by human
rights organisations. By the 1980s, migrant workers outnumbered citizens in several Gulf states,
producing societies characterised by extreme demographic imbalances, sharp hierarchies of
citizenship and non-citizenship, and a distinctive form of economic development that depended
on a vast, legally marginalised labour force.
5.2. Sadat's Egypt: Infitah, Camp David, and the Remaking of
the Regional Order
The death of Nasser in 1970 and the succession of Anwar Sadat inaugurated a fundamental
reorientation of Egyptian politics. Sadat systematically dismantled the Nasserist order: he
expelled Soviet military advisors in 1972, opened the Egyptian economy to foreign investment
through the infitah (open door) policy, and — most dramatically — made peace with Israel
through the Camp David Accords of 1978 and the Egypt-Israel peace treaty of 1979.
The Camp David Accords, brokered by President Jimmy Carter, represented the most significant
diplomatic breakthrough in the history of the Arab-Israeli conflict. Egypt recovered the Sinai
Peninsula, and Israel gained recognition and a peace treaty from the most powerful Arab state.
But the accords also included a vague 'framework' for Palestinian autonomy that went nowhere,
and their effect was to remove Egypt — the Arab world's largest and most militarily significant
country — from the confrontation with Israel. This strategic windfall for Israel was recognised
immediately by the other Arab states, which expelled Egypt from the Arab League and imposed
an economic boycott. Sadat's assassination in October 1981 by members of Egyptian Islamic
Jihad reflected the depth of domestic opposition to the peace treaty, which many Egyptians and
Arabs regarded as a betrayal of the Palestinian cause.
5.3. The Iranian Revolution of 1979
The Iranian Revolution was arguably the most consequential political event in the Middle East
since the collapse of the Ottoman Empire. It overturned not only a specific regime but an entire
model of development: the US-backed authoritarian modernisation that the Shah's 'White
Revolution' had exemplified. The revolution drew on a broad coalition of forces — Islamists,
liberal nationalists, leftists, students, bazaar merchants, and industrial workers — united by
opposition to the Shah's autocracy, his dependence on the United States, and the inequities of
rapid economic modernisation.
The revolution's outcome — an Islamic Republic governed according to Ayatollah Khomeini's
theory of velayat-e faqih (Guardianship of the Jurist), in which ultimate political authority rested
with a senior Shi'a cleric — was not preordained. In the tumultuous period between the Shah's
departure in January 1979 and the consolidation of clerical power by 1981–1982, there were
genuine political contests among the various revolutionary factions. The liberal-nationalist
government of Mehdi Bazargan gave way to increasingly radical Islamist governance; leftist
organisations, including the Tudeh Party and the Mojahedin-e Khalq, were systematically
suppressed; and the seizure of the American embassy in November 1979, which led to the 444-
day hostage crisis, served to radicalise the revolution and marginalise moderate voices.
The regional impact of the Iranian Revolution was enormous. It inspired Islamist movements
across the Muslim world — Sunni as well as Shi'a — by demonstrating that a popular revolution
could defeat a US-backed authoritarian state. It also provoked a fierce counter-revolutionary
response from the Gulf monarchies, particularly Saudi Arabia, which responded by massively
expanding its funding for Wahhabi and Salafi proselytisation worldwide. The resulting
competition between Iranian revolutionary Islam and Saudi conservative Islam — what scholars
have termed the 'sectarianisation' of Middle Eastern politics — would fuel proxy conflicts across
the region for decades.
5.4. The Iran-Iraq War, 1980–1988
Saddam Hussein's invasion of Iran in September 1980, launched in the expectation of a quick
victory over a revolutionary state in turmoil, instead produced an eight-year attritional conflict
that was the longest conventional interstate war of the twentieth century. The war killed an
estimated 500,000 to one million people, devastated the economies of both countries, and
produced some of the most horrific violence of the post-Second World War era, including Iraq's
use of chemical weapons against both Iranian forces and its own Kurdish population (most
notoriously at Halabja in March 1988, where an estimated 5,000 Kurdish civilians were killed in
a single chemical attack).
The international dimensions of the war were characterised by cynicism on all sides. The United
States, which had initially sought to remain neutral, 'tilted' toward Iraq from 1982 onward,
providing intelligence, agricultural credits, and diplomatic support — even as it was
simultaneously selling arms to Iran through the covert Iran-Contra operation. The Gulf states
bankrolled Iraq's war effort to the tune of tens of billions of dollars, driven by fear of Iranian
revolutionary expansionism. Israel, meanwhile, sold arms to Iran, seeing the war as an
opportunity to weaken both its regional adversaries simultaneously. The war's conclusion in
1988, with a ceasefire that restored the pre-war borders, left both countries devastated and
exhausted. Iraq's massive war debts, particularly to Kuwait and Saudi Arabia, would become a
precipitating factor in the 1990 invasion of Kuwait.
5.5. The Lebanese Civil War, 1975–1990
The Lebanese Civil War, which raged intermittently from 1975 to 1990, was both a domestic
conflict rooted in the structural contradictions of Lebanon's confessional system and a regional
proxy war in which external actors — Israel, Syria, Iran, and the PLO — pursued their own
agendas on Lebanese soil. The war killed an estimated 120,000 to 150,000 people, displaced
over one million, and devastated Beirut — once celebrated as the 'Paris of the Middle East.' The
Israeli invasion of 1982, which aimed to expel the PLO from Lebanon and install a compliant
Maronite government, produced the siege of Beirut and the horrific Sabra and Shatila massacre,
in which Israeli-allied Phalangist militiamen killed hundreds (and possibly thousands) of
Palestinian and Lebanese civilians in refugee camps while Israeli forces controlled the perimeter.
The war also gave birth to Hizbullah, the Shi'a Islamist movement that emerged in 1982 from the
intersection of the Israeli occupation of southern Lebanon, Iranian revolutionary inspiration, and
the political mobilisation of Lebanon's long-marginalised Shi'a community. Hizbullah developed
into a formidable military force, a provider of social services, and a political party — a model of
Islamist organisation that combined resistance, governance, and welfare in ways that confounded
simple categorisation. The Ta'if Accord of 1989, which ended the civil war by redistributing
confessional power and institutionalising Syrian hegemony over Lebanon, provided a fragile
peace but left many of the war's underlying causes unaddressed.
5.6. Political Islam: Intellectual Roots and Organisational Forms
The rise of political Islam as the dominant oppositional force in the Middle East during this
period requires explanation. Why did Islamist movements displace the leftist and nationalist
alternatives that had dominated the post-independence political landscape? Several factors
converged.
First, the failures of secular nationalist and socialist governance — the defeat of 1967, the
corruption of post-revolutionary regimes, the unfulfilled promises of social justice — created a
crisis of legitimacy for the existing political order. Islamist movements offered an alternative
vision of modernity rooted in Islamic values and governance, one that was neither Western nor
Soviet but authentically indigenous. The slogan 'Islam is the solution' (al-Islam huwa al-hall)
captured the appeal of a political project that promised to address both material grievances and
spiritual alienation.
Second, Islamist organisations — particularly the Muslim Brotherhood and its affiliates — had
built extensive social infrastructure (schools, clinics, charities, and welfare networks) that
provided services the state was unable or unwilling to deliver. This 'parallel civil society' gave
Islamist movements a social base and organisational capacity that secular opposition groups
lacked.
Third, the Afghan jihad of the 1980s created a transnational network of Islamist militants who,
after the Soviet withdrawal from Afghanistan in 1989, sought new fields of struggle. The
'Afghan Arabs' — the estimated 10,000 to 35,000 Arab volunteers who fought in Afghanistan —
were radicalised by their experience and returned to their home countries (or dispersed to new
conflict zones) carrying with them both combat skills and a jihadist ideology that rejected the
existing state system. The emergence of al-Qaeda from these networks would have catastrophic
global consequences in the following decade.
It is crucial to distinguish between different strands of political Islam. The Muslim Brotherhood
tradition emphasised gradual social reform through education, preaching, and (where possible)
electoral participation. The jihadist current, inspired by Sayyid Qutb's radical reinterpretation of
Islamic political theology, advocated revolutionary violence against both 'apostate' Muslim rulers
and their Western backers. The Iranian model of clerical governance represented yet another
variant. Treating 'political Islam' as a monolithic phenomenon obscures these critical distinctions
and their practical consequences.
5.7. The First Palestinian Intifada and the Road to Oslo
The First Palestinian Intifada, which erupted in December 1987, represented a qualitative shift in
the Palestinian national struggle. Unlike the guerrilla warfare of the PLO, the intifada was a
popular uprising from below: a mass mobilisation of ordinary Palestinians in the occupied
territories — including women, youth, and children — who used stones, strikes, boycotts, and
civil disobedience to challenge the Israeli occupation. The intifada shifted the centre of gravity of
Palestinian politics from the diaspora to the occupied territories and generated intense
international attention to the plight of the Palestinian population under military rule.
The intifada also saw the emergence of Hamas (the Islamic Resistance Movement), founded in
1987 as the Palestinian branch of the Muslim Brotherhood. Hamas challenged the PLO's secular
nationalist framework with an Islamist alternative, and its combination of armed resistance,
social services, and religious legitimacy attracted growing support, particularly in Gaza. The
competition between Fatah/PLO and Hamas would become one of the defining dynamics of
Palestinian politics in the decades that followed.
The Oslo Accords of 1993, signed on the White House lawn by Yasser Arafat and Israeli Prime
Minister Yitzhak Rabin, represented the culmination of secret negotiations in Norway. The
accords established mutual recognition between Israel and the PLO, created the Palestinian
Authority as an interim self-governing body, and envisioned a phased process leading to 'final
status' negotiations on the core issues: Jerusalem, refugees, borders, settlements, and water. The
accords were hailed at the time as a historic breakthrough, but their structural limitations were
apparent from the outset. The most contentious issues were deferred to final status negotiations
that never concluded. Settlement expansion continued throughout the 'peace process,'
undermining the territorial basis for a Palestinian state. And the division of the West Bank into
Areas A, B, and C — with Israel retaining full control over Area C, which constituted over 60
percent of the territory — created a fragmented geography that many critics saw as incompatible
with genuine sovereignty. The assassination of Rabin by an Israeli extremist in 1995, and the
subsequent election of Benjamin Netanyahu, signalled the Israeli right's rejection of the Oslo
framework and marked the beginning of the process's slow collapse.
5.8. Neoliberal Restructuring and Its Social Consequences
The 1970s–1990s period also saw significant changes in the economic policies pursued by
Middle Eastern states, changes that had profound social and political consequences. The shift
from state-led development to market-oriented economic policies — often undertaken in
response to debt crises and under pressure from the International Monetary Fund and the World
Bank — transformed the relationship between state and society across the region.
In Egypt, Sadat's infitah (open door) policy, initiated in the mid-1970s, represented a deliberate
departure from Nasser's state-led economy. The liberalisation of trade, the encouragement of
foreign investment, and the partial privatisation of state-owned enterprises created new
opportunities for a commercially oriented elite but also generated significant social dislocation.
The removal of subsidies on basic foodstuffs in January 1977 triggered massive bread riots
across Egyptian cities — a dramatic illustration of the political risks of economic liberalisation in
societies where large portions of the population depended on state subsidies for basic necessities.
Similar processes unfolded across the region. In Tunisia, Morocco, and Jordan, structural
adjustment programmes imposed austerity measures that reduced public spending, privatised
state enterprises, and opened economies to global competition. The benefits of these reforms
were concentrated among regime-connected elites who were best positioned to exploit new
market opportunities, while the costs were borne disproportionately by the poor, the
unemployed, and the shrinking middle class. The resulting pattern — what scholars have termed
'crony capitalism' — combined economic liberalisation with political authoritarianism, producing
new forms of inequality that were all the more galling because they were visible in an era of
globalisation and media saturation.
The social consequences of neoliberal restructuring would prove to be one of the most important
structural causes of the 2011 uprisings. The youth unemployment, housing shortages, rising food
prices, and growing inequality that characterised the pre-2011 period were not accidental but
were, in significant measure, the product of economic policies that prioritised market efficiency
over social welfare and benefited regime insiders at the expense of the broader population.
Understanding this economic dimension is essential to any explanation of why the uprisings
occurred when and where they did.
5.9. The Algerian Civil War and the Limits of Democratisation
The Algerian Civil War of the 1990s provides a critical case study in the relationship between
Islamism, democratisation, and authoritarian resilience. When the Islamic Salvation Front (FIS)
won a decisive victory in the first round of Algeria's parliamentary elections in December 1991,
the military intervened to cancel the second round and prevent the FIS from forming a
government. The resulting civil war — which lasted from 1992 to 2002 and killed an estimated
200,000 people — posed stark questions about the relationship between democracy and political
Islam.
For advocates of democratisation, the Algerian case demonstrated the bad faith of authoritarian
regimes that invoked the threat of Islamism to justify continued repression: the military's refusal
to accept the election results showed that authoritarianism, not Islamism, was the primary
obstacle to democratic governance. For those who feared the consequences of an Islamist
government, Algeria illustrated the dangers of allowing movements with potentially anti-
democratic agendas to achieve power through democratic means. The 'Algerian paradigm' — the
fear that democratisation would produce Islamist governments that would then dismantle
democratic institutions from within — became a powerful argument for the maintenance of
authoritarian rule across the region, one that Western governments were often willing to accept.
The violence of the Algerian civil war, which included massacres of entire villages by both
armed Islamist groups and regime-linked militias, produced deep trauma in Algerian society and
effectively foreclosed serious political reform for a generation. The war also served as a warning
to other Islamist movements about the costs of confrontation with entrenched authoritarian
states, contributing to the Muslim Brotherhood's preference for gradualist strategies in Egypt and
elsewhere. The Algerian experience remains a crucial reference point for any analysis of the
relationship between Islamism, violence, and the prospects for political change in the Middle
East.