312 • 17 ISRAEL'S REBIRTH AND THE RISE OF ARAB NATIONALISMCompany. In retaliation, Britain and most of its Western allies refused to
buy any oil from Iran, causing a spectacular rise in the demand for Arab oil,
to the benefit of Iraq, Saudi Arabia, and Kuwait. Let us cite a few examples.
Iraq's oil production rose from 3.4 million long tons (3.8 million regular or
3.5 million metric tons) in 1948 to 33.1 in 1955. For Saudi Arabia, the in¬
crease was still more dramatic: from 1 million long tons in 1944 to 46 mil¬
lion in 1954. The champion, though, was Kuwait, whose oil output shot up
from 800,000 tons in 1946 to 54 million in 1956.
Not only did the production and sale of Arab oil (and natural gas) sky¬
rocket, but the concessions were revised to favor the host countries. This
meant that some Arab government revenues also rose dramatically. In
1950 the Arabian American Oil Company (Aramco) reached an agree¬
ment with Saudi Arabia's government on a fifty-fifty sharing of all rev¬
enues. Soon other oil-exporting Arab countries won comparable increases
in their royalty payments from the foreign oil companies. Oil revenues be¬
came the main source of income for most states surrounding the Persian
Gulf, enabling governments like Iraq to embark on ambitious develop¬
ment schemes, whereas patriarchal rulers expanded their palaces and re¬
placed their camels with air-conditioned Cadillacs. The main example of
the latter was Sa'ud, the king of Saudi Arabia from 1953 until his deposi¬
tion in 1964. Later, these oil-rich desert kingdoms would gain the financial
power to influence the policies of the other Arab states and even the West.
Iran, for its part, agreed after Mosaddiq's overthrow in 1953 to place its
nationalized oil company under the administration of a consortium of
foreign companies, mainly US firms—a move noted by most Iranians but
ignored by most foreigners at the time. The potential power of Iranian
and Arab oil producers was not realized until after the 1960s, so we will
have more to say about this topic later. But keep in mind that by 1956 Eu¬
ropeans were using more oil than coal and they imported most of their
petroleum and natural gas from the Middle East.
THE GREAT POWERS AND THE ARAB WORLDNasir's notoriety resulted from his decision in July 1956 to nationalize the
Suez Canal Company amid Arab applause—and to Western dismay.
Britain, even though it had agreed in 1954 to give up its Suez Canal base,
still viewed the canal as the imperial lifeline it had been in the two world
wars. Prime Minister Eden likened Nasir to Hitler and Mussolini. Recalling
his own opposition to Britain's appeasement policy in the late 1930s, Eden