Mutual Economic Interdependence and Military Occupation: Evidences of United States Passive and Active Strategies in Iraq for Oil Security

Abstract

Oil contributes significantly to the energy mix of United States. Data reveal that United States import crude oil from the Middle East, primarily from Saudi Arabia, Iraq and Kuwait. Historically, there have been several disruptions in oil supplies from Middle East to the United States. From 1991 to 2003, there have been two wars between Iraq and United States. During and after the first Iraq war, supply of crude oil stopped from 1991 to 1995. However, US imports of crude oil from Iraq peaked during 2004, soon after United States occupied Iraq. United States use various active and passive strategies to secure its oil supplies. The article takes the case of United States and Iraq mutual oil trade data for further investigation to empirically examine evidences of passive strategy. The article focuses on finding effects of passive strategies, such as mutual economic interdependence, on oil supplies by using cointegration and Granger’s causality tests. Moreover, the article elaborates on the circumstances under which United States use active strategies (military intervention) to ensure its oil security by taking the example of US invasion of Iraq in 2003. The outcome of the empirical analysis establishes the absence of causal relationship between economic interdependence and oil security, which highlights the lack of effect of passive strategies on oil supplies between United States and Iraq. Conclusions drawn from the available research literature consolidate that US active strategy of military invasion and occupation of an economically weak Iraq resulted from its passive strategy to isolate Iraq on the context of perceived threats from Weapons of Mass Destruction (WMD) from Iraq. It helped United States to secure oil supplies from Iraq.