Version : Aug 2023
This policy brief examines the economic factors that influence U.S. foreign policy, with a particular focus on oil/gas interests and the profits of the military industry. These factors have significant implications for U.S. foreign policy decisions and strategies, shaping the nation’s interactions with other countries and its approach to global issues.
Oil and Gas Interests
The United States’ dependence on oil has long influenced its foreign policy. U.S. oil development spans three major periods: the rise of oil as a commodity, beginning in 1850; the post–World War II age of geopolitical competition; and the post–Cold War era of deregulation and diversification. The U.S. is the world’s largest consumer of oil, and its reliance on foreign producers to supply most of its demand has shaped its foreign and military policies. However, The U.S. has a long history of involvement in regions rich in oil and gas resources, which has often led to interventions and conflicts. For instance, the U.S. has intervened in Libya to secure control over hydrocarbon resources.
In 2011, a multi-state NATO-led coalition, including the United States, began a military intervention in Libya to implement United Nations Security Council Resolution 1973. This intervention was part of the broader Libyan civil war and was justified on the grounds of the “responsibility to protect” policy adopted by the UN at the 2005 World Summit. The U.S. has a contentious history in Libya, having helped overthrow Colonel Muammar Gaddafi.
Libya is a significant player in the global hydrocarbon market. Hydrocarbons are organic chemical compounds composed only of the elements carbon (C) and hydrogen (H). They are the principal constituents of petroleum and natural gas, serving as fuels and lubricants as well as raw materials for the production of plastics, fibers, rubbers, solvents, explosives, and industrial chemicals. Libya’s real GDP per capita is among the highest in Africa due to its vast oil and gas reserves. Hydrocarbons make up around 95 percent of exports and government revenue.
This reliance on imported crude oil has driven American foreign and military policy since 1945, when President Franklin D. Roosevelt promised to protect Saudi Arabia in return for special access to Saudi oil.
Profits for the Military Industry
The military-industrial complex plays a significant role in shaping U.S. foreign policy. Major corporations such as Lockheed Martin, Boeing, General Dynamics, Raytheon, and Northrop Grumman have received a large portion of Pentagon contracts, totaling over $14 trillion since the start of the war in Afghanistan. The defense industry has spent $2.5 billion on lobbying over the past two decades, employing over 700 lobbyists per year in the past five years. This influence has led to a narrow foreign policy agenda dominated by military solutions and has contributed to numerous regime change attempts and conflicts, destabilizing regions and leading to humanitarian crises.
The defense industry’s high profits enable firms to sidestep regulations, secure preferential treatment, and gain influence over policy decisions. The defense industry, which includes companies that make military equipment and technology, has become more intertwined with the financial world. More and more, people with a lot of money are investing in the defense industry. This is happening through things like private equity and venture capital firms, which pool money from investors to buy companies or invest in new technologies. The defense industry has become an attractive place for these investments because of the steady flow of money into military technologies and the potential for high returns.
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