Article
Mutual Economic Interdependence and
Military Occupation: Evidences of
United States Passive and Active
Strategies in Iraq for Oil Security
Vision
18(1) 47–54
© 2014 MDI
SAGE Publications
Los Angeles, London,
New Delhi, Singapore,
Washington DC
DOI: 10.1177/0972262913517332
http://vision.sagepub.com
Neeladri Chatterjee
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.
Key Words
Oil Security, Passive Strategy, Active Strategy, Mutual Economic Interdependence, Military Occupation
Introduction
Data reveal that in 1990, just before the operation Desert
Storm, United States was importing 25.58 million metric
tonnes per annum (MMTPA) of crude oil from Iraq
against its total imports of 277.64 MMTPA. During and
after operation Desert Storm, United States did not import
any crude oil from Iraq from 1991 to 1995. However, in
comparison, during US invasion of Iraq in 2003, United
States was importing 23.94 MMTPA in 2003 and its
imports from Iraq peaked at 32.66 MMTA in 2004 (after
US occupation of Iraq). Crude oil import-dependent
countries use various passive economic and political
strategies. They also use active strategies such as crude oil
source diversification and military intervention to safeguard
their long-term crude oil supply interests. Researchers
have time and again hypothesized the concept of mutual
economic interdependence between countries as a potent
passive strategy for influencing important international
decisions. Interdependence theorists note that such
interdependent relations, particularly economic ones, are
increasing, while the use of military force is on the decline.
However, researchers have also stated earlier that with
modernization and development of Weapons of Mass
Destruction (WMD), mutual interdependence would get
more complex (Morse, 1969). Some researchers also
predicted a complete system breakdown, as the complexities
of mutual interdependence increase or overrun the capacity
for management (Scott, 1977). This research primarily
tries to establish or contradict the hypothetical relationship
of mutual economic interdependence (passive strategy)
with oil security for cause–effect relationship through
empirical studies by taking 31 years of time series data
(1980–2010) of United States and Iraq crude oil trade.
Moreover, the research also discusses the context of US
invasion of Iraq for securing supplies of oil from Iraq.
Downloaded from vis.sagepub.com at PENNSYLVANIA STATE UNIV on May 13, 2016
48
Mutual Economic Interdependence and Military Occupation
Generally, the concept of energy security is limited to
crude oil importing countries only. However, the concept
of energy security has evolved in recent years. Several
major drivers have convinced experts and policy makers
that energy security is the responsibility of both consumers
and producers. This article assumes that vulnerability from
security of demand (SOD) and security of supply (SOS) of
crude oil exporting and importing countries, respectively,
can be used as a passive strategy to foster mutual economic
interdependence (IDi) and influence decisions on crude oil
supply (ITi), which is synonymously used as ‘oil security’
in this research. In the research, efforts have been made to
establish this causal relationship between IDi and ITi. The
proposed study aims to establish linkages among these
variables to analyze the influence of ‘asymmetric’1 mutual
economic dependence as a significant ‘passive strategy’
for ‘oil security’. Further, for examining circumstances
under which active strategies such as military intervention
for oil security are used amidst complex interdependence
(i.e. with the development of WMD), the researcher has
taken the example of US–Iraq relationship for further
analysis.
The article attempts to answer the following questions:
• What is the relationship between mutual economic
interdependence (proxy for passive strategy) and
crude oil supply (proxy for oil security) between the
United States and Iraq? Whether ‘asymmetric’ interdependence affects oil security and mitigates use of
force (active strategies)?
• What were the circumstances under which United
States invaded Iraq? Did it help US oil security?
To provide some answers to these questions, this article
develops an empirical framework that examines the cause–
effect relationship between economic interdependence and
oil security. The article makes two main contributions.
First, it tries to quantify mutual economic interdependence
and empirically analyze its effect on oil supplies between
two countries. To the best my knowledge, no published
study has empirically tested the cause–effect relationship
of mutual economic interdependence and oil security to
consolidate or contradict the theoretical concept that
passive strategies such as mutual economic interdependence
influence oil supply security. Second, the article attempts
to provide circumstances under which military invasion is
used as an active strategy for oil security by citing the
example of US occupation of Iraq.
The rest of the article is structured as follows: Section 2
presents the literature review; Sections 3 and 4 present data
description and the econometric methodology, respectively;
Section 5 presents the Empirical Analysis and results;
Section 6 presents the Conclusion.
Literature Review
Mutual Interdependence
Interdependence means increasing reciprocal effects and
vulnerabilities among nations on an increasing number of
different issues, including energy. The term ‘complex
interdependence’ was developed by Keohane and Nye
(1977) and refers to the various complex transnational
connections (interdependence) between states and societies.
Keohane and Nye (1977) highlighted vulnera-bility
interdependence or ‘asymmetric relations’ as a source of
power, which can be converted into decisional influences.
Deutsch (1978) in his book, ‘The analysis of International
Relations’, pointed out that different degrees of relative
vulnerability also involve different capacities to manipulate
interdependence to enhance influence over international
outcomes. Bengt (1980) pointed out that economic interdependence could also be measured in terms of international
trade. He further mentions that mutual interdependence can
also be measured in terms of trade flows between two
countries. Interdependence exists where there is relatively
equal or balanced exchange of not easily substitutable goods (Inkeles, 1975). Caporaso (1978) attempted to
quantify economic interdependence and defined such
dependence of actor A on actor B as ‘the extent A relies on
B for large quantities of important goods, which cannot be
easily replaced at sufferable costs, while B acquires small
quantities of unimportant goods from A which can be
easily replaced’. Caporaso (1978) then calculated the
interdependence of A and B as the net difference between
their dependencies.
However, it cannot be ascertained from these studies the
extent to which asymmetric economic interdependent relations can affect international outcomes because further
analyses were not carried out to empirically test for any
‘cause–effect’ relationship. This research uses the concept
of mutual economic interdependence between Iraq (oil
exporting country) and United States (importing country)
to find possible causal relationship between mutual economic interdependence and oil security. However, to avoid
calculating mutual economic interdependence based on
trade of goods, which are not easily replaceable, and goods
which can be easily supplemented, this research uses
mutual crude oil import and export between United States
and Iraq as a proxy variable for calculating economic interdependence. The reason for this assumption is based on the
fact that majority of trade revenue generated by countries
of Middle East (including Iraq) and North Africa (MENA)
countries comes from oil exports which has influence on
their economic security (Chatterjee, 2012a). Similarly, for
an oil importing country like United States, oil is an important part of its energy mix. Moreover, trade between United
States and Middle East countries is heavily dominated by
Vision, 18, 1 (2014): 47–54
Downloaded from vis.sagepub.com at PENNSYLVANIA STATE UNIV on May 13, 2016
Neeladri Chatterjee49
crude oil. Therefore, it is assumed that oil trade between
United States and Iraq is an important component for
determining mutual economic interdependence.
Oil Security
US Department of Energy (US DOE) in 1956 defined
energy security as a sufficient supply of energy at affordable
price. Many of the energy security definitions are focussed
on securing and maintaining supply of energy, particularly
supply of oil (Clawson, 1997). Energy (including oil)
security can be defined as a condition when a nation has
access to sufficient energy resources at reasonable prices
for foreseeable future (Barton, 2004). Barton (2004) stated
that such an access or control of resources is imperative for
mitigating risk from major oil supply disruption. An exact
definition of energy security is hard to give as different
people interpret it differently at different moments in time
(Alhajji, 2007). Oil security per se means availability of
uninterrupted supply of oil at all times; supply of oil
between two countries is the simplest indicator of oil
security. Accessibility of oil is also another important
factor for oil security; however, it often carries geopolitical
implications (Kruyt et al., 2009).
Passive and Active Strategies
Alhajji mentions four major principles underlining the
energy policies of all major industrial countries for oil
security. These are (a) diversity of energy supplies;
(b) diversity of oil import source; (c) reduced dependence
on Middle East oil and (d) low oil price volatility. The Asia
Pacific Energy Research Centre (Quest for Energy Security,
2007) in a study also consolidated the fact that diversity is
an important means to hedge against supply risks. Vlado
(2009) argues against over emphasis on diversification of
sources, stating that ‘though diversification is an important
aspect, too much must not be read into it’. Diversification
has been one of the oldest active strategies for mitigating
oil supply risks; however, mutual economic interdependence
can also be an important passive strategy mitigating oil
supply risk (Kalicki and Goldwyn, 2005). National Council
of State Legislatures (NCSL) United States in a report in
2006 on energy security strategies for United States
described a resilient energy system as one, which is capable
of withstanding threats through a combination of active
(direct) or passive (indirect) measures. It is necessary to do
further empirical research to explore the effect of passive
strategies like mutual economic interdependence on oil
supplies (Chatterjee, 2012b). Apart from passive strategies,
active strategies such as military occupation are also used
for oil security. Singer (2008), in policy analysis, briefly
stated that oil is one of the resources, which still attracts
military intervention for its access and control (Singer,
2008). The concept of energy security is generally offensive
as it is closely related to economic well-being of its citizens;
Western States prefer to use offensive or active strategies
against economically and politically weak oil supplying
states (Grafstein, 2002).
The research endeavours to empirically examine the use
of ‘asymmetric economic interdependence’ between two
countries as a passive strategic tool to influence international
outcomes, such as oil supply. The article assumes that asymmetry in crude oil trade dependence between two countries
has a causal relationship with crude oil supply quantity. It
uses cointegration and Granger causality tests for testing
causality between ‘passive strategy’ such as asymmetric
economic interdependence and crude oil supplies quantity.
Data Description
Data of United States and Iraq crude oil exports and US
imports from Iraq have been taken from United Nations
Energy Statistics report 2011 (Table 1). This article
examines 31 years of data starting from 1980 to 2010;
however in Table 1, only figures from 1990 to 2010 are
presented as an example. This period includes two wars
between Iraq and United States, first in 1991 and second in
2003. The export and import data have been expressed in
MMTPA. Further, it is assumed in the article that Ij is the
total import from (j) supplying country (here Iraq) and ITi
is the total imports of crude oil by the oil importing country
(i) (here United States). ImDi is the import dependence of
the crude oil importing country (i) on the oil supplier (j).
The research assumes that interdependence (IDi)
between United States and Iraq is equal to export
dependence on crude oil of Iraq (EDi) minus import
dependence on crude oil of United States (ImDi) as the
passive strategy factor. Measures of import and export
dependence are the most commonly used indicators for
energy security. An example of such an indicator is the
import of oil, often expressed relative to oil consumption
(Alhajji and Williams, 2003). Here, export dependence
(EDi) is the quantity of exports from Iraq to United States
divided by the total exports of crude oil by Iraq for that
particular year. Similarly, import dependence (ImDi) is the
ratio of crude oil imported by United States from Iraq and
US total imports of crude oil for that particular year. For
ImDi purposes, this article takes total import figures of
crude oil instead of consumption as it may also include
crude oil from indigenous source. Thus mathematically
import dependence can be represented as
ImDi = Ij/ITi.
Thus, if IDi > 1.00 (where IDi = export dependenceimport dependence), it implies that Iraq is more dependent
Vision, 18, 1 (2014): 47–54
Downloaded from vis.sagepub.com at PENNSYLVANIA STATE UNIV on May 13, 2016
50
Mutual Economic Interdependence and Military Occupation
Table 1. The Level of Crude Trade Interdependence between United States and Iraq for the Period 1990–2010
Year
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
US Total Crude Iraq Total
Oil Imports in Crude Exports
MMTPA
in MMTPA
277.64
273.36
282.07
337.82
351.56
359.87
373.71
409.40
433.34
434.59
451.51
464.30
454.94
481.08
502.13
504.02
503.62
499.29
486.95
448.62
456.09
78.15
2.12
2.97
2.89
2.93
3.11
4.32
36.86
79.68
100.63
102.50
90.18
71.28
49.12
73.89
68.77
73.68
80.56
88.22
86.12
85.23
US Imports from
Iraq (ITi)
in MMTPA
US Crude Oil Import Iraq Crude Oil Export
Interdependence
Dependence on
Dependence on
United States (EDi) (IDi) = (EDi) – (ImDi)
Iraq (ImDi)
25.58
0.00
0.00
0.00
0.00
0.00
0.05
4.43
16.72
36.09
30.86
39.57
22.85
23.94
32.60
26.23
27.53
24.09
31.21
22.35
20.61
0.09
0.00
0.00
0.00
0.00
0.00
0.00
0.01
0.04
0.08
0.07
0.09
0.05
0.05
0.06
0.05
0.05
0.05
0.06
0.05
0.05
0.33
0.00
0.00
0.00
0.00
0.00
0.01
0.12
0.21
0.36
0.30
0.44
0.32
0.49
0.44
0.38
0.37
0.30
0.35
0.26
0.24
0.24
0.00
0.00
0.00
0.00
0.00
0.01
0.11
0.17
0.28
0.23
0.35
0.27
0.44
0.38
0.33
0.32
0.25
0.29
0.21
0.19
Source: UN Energy Statistics report 2011 (exports and imports data only).
on United States for its exports as compared to US
dependence on Iraq for imports. Such relative interdependence IDi (refer Figure 1) has been assumed as
‘asymmetric relation’ or mutual economic interdependence.
The level of crude oil interdependence between United
States and Iraq is highly unbalanced or asymmetric as
shown in Table 1. US import dependence on Iraq has been
within the range of 0–9 per cent, whereas Iraq export
Figure 1. Flow Chart Showing Assumed Relationship Between Oil Security and Asymmetric Economic Interdependence
Oil Supply Security Strategy
Interdependence (ID)
Kenneth Waltz, Karl Deutsch
Sensitivity (systemic)
Interdependence
Vulnerability (specific)
Interdependence
Net Mutual dependence
James Caporaso, 1978
%TWFG1KNExport Dependence (ED)
Asymmetric (ED-ImD) = ID
/WVWCNGEQPQOKEInterdependence
%TWFG1KNImport Dependence (ImD)
Vision, 18, 1 (2014): 47–54
Downloaded from vis.sagepub.com at PENNSYLVANIA STATE UNIV on May 13, 2016
Neeladri Chatterjee51
Table 2. Summary Statistics for Both IDi and ITi Series (United States–Iraq)
Variable
ITi
IDi
Observations
Description
Mean
Standard Deviation
Minimum
Maximum
Crude oil supply from Iraq to United States
(MMTPA)
Crude oil trade interdependence between Iraq
and United States
From 1980 to 2010
13.579
13.885
0
39.570
0.138
0.144
0
0.438
dependence on United States has been 0–49 per cent.
Although the interdependence ratio is between 0 and 44
per cent, Iraq export dependence is very high as compared
to US import dependence. This shows Iraq’s dependence
on United States for majority of its oil revenues, which has
a major influence on its economic well-being (Chatterjee,
2012a). The basic summary statistics of IDi and ITi series
of United States and Iraq is given in Table 2.
Econometric Methodology
Empirical studies of multivariate time series data have
shown that in order to avoid spurious regression situation,
the variables must be stationary or cointegrated (Engle and
Granger, 1987). It is well known that most of the economic
time series data might have a unit root and dominated by
stochastic trend. Conventional regression techniques,
based on non-stationary time series, produce spurious
regression, and statistics may simply indicate only correlated trend rather than a true relationship. In this article,
we have tested data of crude oil supply quantity and the
calculated mutual economic interdependence for nonstationarity; subsequently, the series was tested for
cointegration, and then a decision was taken on whether to
model the variables as an unrestricted vector autoregression
(VAR) or error correction model (ECM). Finally, variables
were tested using Granger causality to establish or
contradict the assumed hypotheses. The research examines
whether dynamic reciprocal, unidirectional or no causality
exits between interdependence and crude oil supply data of
United States and Iraq.
Engle and Granger (1987) showed that if the series X
and Y, for example, are individually I(1) (i.e. integrated of
order one) and cointegrated, then there would be a causal
relationship at least in one direction. However, the direction
of causality can be detected through the vector ECM of
long-run cointegrating vectors. Furthermore, Granger’s
Representation Theorem demonstrates how to model a
cointegrated I(1) series in a VAR format. VAR can be
constructed either in terms of the level of the data or in
terms of their first differences, that is, I(0) variables, with
the addition of an error correction term to capture the
short-run dynamics.
31
31
31
31
If the series are I(1) but not cointegrated, causality test
may give misleading results unless the data are transformed
to induce stationarity.
Three-stage procedures have been employed to test the
existence of causality. The first step tests for the order of
integration of the variables using augmented Dickey–Fuller
(ADF) (1981) statistics. Conditional on the outcome of the
tests, the second stage involves investigating cointegration
relationship among the variables using VAR approach of
Johansen and Juselius (1990) (Johansen, 1991).
The third stage (or second if bivariate cointegration is
rejected) involves constructing standard Granger-type
causality tests, augmented where appropriate with a lagged
error correction term.
1. ADF test for stationarity
ADF test is conducted with the following model:
DXt = a0 + (1–k) bt – (1–k) Xt–1 + Sgj DXt–j + et;
( j: 1, 2, …, p)(1)
where Xt is the underlying variable at time t, et is the
error term and a0, b, k and gj are the parameters to be
estimated.
The lag terms are introduced in order to justify
that errors are uncorrelated with lag terms. For the
above-specified model, the hypothesis, which would
be of our interest, is
H0: (1 – k) = 0
2. Granger causality test
If the series X and Y are individually I(1) and cointegrated, then Granger causality tests may use the I(0)
data with an error correction term, that is
(2)
(3)
Vision, 18, 1 (2014): 47–54
Downloaded from vis.sagepub.com at PENNSYLVANIA STATE UNIV on May 13, 2016
52
Mutual Economic Interdependence and Military Occupation
where δ and d are error correction terms, ut and
vt are zero-mean, serially uncorrelated, random
disturbances.
If the data are I(1) but not cointegrated, valid
Granger-type tests require transformation to make
them I(0). So, in this case, the equations become
(4)
(5)
The optimum lag length of the VAR can be
determined on the basis of Akaike’s (AIC) and/or
Schwarz Bayesian (SBC) and/or log-likelihood
ratio (LR) test criterion.
For Eqs. (2) and (3), the F-statistics on the
lagged explanatory variables of the ECM indicates
the significance of the short-run causal effects. The
t-statistics on the coefficients of the lagged errorcorrection term indicates the significance of the
long-run causal effect.
For Eqs. (4) and (5), DY GC DX if,
H0: g1 = g2 = ... = gn = 0 is rejected
Against
HA: = at least one gj ≠ 0, j = 1, ..., n,
and DX GC DY if,
H0: c1 = c2 = ….. = cn = 0 is rejected
Against
HA: = at least one cj ≠ 0, j = 1, ..., r.
Empirical Results
In the first stage, the order of integrations of the variables
is investigated. Table 3 presents the results of unit root tests
based on ADF tests on the levels and the first differences of
the variables IDi and ITi. The null hypothesis of a unit root
cannot be rejected at 5 per cent level of significance.
Stationarity is obtained by running the similar test on
the first difference of the variables, indicating that both the
series are I(1) in nature.
Table 3. Unit Root Test of IDi and ITi Series (United States–Iraq)
ADF Test Statistic
Variables
ITi
IDi
1% Critical value
5% Critical value
10% Critical value
Level
First Difference
-1.503
-1.354
-4.339
-3.587
-3.229
-5.218
-7.060
-4.339
-3.587
-3.229
Table 4. Johansen Cointegration Estimation Results of IDi and
ITi Series (United States–Iraq)
Rank Test (trace)
Number of cointegration
None
Almost 1
Trace statistic
14.609
1.069
5% Critical value
15.494
3.841
Rank Test (max eigenvalue)
Number of cointegration Max-Eigen statistic 5% Critical value
None
13.540
14.264
Almost 1
1.069
3.841
In the second stage, Johansen maximum likelihood
procedure is used to detect cointegration. This provides
a unified framework for estimation and testing of
cointegrating relations in the context of a VAR ECM. The
cointegration rank, r, of the time series is tested using twotest statistics. Denoting the number of cointegrating vectors
by ro, the maximum eigenvalue (l max) test is calculated
under the null hypothesis that ro = r, against the alternative
of ro > r. The trace test is calculated under the null hypothesis
that ro ≤ r, against ro > r.
Referring to Table 4, both maximal eigenvalue test and
trace test reveal that the null hypothesis r = 0 and r ≤ 1
between ITi and IDi cannot be accepted against the
alternative r ≥ 1 and r = 2 at 5 per cent level of significance.
These imply the absence of cointegration between ITi
and IDi.
In the absence of cointegration between variables
IDi and ITi, short-run causal effects can be tested with the
first difference operator of the variables, that is, ∆IDi and
∆ITi in an unrestricted VAR framework.
On the basis of SBC and adjusted LR test criteria, the
optimal lag order of the VAR is chosen as 1. The absence
of residual serial correlation of the individual equations has
also confirmed the correct order of VAR selection.
Table 5 represents the results of the Granger causality
tests. The null hypothesis of non-causality from ΔID to
ΔIT, which is asymptotically distributed as a chi-square
variate with one degree of freedom, cannot be rejected at
5 per cent level of significance. While testing the noncausality from ΔIT to ΔID, the null hypothesis cannot be
Table 5. Granger Causality Test of Series (United States–Iraq)
Granger Causality
Source of Causation (short run)
Dependent variable
ΔITi
ΔIDi
ΔITi
–
0.031 (0.861)
ΔIDi
0.310 (0.582)
–
Notes:Here ‘Δ’ denotes the first difference operator of IDi and ITi
series.
Figures in brackets are probability values.
Vision, 18, 1 (2014): 47–54
Downloaded from vis.sagepub.com at PENNSYLVANIA STATE UNIV on May 13, 2016
Neeladri Chatterjee53
rejected at 5 per cent level of significance. Thus, the
Granger causality results show lack of causality in either
direction.
Conclusion
US foreign policy towards Iraq has been aggressive since
1991, however it continued to source oil from Iraq for its
energy security, excepting for the period from 1991 to
1995. The importance of oil security and the perceived
threat to US national security from WMD manufactured by
Iraq led to a highly complex scenario. On one hand, oil
security was necessary for United States, and on the other
hand, United States did not want to compromise on its
National security, especially after the 26/11. Although,
United States is one of the major importers of crude
oil from Iraq, the US administration played a pivotal
role in the UN Security Council to bring in resolution
for immediate, unconditional and unrestricted access
for inspection of any sites in Iraq for WMD by the
UN Monitoring, Verification and Inspection Commission
(UNMOVIC) and the International Atomic Energy Agency
(IAEA) on November 2002, for its own national security.
However, when Iraq did not comply with UN Security
Councils pressure, United States attempted to push through
a UN security resolution for invasion of Iraq. The efforts
proved futile when other permanent members, including
Germany, Russia and France, vetoed it. However, United
States along with United Kingdom, invaded Iraq in 2003
and declared the occupying forces by the UN Security
Council through its 1483 resolution on May 2003. This
shows US zero tolerance for any threat to National security,
after 26/11 even from countries from where it sources oil.
Moreover, the issue of WMD could also be treated as a
political passive strategy by United States to politically
isolate Iraq, before invading it.
The article further reveals through the empirical
research that evidences of unbalanced (asymmetric) oil
trade interdependence exist between United States and
Iraq. The economic Interdependence ratio is heavily
skewed towards US favour, that is, Iraq export dependence
on United States is greater than US import dependence
on Iraq (refer Table 1). This asymmetrical economic
interdependence is due to Iraq’s overt dependence on oil
exports as a major source of revenue generation, indicating
lack in the development of other sectors and shows Iraq’s
vulnerable economic conditions.
Moreover, econometric analysis proves that there is no
causality in any direction between the assumed proxy
variables for Interdependence and oil security. Lack in
causality between the economic interdependence proxy
variable IDi and oil security proxy variable ITi consolidates that passive strategy in the form of economic
interdependence is not in play between Iraq and United
States. Therefore, one can comprehend that although
asymmetric economic interdependence is considered to be
an important passive strategy for oil security (Kalicki and
Goldwyn, 2005), lack of causality between economic
interdependence and oil security between United States
and Iraq (as evident from the econometric results) could
be one of the contributing factors for use of direct
strategy.
Some of the reasons which contributed to the military
invasion of Iraq are US suspicion on Iraq’s WMD, Iraq’s
lack in economic development (from its dependence
on oil exports as major source of revenues), its political
isolation (from not allowing UN inspectors), US aggressive
foreign (policy after 26/11) and US need for oil security in
Middle East. Therefore, the research consolidates the fact
that military intervention is still used by Western forces,
where issues of energy security are concerned on countries which are politically and economically weak, especially where there is lack in established cause–effect
relations between mutual economic interdependence and
oil security.
US military occupation of Iraq was a strategic success,
as it helped US oil companies to gain access to vast oil
resources of Iraq and win major contracts for exploration
and production. Statistical data and business evidences
reveal that after US–Iraq second war, Iraq’s exports of
crude oil to United States have increased, at present, United
States is the major export destination of Iraqi crude oil.
Juhasz (2008), in her book, mentions that after invasion of
Iraq by United States in 2003, oil companies of United
States have landed themselves lucrative contracts for
exploration and supply of crude oil (prior of 2003, there
were no US oil company operating in Iraq). Zalloum
(2002), an international oil consultant and economist,
stated that United States and its ally have ‘obtained
concessions’ in major Iraqi oil fields after its occupation
of Iraq.
Central Intelligence Agency (CIA) in a report has
presented that no concrete evidences of chemical, biological
or nuclear WMD were found in Iraq after US occupation
(CIA-Report, 2004). One can therefore comprehend that
US use of military force, as a direct strategy helped primarily
to achieve oil security through access, presence and
penetration of the source of oil in Iraq than anything else.
To further examine the evidences of economic
interdependence as a passive strategy for oil, one could
do a comparative analysis of United States and Kuwait.
Historically, India has never engaged any kind military
intervention as a direct strategy for security of oil; it
adopts more passive or indirect strategies through
political persuasiveness. Further, research on the passive
strategies used by India for its oil security could be
Vision, 18, 1 (2014): 47–54
Downloaded from vis.sagepub.com at PENNSYLVANIA STATE UNIV on May 13, 2016
54
Mutual Economic Interdependence and Military Occupation
another area of interest, especially its strategy in Iran,
given that it sources oil from Iran even with United States
and Europe sanctions.
Note
1. Keohane and Nye (1977) stated that ‘asymmetric relations’
is a source of power, which can be converted into decisional
influences. Here asymmetric interdependence denotes mutual
economic interdependence, primarily oil trade export and
import dependence of Iraq and US respectively.
References
Alhajji, A.F., & Williams, L. James. (2003). Measures of petroleum dependence and vulnerability in OECD countries.
Middle East Economic Survey, 46(16), 363–398.
Alhajji, A.F. (2007). What is energy security? Definitions and
concepts. Middle East Economic Survey, 50(45), 120–121.
Asia Pacific Energy Research Centre (APERC). (2007). A quest
for energy security in 21st centre. Japan: Institute of Energy
Economics (IEE).
Barton, B. (2004). Managing risk in a dynamic legal and regulatory environment. New York: Oxford University Press.
Bengt, Sundelius. (1980). Interdependence and foreign policy.
Cooperation and Conflict, XV, 187–208.
Caporaso, James. (1978). Dependence, dependency and power
in global system—a structural and behavioral analysis.
International Organization, 32(1), 13–14.
Chatterjee, Neeladri. (2012a). Exploring causal relationship
between security of demand for oil and economic well being:
The case of five MENA oil exporting countries. Retrieved
from https://www.dur.ac.uk/resources/alsabah/alsabahPaperChaterjeeno4.pdf
———. (2012b). A times series forecast of geopolitical market
concentration (GMC) risk: An analysis of crude oil diversification portfolio of India. Strategic Analysis, 36(1), 145–165.
Clawson, P. (1997). Energy security in the time of plenty.
Washington, DC: National Defense University Press.
Deutsch, Karl. (2007). The analysis of international relations.
Prentice-Hall: Englewood-Cliffs, NJ.
Engle, R.F., & Granger, C.W.J. (1987). Cointegration and error correction: Representation, estimation and testing. Econometrica,
55(2), 251–276.
Grafstein, R. (2002). What rational political actors can expect.
Journal of Theoretical Politics, 14(2), 139–165.
Inkeles, Alex. (1975). The emerging social structure of the world.
World Politics, 27(1), 467–495.
Iraq’s Chemical Warfare Program-Report by CIA. (2004).
Retrieved from https://www.cia.gov/library/reports/generalreports-1/iraq_wmd_2004/chap5.html#sect5
Johansen, Soren. (1991). Estimation and hypothesis testing
of cointegration vectors in gaussian vector autoregressive
models. Econometrica, 59(6), 1551–1580.
Johansen, S., & Juselius, K. (1990). Maximum likelihood estimation and inference on cointegration with application to money
demand. Oxford Bulletin of Economics and Statistics, 2(2),
169–210.
Juhasz, Antonia. (2008). The tyranny of oil—The world’s most
powerful industries and what we must do to stop it. New
York: HarperCollins Publishers.
Kalicki, J.H., & Goldwyn, D.L. (2005). Energy security: Toward
a new foreign policy strategy. Washington: Woodrow Wilson
Press.
Keohane, Robert., & Nye, Joseph. (1977). Power and interdependence. Boston, MA: Little Brown.
Kruyt, Bret., Van Vuuren, D.P., Vires de, H.J.M., & Groenenberg,
H. (2009). Indicators for energy security. Energy Policy,
37(6), 2166–2181.
Morse, Edward. (1969). The politics of interdependence.
International Organization, 23(2), 311–326.
Scott, Andrew. (1977). The logic of international interaction.
International Studies Quarterly, 23(4), 425–460.
Singer, Clifford. (2008). Innovative approach to peace and security. Policy Analysis Brief, Stanley Foundation. Retrieved from
http://www.stanleyfoundation.org/publications/pab/PAB
08Singer.pdf
Vivoda, Vlado. (2009). Diversification of oil import sources
and energy security: A key strategy or an elusive objective.
Energy Policy, 37(11), 4615–4623.
Zalloum, Yahya Abdulhay. (2002). Oil crusades—America
though Arab eyes. London: Pluto Press.
Neeladri Chatterjee holds a PhD degree from Faculty of
Management Studies (FMS), University of Delhi, India.
He has formerly worked as a research assistant at Graduate
School of Business at the University of Technology (UTS),
Sydney. He also served as a visiting fellow with Institute
for Defense Studies and Analyses (IDSA), New Delhi. He
is a visiting faculty at various Business Schools in India
and Europe. He is currently employed as a Senior Finance
Officer with Indian Oil Corporation Ltd. His research
interests include dynamism in global geopolitical scenarios
and its implications on energy security, business and
economic policies.
Vision, 18, 1 (2014): 47–54
Downloaded from vis.sagepub.com at PENNSYLVANIA STATE UNIV on May 13, 2016