THE GULF WAR
Gulf War –conflict
waged by coalition
force from 34
nations led by the
against Iraq in
response to Iraq's
Iraq claimed that Kuwait territory
historically belongs to them.
Iraq accused Kuwait of exceeding its
OPEC quotas for oil production. The
United Arab Emirates and Kuwait were
consistently overproducing oil. Iraq
was interested in keeping price about
18$/barrel. But Kuwait and UAE kept
to overproducing it, so price dropped
to 10$. Iraq losses estimated to be 7
billion dollars a year.
Kuwait reserves estimated to be 10%
of the world's reserves. Iraq - 3-4%
• 2nd August Iraq National Army have crossed the Kuwait border.
• Iraqi Army was the world's fourth largest army; it consisted of
955,000 standing soldiers, 650,000 paramilitary forces, 4,500 tanks,
484 combat aircraft and 232 combat helicopters.
• Kuwait army consisted of 16’000 men, 80 aircraft and 40 helicopters
Within 12 hours all country was captured.
• Iraq SpecFors attempted to capture Kuwait’s Royale family, but were
unsuccessful. They have fled to OAE.
• Same day, a new government was established, which signed the
document about Kuwait joining Iraq.
• World public have doomed Iraq for such hostile actions.
• Coalition was created shortly consisting of 34 nations
Note: most of them are:
• Members of OPEC
• Resolution 678, was passed on 29 November 1990, which
gave Iraq a withdrawal deadline until 15 January 1991, and
authorized "all necessary means to uphold and implement
Resolution 660 (free Kuwait)", and a diplomatic
formulation authorizing the use of force if Iraq failed to
• Oil supplies were constantly delayed/stopped/lost.
• Oil price growth massively
• Other economical sectors were negatively affected
by this conflict
• The tensity in the region made all non-Arab civilians,
religious minorities and foreigners targets of
religious radicals, including Americans.
• The USA investments in the oil sector were under
threat of withdrawl, meaning that investors/firms
were willing to quit the area.
GDP – $167.9 billion
Income per capita of
5th richest country in
the world, per capita.
THE REASONS FOR
Annexation - is a severe
violation of UN resolutions.
Severe abuse of human
rights during military
High risk of destabilization
of a region.
Heavy military crimes
committed by Iraq soldiers.
The willingness of UN to
THE REASONS OF INTERVENTION
Destabilization of a region made oil market
unstable – the oil prices started to grow
The Saudi Arabia, which was under threat
of Iraq intervention, was a close partner of
The war economy
THE WAR ECONOMY (EXPENSES)
Expenses of a conflict is estimated to be
40 billion of USD.
40 BILLION $
25% of the expenses
was paid by the USA
75% of the expenses was paid
by the Arab countries,
specifically by Kuwait and
Saudi Arabia (30 billion $)
THE WAR ECONOMY
The oil price before the war was approx. 18$
…but with the Gulf war, it rose to 60$ per barrel,
generating an EXTRA profit of about 60 billion $
Who did this profit go to?
In the Arab countries the “fifty – fifty” law is valid: 50%
to the state and 50% to the multinational that controls
the oil deposit. This gives us…
Net profit from the increase in the
price of oil: 60 billion $
30 billion $ to the
30 billion $ to the
governments of the Arab
states (Kuwait + Saudi
THE BEST PART OF A SCHEME
In the Middle East, the extraction and trading of oil is in the
hands of the 7 Sister (Shell, Tamoil, Esso…), all of which are
American, and 5 are state owned.
30 billion $
Approx. 21 billion $ to
the American State
Approx. 9 billion$ to
the American private
Expenses of Profit from the
increase in the
Profit or loss
+ 11 $
Where did the $ 40 billion spent for the war
To the war industry, all of which just happens to be almost
exclusively in USA
• The willingness of UN, led by US, to free
Iraq is economically based.
• Most of the OPEC countries have
supported financially all of the Gulf war
operations. Meaning that this little-scale
conflict could affect world markets of oil.
• Today world is VERY dependant on
• Which resource caused the conflict?
• Who were the main battlefield players?
• How much oil Kuwait have in
• What price of oil was in 1990-1991?
• What price of oil was in 1989?