OPEC, Oil Prices, and Global Migration since 1973

IWMPost Article

The OPEC oil crisis restructured the global economy and geopolitics in a manner that generated over 100 million unexpected migrants.  

Global migration is at a historic high: there are 281 million migrants globally, more or less evenly divided between the Global North and the Global South. Almost 40 percent are family migrants; the rest are asylum seekers, refugees, labor migrants, or some combination thereof. The boundaries between these categories are fluid: refugees or labor migrants come as family members, notably to the United States, when there are no other legal migration channels for them. Refugees become, willingly or not, laborers. And millions more, who do not appear in the statistics, come as undocumented migrants, crossing deserts, pushing through mountain ranges, and traversing oceans in rickety boats. Most global migrants are low-skilled, but because wealthy receiving countries fetishize high-skilled migration and deny their need for low-skilled labor, the majority of low-skilled migrants use smugglers, and many are trafficked. Thousands die yearly along the way: they drown in the Mediterranean, suffocate in lorries, and die of thirst in deserts.

Mass migration is politics, as an even casual glance at news outlets makes clear. It is also a puzzle. For this level of migration was neither expected nor, in the Global North, wanted. From the 1920s in the United States and the early 1970s in Europe, policymakers made every effort to end postwar labor migration schemes and to block new migration. Asylum applications in the late 1960s and early 1970s were a trickle. Western public opinion has for decades been resolutely hostile, Canada excepted, to current or higher levels of migration. As a result, global migration was meant, at best, to stagnate and, probably, to fall. Yet, since 1970 it has tripled in absolute terms and increased by 1.5 percent as a percentage of world population. This increase translates into well over 100 million people.

In explaining this development, scholars have cited family immigration, the ease of international travel with the arrival of long-range commercial aircraft, and increased violent conflict. None of these explanations is adequate. As noted, family migrants are a minority of total global migration, even when undocumented migration is not counted, and many family migrants are pushed or pulled by something other than the family. Few asylum seekers or undocumented migrants travel by plane; it is a foolish refugee or would-be low-skilled labor migrant who declares themselves such when applying for a travel visa to North America, Australia, or Europe. Violent conflict has increased since the early 1970s and it is relevant, but citing it as an explanation of mass migration is question-begging: why?

In War, Work and Want: How the OPEC Oil Crisis Caused Mass Migration and Revolution (Oxford: Oxford University Press, 2023), I argue that the economic and geopolitical changes unleashed by the quadrupling of oil prices in 1973 set in motion processes that resulted in over 100 million unexpected and unwanted migrants. The oil-price surge resulted in a permanent halving of economic growth across the West. We went from a world in which American and European economic growth averaged 5 percent per year, and often hit 6–7 percent, to one in which it averaged 2.5 percent.

Outside the West, in the oil-poor countries of the Middle East such as Egypt and Syria, inflation generated by the oil crisis wrecked import substitution industrialization—the policy of nurturing domestic industries with well-paid working-class jobs behind a tariff wall. In response, under International Monetary Fund, World Bank, and U.S. pressure, Egypt, in the 1970s, and Syria, in the 1980s, embraced liberal capitalism.

The consequences were profound. In the West, the inflation-racked middle and upper-middle classes rebuilt their shattered living standards on the back of cheap labor. In the United States, with the active collusion of the state, firms defined inflation as a wage problem and destroyed the unions. In the European Union, where unions remained stronger, firms went around them through the creative use of piecework and an EU directive allowing them to hire workers in any member state, to pay them wages and benefits found in their home country, and to have them work anywhere in the EU. Unremarkably, firms sought workers in Southern and Eastern Europe and posted them to Northern and Western Europe.

Working-class wages plummeted, taking workers’ livelihoods, and sometimes lives, with them. In multiple sectors of the economy, unionized jobs disappeared and wages crumbled. Wages fell to the point where domestic workers were no longer prepared to accept them. Nationals exited the sectors affected by skilling up or leaving the labor market for unemployment and, all too often, alcohol and drug addiction. The “deaths of despair” of white working-class men through alcoholism, drug overdose, and suicide are inseparable from how capitalism restructured in the aftermath of the oil crisis.

In the Global South, the path was different but the destination the same. As later industrializers, the four Asian Tigers (Hong Kong, Singapore, South Korea, and Taiwan) as well as Malaysia and Thailand had no golden age of unionization. Instead, they drew on an ample supply of cheap rural-to-urban migration to support export-led economic growth. They then turned to migrant labor from other Asian countries when that labor ran out (so did the city-states of Hong Kong and Singapore, which never had the latter). Asian wealth and consumer lifestyles are thus as dependent on exploited migrant labor as are those in the West.

In the Middle East, the embrace of neoliberalism by Egypt and Syria created flashy shows of wealth in hotels on the Nile and in glitzy storefronts on the streets of Damascus but also spiraling inequality and political opposition from which Islamists profited. Inequality, compounded by corruption, and political repression resulted in the mass protests of the 2011 Arab Spring. Libyan leader Muammar Gaddafi’s threats of genocide resulted in the NATO bombing campaign that toppled his regime and unleashed a civil war resulting in 2.2 million refugees. In Syria, President Bashar al-Assad’s brutal crackdown led to another civil war and the flight of some 7 million people.

In Iran, a sudden gush of oil money funded the Shah’s military and his White Revolution, a rapid modernization program launched in 1963 and accelerated with post-embargo oil revenues. But it also unleashed forces he struggled to control, resulting in the Iranian Revolution. That revolution led to the second oil shock of 1979, which decided the Soviet Union, until then hesitant, to invade Afghanistan. When mujahideen resistance dashed Moscow’s expectations of a quick victory, the Red Army launched an obliteration campaign against the countryside, designed to drive civilians into the cities, which it controlled, or out of the country. Both happened, with 5 million refugees fleeing to Iran and Pakistan. In Pakistan’s refugee camps, Afghan boys who had lost everything were schooled in anti-Shiite and anti-Western hate and misogyny by uneducated mullahs. They became the Taliban, who took power in Afghanistan, sheltering Osama bin Laden and enabling his September 11, 2001 attacks on the United States. Those attacks, and the United States’ dependence on Middle Eastern oil, resulted in three U.S.-led military assaults: against Iraq in 1990 and 2003 and Afghanistan in 2001. The result was millions of refugees.

War has been one great driver of global migration over the last five decades. From 1973 to 2020, oil wars led to over 22 million refugees. In the same period, 94 million labor migrants moved to Asia, Europe, and the United States to work in six sectors: meat processing, agriculture, construction, retail, textiles and garments, and domestic labor. Their need for work, the second driver of migration, drew them into precarious, exploitative, and dangerous positions because any job is better than no job. Those jobs and their appalling conditions exist because of our want: the desire of consumers in rich countries for ever-cheaper products and services. The result is a structurally embedded, global migrant working class. The world economy is awash with documented and undocumented migrants driven by war, drawn by work, and destined to satisfy our insatiable consumerist wants.

Randall Hansen is Canada Research Chair in Global Migration at the University of Toronto. He was a visiting fellow at the IWM in 2023.