Randall Hansen has been writing about immigration for 30 years. In his latest book, War, Work and Want, he aims to solve a puzzle: at the end of the 1960s, mass immigration appeared to be coming to an end. Post-colonial migration had been curtailed – Britain had removed the free movement of people from the Commonwealth, and European countries had ended their “guest worker” schemes – while in the US, net migration had been negative for a decade. “You would have thought immigration would have been history, rather than politics.”
And yet for half a century immigration has risen, and is now at the highest point in human history; the latest estimates from the UN put the number of people on the move at 281 million. Immigration was the primary issue in the Brexit referendum, but net migration into the UK last year was more than double that of 2016. Why? Hansen’s thesis is that this huge movement of people can be traced back to a single event – an “economic and ideological force multiplier” – that set the conditions for the modern world. That event was the Opec oil embargo of 1973.
We spoke nearly 50 years to the day after Opec (then known as Oapec, the Organisation of Arab Petroleum Exporting Countries), led by Saudi Arabia, cut exports and production to the countries that supported Israel in the Yom Kippur War. Hours before our meeting on 18 October, Iran had recommended that the nations of the Organisation of Islamic Co-operation, led by Saudi Arabia, should embargo oil exports to Israel in response to the Israel-Hamas war.
Hansen’s book convincingly argues that the 1973 embargo was the inciting incident for the events of the past half-century. Arab nations’ use of the “oil weapon” meant Israel’s military victory came at a huge price: inflation and recession across the West, while the Middle East enjoyed “the most successful get-rich-quick scheme in economic history”.
“It halved economic growth in the West and the global north, permanently. We went from 5 per cent [GDP growth per year] to 2.5, and we’ve never gone back.” In every developed economy outside Opec, wages entered a multi-decade stagnation. The postwar boom, funded by cheap energy, was at an end. But Western governments, businesses and consumers did not simply agree to have less. In a materially more expensive world, they reacted by devaluing work. “We rebuilt our standard of living,” Hansen told me, “by destroying the unions and replacing them with cheap, exploited migrant labour.”
The “we” in this thesis is not governments or businesses, but us – the Western consumers who want ever cheaper products and free services. This is not because we’re immoral but because domestic wages have generally been stagnant. The repricing of energy in 1973 – the “great revaluation”, as Hansen calls it – took away the economic growth that had supplied new luxuries in previous decades, and capitalism responded with new efficiencies: goods made in countries with far worse pay and working conditions, and in our own countries “the creation of a class of jobs that only migrants are prepared to do”.
But this is only half the story: the 1973 oil embargo also supplied the migrants to do the work we didn’t want to do. “It flooded the Gulf States and Russia with money, and that reconfigured politics and changed geopolitics in a way that had massive consequences.” Many of the most important events of the past 50 years, Hansen said, were precipitated by the “destabilising, revolution-inducing” power of the great repricing.
In Iran, the oil boom had caused rapid economic and cultural change, allowing Ayatollah Khomeini to topple the Shah in 1979. In the same year, Saddam Hussein formally became Iraq’s leader, while Afghanistan’s natural gas fields and its proximity to the Persian Gulf made it newly valuable to the Soviet Union, which invaded. The new price of energy was an incentive to conflict. In War, Work and Want, Hansen explains how the two Iraq wars, the Syrian Civil War and Russia’s invasion of Ukraine can all be viewed as having proceeded from the embargo of 1973. Oil’s dominance as the source of economic and political power helped to create “an era of refugee labour”, he told me, as tens of millions of people sought relief from conflict and took any work they could get.
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In the West, however, the newly affordable flow of workers has had a stabilising effect. Real wages were stagnant, but life became cheaper. Combing through pricing data on trousers, sporting equipment and furniture, Hansen confirmed a pattern: “Any product with a high labour component got much cheaper. So it’s not an automation story. It’s a labour story.” Stylish jeans were affordable not because we were better off but because they were made by Syrians fleeing a murderous regime.
As we were speaking, Opec issued a statement that it would not be pursuing an embargo against Israel. But no embargo is needed: the oil price rose anyway as tensions escalated. This illustrates a grim truth: for autocratic petrostates such as Russia and Saudi Arabia, violence is a more stable floor for prices than the threat of production cuts. In 2022, despite a punishing war, Russia’s current account reached a record high. Chaos pays for itself.
Hansen argues that the West, too, has benefited from post-1973 immigration: our economies have been propped up, our clothes manufactured and our toilets cleaned by people forced to leave their homes. Not that we thank them for it: one of our Prime Minister’s five key objectives is to “stop the boats”. The people who arrived in the UK on small boats last year accounted for less than 4 per cent of total arrivals, but they are more emotive, Hansen said, because they represent “such a flagrant violation of sovereignty and border control”. Politically, to present small boats as the problem makes sense: most voters agree with border control in principle, and such arrivals are easier to address than others, especially as the UK, Hansen pointed out, is “particularly dependent on low-skilled migrants… That’s why Brexit led not to fewer, but to more immigrants, because the country is so structurally dependent on them. They weren’t coming for the weather, or the reasonable house prices.”
The resource curse of the oil economy will not last forever, but while it does, it remains a geopolitical threat. As Russia has shown, and as Iran is now showing, it is within the power of petrostates to push Western countries into deep recession, just as they did in 1973. “When you read the memoirs of [the 1970s leaders] Schmidt and Callaghan and Giscard d’Estaing,” Hansen said, “at the time they were really worried that the Western economy was going to enter a crash from which it never emerged.”
The only way to rob the petrocracies of their power is to end our addiction to the energy they sell, using massive investment programmes such as the US’s Inflation Reduction Act and the EU’s Green Deal. “It’s difficult for non-democracies with massive amounts of oil to make this transition, because that’s the oil curse – it’s just such cheap, easy money. In the absence of liberal democracy, you don’t you don’t have the level of innovation necessary for the transition.”
The risk is that the transition is derailed by the fossil-fuelled populism at which the Conservatives are now grasping or that could return Donald Trump to the White House next year. The conditions are there, said Hansen, for us to repeat our historic mistake: “The early 2020s look very much like the early 1970s. You have an American president who came to power on the back of a great deal of optimism, damaged by the chaotic withdrawal from the Vietnam of our of our age – which is to say the war in Afghanistan. You have a Russian invasion of another sovereign state, that no one predicted, no one expected and horrified the world. And then you have the deployment of an oil embargo by a major oil-exporting state [Russia]. It’s a huge echo.”
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