The policies of OPEC affect the economic development

Answer each of the following questions in an essay. Be sure to include specific examples that support your thesis and conclusions.

1.

How did the oil embargo and the policies of OPEC affect the economic development of the United States?

2.

How did the Palestinian-Israeli conflict shape the development of Arab states, especially Egypt?

3.

Why was there so much violence in Central America during the Cold War?

4.

What led to the Four Modernizations movement of China? Were they all equally successful? Explain what was missing from this attempt at reform.

5.

How has Pakistan developed politically and economically since the 1970s?

Answer Key

1.

Answer would ideally include:
 
· In 1973 OPEC implemented a successful embargo of America and western Europe, and energy costs quadrupled. The United States was unable to break the cartel and lost influence globally. Oil prices remained high, and revolution in Iran caused a second oil shock in 1979. Prices increased, and energy costs slowed economic growth, triggering inflation and low wage growth (stagflation). Banks raised interest rates, slowing economic growth further and leading to a major recession. Reduced consumer demand lowered inflation but also damaged economies that sought to export to the United States. Rising debt combined with rising interest rates globally produced a global debt crisis. The debt crisis allowed the United States to gain economic leverage and impose neoliberal free-market reforms globally.

2.

Answer would ideally include:
 
· OPEC organization, which was effective in response to the Yom Kippur War in 1973, left Israel feeling vulnerable and empowered oil-exporting Arab nations. The wealth of oil-producing Arab states changed power relations between Arab countries, as did the rise of Islamic militancy. Egypt and the United States engaged in a peace process with Israel in 1979 that returned the Sinai Peninsula to Egypt and led to American aid to Egypt but also spread division as most Arab states did not support the process, and Islamic radicals assassinated Anwar Sadat in 1981. Tensions between Israel and other Arab states continued, and the peace between Egypt and Israel has been placed under considerable pressure by the rise of Hamas in Palestine, by the deteriorating conditions in the Gaza Strip and West Bank since the death of Yasir Arafat in 2004, and by the revolution in Egypt in 2011, which led to growing uncertainties in Egyptian politics.

3.

Answer would ideally include:
 
· Central American economies were dominated in many cases by American interests. Movements arose during the Cold War era aimed at nationalism and reducing American influence, while peasants sought land reform and political rights. Marxist revolutionary movements and other radical social reformers gained strength in Guatemala, Nicaragua, and El Salvador, while the United States backed right-wing interests that included the military and powerful dictators. In Nicaragua, the U.S. backed right-wing insurgents in their struggle against the successful Sandinista revolutionary movement that overthrew dictator Anastasio Somoza. War and conflict were widespread until Costa Rican president Oscar Arias mediated peace talks in 1986 that led to open elections. These did not alleviate poverty and violence, which have persisted.

4.

Answer would ideally include:
 
· Mao’s attempts to reform China along strict Marxist lines, with an emphasis on purging dissent and heavy labor on a small scale, had created greater social equality but destabilized the country in other ways. City dwellers in particular felt a sense of chaos, perhaps because the largest cultural changes occurred there. Intellectuals and technicians, who as a class had been purged in the Cultural Revolution, fought back to reclaim their influence. Ultimately, Mao’s Cultural Revolution had failed. In response, Deng Xiaoping, who assumed leadership of China after Mao’s death, instituted the Four Modernizations as part of an effort to remake China yet again, undoing some of the problems created by Mao. Deng singled out four areas of the economy and industry for some degree of modernization and experimentation, the opposite of Mao’s rigid policies. The four areas modernized were agriculture (large collectives were replaced with more traditional family farms and cash crops), industry (which remained state-owned, but foreign-owned factories were allowed to open and some private enterprise was allowed), science and technology, and national defense (which also remained in government hands). The agricultural reforms were the most successful and benefited the peasantry greatly. Industry and technology also did well. One area not addressed by Deng’s reforms was societal changes brought on by economic changes. China experienced dissent in 1989 as a result. The Communist Party retained a monopoly on political power and did not respond to the worldwide movement toward more democracy and political freedom. University students, however, did respond to that movement and the lack of political change in China and began a series of demonstrations and protests in 1989.

5.

Answer would ideally include:
 
· Military rule in Pakistan led to a close alliance with the United States, and Pakistan received considerable U.S. assistance. Relations with both the United States and India worsened considerably as Pakistan developed nuclear weapons by 1998, which nearly precipitated war with India. Pakistani-based terrorist groups have attacked targets in India, and Pakistani support for the Taliban and others in Afghanistan in their struggle against Soviet occupation led to close connections between the Taliban and al-Qaeda, including their operation in parts of Northwest Pakistan. While Pakistan’s dictator Perez Musharraf renewed alliances with the United States after September 2001, he was forced to resign when his political rival Benazir Bhutto was assassinated in 2007.