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Economy in Cold War: Cuban Missile Crisis to Detente


The United States had maintained a strong presence in Cuba ever since it helped Cuba gain its independence in the Spanish-American War of 1898. American businesses began to invest heavily in Cuba and expected a government friendly to their interests. During the 1930s, however, the Cuban government took a more nationalistic turn and promoted greater Cuban control of the economy. In response to this threat against American interests, officials in Washington helped to establish the dictatorship of Fulgencio Batista, who took a permissive attitude toward continued American dominance of the Cuban economy—from natural resources to nightlife. With Batista in power, wealthy Americans and even American mobsters came to see Cuba as their personal playground. But even as Batista's regime won support from Americans, his harsh policies and uncompromising dictatorship turned many of the Cuban people against him.

Guerrillas, first in the mountains and then in the towns, began attacking government buildings and the army as early as 1953. Led by the charismatic young Fidel Castro, these guerrillas eventually succeeded in leading a revolution that toppled Batista's government in 1959. Castro became, for most Cubans, a national hero, cementing his role as the new leader of Cuba. Castro began to institute land reform, nationalizing millions of acres owned by American companies and seizing control of the country's businesses and natural resources from foreign investors. In response, the United States severed diplomatic relations with Cuba in 1961, leading Cuba to ally itself with the Soviet Union.

Castro was both a leftist and an ardent Cuban nationalist, and it would have been very difficult for the United States to maintain good relations with his regime under any circumstances. That said, it is important to note that Castro did not seize power in Cuba in the name of the Communist Party; he did not fully embrace Communism until he had been ruling Cuba for more than two years, and even then his alliance with the Soviet Empire came about only in the wake of American sanctions against his regime. Did those sanctions, imposed largely to protect the interests of large American corporations whose interests were threatened by Castro's nationalistic economic policies, push Castro into the Soviet orbit? Critics of American foreign policy have long asserted that the US government's unbending support for American corporations' narrow interests in Cuba amounted to a kind of economic imperialism that practically drove Castro into alliance with the Soviets, thus undermining broader American Cold War strategic interests.

Oil in the Middle East

While Cuba was economically important to a handful of powerful American companies, the Middle East provided a vital resource—oil—that was critical to the entire American economy. US policy in the Middle East had the difficult task of balancing America's interest in that oil with America's traditional support for Israel, which usually had hostile relations with the neighboring nations that controlled the oil. In 1960, a number of those Middle Eastern nations joined together to form the Organization of Petroleum Exporting Countries (OPEC). The Middle Eastern states of Iraq, Iran, Kuwait, and Saudi Arabia, plus the South American nation of Venezuela, sought to use the organization to coordinate petroleum production and pricing.

These nations watched closely during the Six Day War of 1967 and the Yom Kippur War of 1973, both of which pitted Israel (backed by the United States) against Egypt and Syria (backed by the Soviet Union). In the 1967 conflict, Israel launched a preemptive strike against its Arab neighbors, storming to victory and seizing expansive new territories in the West Bank, Golan Heights, and Sinai Peninsula. Six years later, Egypt and Syria struck back with a surprise attack launched on the Jewish holiday of Yom Kippur. Arab armies pushed into Israel, recapturing much of the ground lost in 1967. The Americans, assuming incorrectly that the Soviets were behind the Arab attack, responded to Israel's pleas for aid with a massive airlift of supplies that helped to turn the tide of the war.

OPEC responded to America's intervention on Israel's behalf by placing an embargo on oil sales to the United States and raising oil prices around the world. The embargo would continue through 1974, quadrupling the price of oil in the United States. For the first time since World War II, Americans endured gasoline rationing. In some areas, people whose cars carried license plates ending in odd numbers purchased gas on odd days of the month, while those with license plates ending in even numbers purchased gas on even days of the month. (To keep it fair, everyone could purchase gas on the 31st.)

The Oil Crisis made clear to American policymakers the costs of supporting Israel in a hostile Middle East. It also brought the attention of the American public away from the Nixon administration's successes with the Soviet Union and China to the problems of policy in the Third World. The thorny interrelationship of America's strategic and economic interests in the Middle East would continue to bedevil American policymakers into the twenty-first century.

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