This article is taken from the April 2022 issue of The Critic. To get the full magazine why not subscribe? Right now we’re offering five issues for just £10.

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All writers and their publishers aim for relevance, but the timing of this book is uncanny even so. Disorder, which aims to explain today’s instability through three intertwined stories about oil, money and power, was published on the day that Russia launched its new offensive in Ukraine.

The author, Helen Thompson, a professor of politics at Cambridge, is more widely known as a New Statesman columnist and for her aphoristic, dispassionate contributions to Talking Politics podcast. She argues convincingly that world history since the end of the nineteenth century hinges on the pursuit, and price, of oil. The competition, wealth and dependency that oil and gas have generated have not only supercharged inter-state rivalry: they are now testing democracy’s breaking strain. Disorder is about geopolitics — the idea that the location and resources of states drive history more than their peoples or politicians. It is not an easy read but it is bursting with ideas.

The book starts a little over a century ago, with the two great oil producers of the era, the United States and Russia, vying for business in oil-poor Europe. The Great War then proved the importance of petroleum: “the Allied cause had floated to victory upon a wave of oil,” proclaimed Britain’s foreign secretary. Yet, due to the Ottomans’ successful disruption of Russian supplies, the tsunami that had finally engulfed Germany in 1918 came from America.

Growing German dependence on Russian oil split NATO in two

“The age of oil,” Thompson declares, “would not allow for a European world power or a European continental empire.” But it was not for want of trying. The quest for energy security was to entangle Britain, in particular, in the Middle East but oil from that part of the world did not significantly influence the outcome of the Second World War. American oil was again crucial to victory in 1945 because it was cheaper to supply.

The Americans were anxious to preserve domestic oil stocks and eager to stop continental Europe buying Soviet oil. After outmanoeuvring the British in the late 1940s they built the Tapline to take Saudi oil from the Persian Gulf to the Mediterranean. Syria, through which this pipeline ran, became an arena for the Americans and the Russians. It was a portent of things to come.

Even so, by 1956, about 70 per cent of western Europe’s oil still transited the Suez Canal. Thompson depicts the importance of the crisis that was triggered by Nasser’s takeover of the waterway in a brilliantly fresh way: the disruption of canal traffic and the loss of faith in Nasser led European states to look east for their energy.

Growing German dependence on Russian oil and gas split NATO in two. Whereas Britain and France helped protect oil tankers plying the Gulf during the Iran-Iraq War, the West German government refused to take part in the operation. Thompson tells the story of European attempts to procure alternative supplies (redoubled after Russia turned off the Ukrainian tap briefly in 2009) and their consequences — chief among them, growing tensions with Turkey.

During the 1970s the United States became an oil importer, after domestic demand outstripped its own output. Not only did this drive embroil the Americans in the Middle East, but it also had important economic implications. Now needing to finance a trade deficit resulting from the need to import oil, President Nixon abandoned the Bretton Woods system, which had ensured exchange rate stability since the end of the war by pegging the dollar to gold.

From there on, American power hinged on the Eurodollar

From there on, American power hinged on the Eurodollar — dollars created by oil and held in foreign banks, which the United States now needed to plug the trade gap. For Thompson energy — and not ideology — explains the appeal of monetarism and de-regulation by the late 1970s: “Politicians on both sides of the Atlantic had an acute incentive to retreat from regulating capital flows because they needed easy access to dollars to pay for larger oil import bills.”

Many European currencies rose against the dollar but fell against the Deutschmark as a result of Nixon’s move. This see-saw, which made German exports less competitive and, in the French mind, threatened European unity by driving a wedge between the franc and the mark, led eventually to the Economic and Monetary Union. One of the many things I did not know until I read this book was that the leader of Italy’s team in the negotiations which established the single currency was a then little-known official named Mario Draghi.

As Thompson puts it, Draghi’s aim was to replace Italy’s “caste of party politicians with technocratic monetary experts who, bound by external fiscal demands, could reform Italian democracy”. Since then, Italy’s economy has stagnated, but the same cannot be said for Draghi’s career. The former bureaucrat has since served a term as president of the European Central Bank and became Italian prime minister last year. “In good part, Draghi’s appointment took the second Italian Republic to its logical conclusion: if only governments headed by a prime minister the ECB trusts can govern, then the best candidate is an Italian former president of the ECB,” the author mordantly observes.

The book’s focus on geopolitics downplays the human factor

The transfer of responsibility for monetary policy to the ECB arose out of the idea that inflation was the result of “democratic excess” rather than energy costs. The third and final part of Disorder tackles the deleterious consequences of this tendency towards aristocracy and the flows of money that oil and the end of capital controls have unleashed. To take one example, the origins of the 2008 financial crisis lie in the decision taken by the Clinton administration to mandate two congressionally-chartered mortgage corporations, Fannie Mae and Freddie Mac, to lend more money to low-income earners, in the hope of boosting Black and Hispanic homeownership.

Hitting these targets encouraged dubious accounting and made the firms’ top executives very rich. In turn they financed congressmen’s re-election campaigns to ensure that scrutiny of their operations was minimal. The fact that both corporations had managed to attract large quantities of Chinese money gave their eventual implosion global significance.

The book’s main flaw is that its focus on geopolitics downplays the human factor. Putin’s alarming recent behaviour confirms this as a powerful force. Thompson anticipates this at the start, by acknowledging that the book does not address religion or culture. That absence is perhaps most obvious in Disorder’s final pages, in which she turns her attention to the implications of expensive energy and the need not just to decarbonise but to reduce energy usage full stop. “In Western democracies, politicians will need to make palatable the likely sacrifices demanded of citizens, without entrenching further aristocratic excess.” Are world leaders thinking as rigorously about this problem as Thompson is? I doubt it.