§8 SOCIAL SClfcMi^t Why Militarization? There are many reasons which have been presented by the regime, to answer this important question. The reasons which have been presented are security (internal and external), geo-political situation of the country, the protection of economic interest, i.e., oil fields etc. We can examine them in some detail as below. (a) Strategic Position Iran occupied an important strategic position in Asia, since it was in military and economic terms one of the strongest countries between Western Europe and Japan. Saudi Arabia, which has been a much richer country, has neither the population nor the military capacity of Iran. The only comparable countries in the Middle East in terms of population had been Egypt and Turkey, but neither of them had the economic resources derived from oil that Iran had. Moreover, Iran was in a strategic position not only because of its relationships with the Western countries but also because it has a long border wilh the Soviet Union. (b) Economic Reasons: Oil revenue has been a secure income on which the military expenditure has mainly relied. There has always been a direct correlation between oil revenue and arms purchased. A major part of the oil revenue returned to the industrialised nations through the purchase of arms—a phenomenon which later came to be known as the policy of recycling of petro-dollars, in the context of the global distribution of U.S. dollars held as stocks. Table 1 OIL REVENUE AND MILITARY EXPENDITURE DURING 1955-78 (IN BILLION RIALS/AT CURRENT PRICE) Items 1955 1962 1973 1978 Oil Revenue 4.6 17 311 1,500 Military Expenditure 4 11.7 134 700 M.E. as % of oil revenue 87 68.8 43.1 46.6 Source : Extracted from various issues of SIPRI and Statistical Yearbook of Iran. Military expenditure during this period (1955-1978) was increasing smoothly, but after the oil price hike in 1973, it increased dramatically. After 1973, Iran's oil revenue amounted to around $ 20 billion annually, and created an excess supply of resources that an economy of Iran's size and infrastructure, found difficult to absorb. The potential alternatives to be used singly or conjointly were three : (a) to increase the expenditure