Oil Addiction: The World in Peril - 18
by Pierre Chomat (Universal Publishers, 2004)
translated from the French by Pamela Gilbert-Snyder
Part III. The Power of America: Rooted in Dependency
Chapter 18. Black Gold in the Persian Gulf
The first European nation to really understand petroleum's phenomenal potential for industrial development was England. Cradle of the Industrial Revolution, it realized that it owed its rapid ascension to the use of energy. With coal, England developed a passion for industry; with oil, this passion would prove insatiable. At the dawn of the twentieth century, England began focusing its colonial expansion on the search for reserves of black gold, and this led it inevitably to the Middle East.
In 1901, the Shah of Persia, Mozzafar-edin Shah, granted an oil concession covering his entire country to a small private company from Britain belonging to William Knox d'Arcy. This was actually more than a concession. It was a partnership between Persia and Knox d'Arcy that guaranteed Persia sixteen percent of all of the company's revenues. Knox d'Arcy drew the first oil from his well in Khuzestan province (now southwestern Iran) in 1904. Oil fields had already been developed in Baku (Azerbaijan) on the Caspian Sea, where a primitive oil distillery may have been in operation as early as 1723 {22}, but the Persian oil of Khuzestan was the first ever to be extracted industrially in the Middle East.
In 1912, the Shah's agreement was reduced to shreds. With no prior warning, the Persians were informed that someone else, the Anglo-Persian Oil Company (APOC), one hundred percent English, would replace William Knox d'Arcy in managing the concession. Winston Churchill had just convinced the House of Commons to inject new capital into Knox d'Arcy's company and acquire a controlling interest. In return, the oilmen promised Churchill, then head of the British Navy, secure supplies of oil at a price that did not exceed development costs - that is, without paying a profit to the company or to Persia, for that matter, which was faced with a fait accompli. {23}
Disregarding the contract signed by Knox d'Arcy, the British Empire, then the world's superpower, began simply helping itself to Persian petroleum. Soon APOC's interests and those of the Empire were one and the same, and Persia had no recourse but to bow down before them. The Bakhtiari tribe, which had retained ancestral rights over the mouth of the Shatt-el-Arab estuary and Kuwait, was also in for a nasty surprise at the negotiating table. It was dispossessed of its lands in Abadan, where APOC was planning to build industrial facilities and living quarters, and their chief, Sheikh Khazal, was forced to sign a paltry agreement and abandon his territory. {24}
From then on, in the Middle East as in Texas, control of oil resources belonged to whoever could pump it out of the ground. This control also raised England and the rest of Western Europe to the highest rungs of the industrial ladder. Persia could only sit and watch as its oil was drained away toward the West. This was the height of the colonial period.
When war came in 1914, the British were quick to react. As soon as combat began, they clashed swords in Mesopotamia. For four years, they fought the Turks in what must now be recognized as the world's first "oil war". Persia was not the only black gold mine that the Crown of England was eying voraciously. Mesopotamian oil was also considered vital for the future of the Royal Navy, then the world's most powerful, which was planning to convert its entire fleet to the new fuel. In 1884, the Pasha of Baghdad had divided Mesopotamia into three Ottoman provinces, each with its own government: Basra on the Persian Gulf in the south, where the country's first known petroleum reserves were located; Baghdad in the center; and Mosul in the north. The British took over Basra in 1914, Baghdad in 1917, and then Mosul. By 1918 they occupied
all three provinces, which they unified later under the name "Iraq".
During this campaign, the British imperial forces, made up essentially of colonial soldiers from India, suffered four hundred thousand casualties. Even at this early date, the Empire was paying a high price in human lives for access to Gulf oil.
World War I had given England the excuse and opportunity to secure its positions in the Middle Eastern oil fields. By the end of the war, it was at home in the Indian Ocean, the Red Sea, and the Persian Gulf. Germany and its ally, the Ottoman Empire, could not have aided the British more if they had actually tried to intentionally. Not only did Germany fail to chase England out of the Middle East as planned, it also had to abandon the first outposts of its own would-be colonial empire to the victors. Germany would not forget it.
In April 1920, the French and English met in San Remo, Italy, to formalize the applications of the Treaty of Versailles that had ended World War I. Their main concern was to divvy up the Middle East. Under a system established by the League of Nations, Great Britain was awarded the Mandates for Iraq and Palestine, with France receiving those for Syria and Lebanon. Germany's pre-war share of the Iraqi oil fields went to France and England, the latter receiving the lion's share. In terms of oil, Great Britain came out of the war the biggest winner. It now had a firm grip on the hydrocarbon reserves of Iran and Iraq, and it fully intended to take maximum advantage of them.
At that time, London's financial district was more interested in hunting for black gold than in knowing anything about the populations of Persia and Mesopotamia, who had no idea that decisions about their country were being made on the banks of the Thames. Their lives were not worthy of any particular notice - just the occasional blow of a sword at most. If a khan or a sheikh was sometimes called before a petroleum company representative, it was nearly always to inform him that an oil reserve would be developed on his lands. He might also be asked to sign some piece of paper guaranteeing the company the inalienable right to develop the mineral resources of the region that he was supposed to be ruling. And if his authority was not sufficiently recognized by neighboring tribes, the Empire's envoys did what they could to change that; he might be supplied with weapons, for example. Finally, to give the contract international credibility and to keep the other black gold hunters at bay, it was advisable for this local leader to appear to be wealthy. Once the agreement was signed, His Lordship was invited to show the world the wealth that he had procured as a result of his relations with the British. One might see him parading around with a large retinue and a new and improved harem. London would then praise its emissaries for bringing, if not civilization, at least some ostentatious wealth to its new partners.
The Anglo-Persian Oil and Iraq Petroleum companies, created by the English to develop Middle Eastern oil, soon ruled the land like potentates. By 1930, APOC was already considered an industrial giant that possessed, beneath its derricks, the greatest potential fortune ever known. This made it the world's largest de facto bank, even though its gold was black, liquid and still buried in the ground.
Although the Americans finally managed to force their way into the Iraq Petroleum Company as shareholders alongside the Anglo-Persian Oil Company, Anglo-Dutch Shell and the Compagnie Francaise des Petroles, the British still monopolized most of the Middle East's mineral wealth. The French were for the most part preoccupied with profiting from their colonies in Africa and Southeast Asia. American oil companies were busy exploiting the innumerable petroleum fields on their own continent and in Venezuela, and had only a minor interest in venturing into the Middle East. Although the business world could not help but admire the British Empire's success, American industry and its staunch defenders in Congress watched with bitter envy.
The oil companies were talked about worldwide, but the nations that produced the oil received little notice. APOC, the Iraq Petroleum Company, and their subsidiaries were officially paying royalties to Iraq and Persia in amounts corresponding to their respective holdings, generally between fifteen and twenty percent for each oil concession. {a} But they paid these fees sporadically if at all. The companies' books were kept in London, and the representatives of Persia and Iraq were not invited to decision-making sessions. The royalties never amounted to much, especially in comparison with the profits the Chancellor of the Exchequer was making simply by virtue of the taxes levied on the sale of petroleum products.
Such was the British Empire!
Notes
{22} Alain Perrodon, Lepitrole a traven les ages, (Paris, France: Editions Boubee, 1989), 34.
{23} Manucher Farmanfarmaian and Roxane Farmanfarmaian, Blood and Oil, (New York: The Modern library, 1999), 89.
{24} Ibid, 91.
{a} Petroleum exploration and development concessions are contracts between the entity that owns a specific territory, usually the State, and an oil company responsible for finding and developing, usually at its own expense, any resources that may exist on that land.
Bill Totten http://www.ashisuto.co.jp/english/
translated from the French by Pamela Gilbert-Snyder
Part III. The Power of America: Rooted in Dependency
Chapter 18. Black Gold in the Persian Gulf
The first European nation to really understand petroleum's phenomenal potential for industrial development was England. Cradle of the Industrial Revolution, it realized that it owed its rapid ascension to the use of energy. With coal, England developed a passion for industry; with oil, this passion would prove insatiable. At the dawn of the twentieth century, England began focusing its colonial expansion on the search for reserves of black gold, and this led it inevitably to the Middle East.
In 1901, the Shah of Persia, Mozzafar-edin Shah, granted an oil concession covering his entire country to a small private company from Britain belonging to William Knox d'Arcy. This was actually more than a concession. It was a partnership between Persia and Knox d'Arcy that guaranteed Persia sixteen percent of all of the company's revenues. Knox d'Arcy drew the first oil from his well in Khuzestan province (now southwestern Iran) in 1904. Oil fields had already been developed in Baku (Azerbaijan) on the Caspian Sea, where a primitive oil distillery may have been in operation as early as 1723 {22}, but the Persian oil of Khuzestan was the first ever to be extracted industrially in the Middle East.
In 1912, the Shah's agreement was reduced to shreds. With no prior warning, the Persians were informed that someone else, the Anglo-Persian Oil Company (APOC), one hundred percent English, would replace William Knox d'Arcy in managing the concession. Winston Churchill had just convinced the House of Commons to inject new capital into Knox d'Arcy's company and acquire a controlling interest. In return, the oilmen promised Churchill, then head of the British Navy, secure supplies of oil at a price that did not exceed development costs - that is, without paying a profit to the company or to Persia, for that matter, which was faced with a fait accompli. {23}
Disregarding the contract signed by Knox d'Arcy, the British Empire, then the world's superpower, began simply helping itself to Persian petroleum. Soon APOC's interests and those of the Empire were one and the same, and Persia had no recourse but to bow down before them. The Bakhtiari tribe, which had retained ancestral rights over the mouth of the Shatt-el-Arab estuary and Kuwait, was also in for a nasty surprise at the negotiating table. It was dispossessed of its lands in Abadan, where APOC was planning to build industrial facilities and living quarters, and their chief, Sheikh Khazal, was forced to sign a paltry agreement and abandon his territory. {24}
From then on, in the Middle East as in Texas, control of oil resources belonged to whoever could pump it out of the ground. This control also raised England and the rest of Western Europe to the highest rungs of the industrial ladder. Persia could only sit and watch as its oil was drained away toward the West. This was the height of the colonial period.
When war came in 1914, the British were quick to react. As soon as combat began, they clashed swords in Mesopotamia. For four years, they fought the Turks in what must now be recognized as the world's first "oil war". Persia was not the only black gold mine that the Crown of England was eying voraciously. Mesopotamian oil was also considered vital for the future of the Royal Navy, then the world's most powerful, which was planning to convert its entire fleet to the new fuel. In 1884, the Pasha of Baghdad had divided Mesopotamia into three Ottoman provinces, each with its own government: Basra on the Persian Gulf in the south, where the country's first known petroleum reserves were located; Baghdad in the center; and Mosul in the north. The British took over Basra in 1914, Baghdad in 1917, and then Mosul. By 1918 they occupied
all three provinces, which they unified later under the name "Iraq".
During this campaign, the British imperial forces, made up essentially of colonial soldiers from India, suffered four hundred thousand casualties. Even at this early date, the Empire was paying a high price in human lives for access to Gulf oil.
World War I had given England the excuse and opportunity to secure its positions in the Middle Eastern oil fields. By the end of the war, it was at home in the Indian Ocean, the Red Sea, and the Persian Gulf. Germany and its ally, the Ottoman Empire, could not have aided the British more if they had actually tried to intentionally. Not only did Germany fail to chase England out of the Middle East as planned, it also had to abandon the first outposts of its own would-be colonial empire to the victors. Germany would not forget it.
In April 1920, the French and English met in San Remo, Italy, to formalize the applications of the Treaty of Versailles that had ended World War I. Their main concern was to divvy up the Middle East. Under a system established by the League of Nations, Great Britain was awarded the Mandates for Iraq and Palestine, with France receiving those for Syria and Lebanon. Germany's pre-war share of the Iraqi oil fields went to France and England, the latter receiving the lion's share. In terms of oil, Great Britain came out of the war the biggest winner. It now had a firm grip on the hydrocarbon reserves of Iran and Iraq, and it fully intended to take maximum advantage of them.
At that time, London's financial district was more interested in hunting for black gold than in knowing anything about the populations of Persia and Mesopotamia, who had no idea that decisions about their country were being made on the banks of the Thames. Their lives were not worthy of any particular notice - just the occasional blow of a sword at most. If a khan or a sheikh was sometimes called before a petroleum company representative, it was nearly always to inform him that an oil reserve would be developed on his lands. He might also be asked to sign some piece of paper guaranteeing the company the inalienable right to develop the mineral resources of the region that he was supposed to be ruling. And if his authority was not sufficiently recognized by neighboring tribes, the Empire's envoys did what they could to change that; he might be supplied with weapons, for example. Finally, to give the contract international credibility and to keep the other black gold hunters at bay, it was advisable for this local leader to appear to be wealthy. Once the agreement was signed, His Lordship was invited to show the world the wealth that he had procured as a result of his relations with the British. One might see him parading around with a large retinue and a new and improved harem. London would then praise its emissaries for bringing, if not civilization, at least some ostentatious wealth to its new partners.
The Anglo-Persian Oil and Iraq Petroleum companies, created by the English to develop Middle Eastern oil, soon ruled the land like potentates. By 1930, APOC was already considered an industrial giant that possessed, beneath its derricks, the greatest potential fortune ever known. This made it the world's largest de facto bank, even though its gold was black, liquid and still buried in the ground.
Although the Americans finally managed to force their way into the Iraq Petroleum Company as shareholders alongside the Anglo-Persian Oil Company, Anglo-Dutch Shell and the Compagnie Francaise des Petroles, the British still monopolized most of the Middle East's mineral wealth. The French were for the most part preoccupied with profiting from their colonies in Africa and Southeast Asia. American oil companies were busy exploiting the innumerable petroleum fields on their own continent and in Venezuela, and had only a minor interest in venturing into the Middle East. Although the business world could not help but admire the British Empire's success, American industry and its staunch defenders in Congress watched with bitter envy.
The oil companies were talked about worldwide, but the nations that produced the oil received little notice. APOC, the Iraq Petroleum Company, and their subsidiaries were officially paying royalties to Iraq and Persia in amounts corresponding to their respective holdings, generally between fifteen and twenty percent for each oil concession. {a} But they paid these fees sporadically if at all. The companies' books were kept in London, and the representatives of Persia and Iraq were not invited to decision-making sessions. The royalties never amounted to much, especially in comparison with the profits the Chancellor of the Exchequer was making simply by virtue of the taxes levied on the sale of petroleum products.
Such was the British Empire!
Notes
{22} Alain Perrodon, Lepitrole a traven les ages, (Paris, France: Editions Boubee, 1989), 34.
{23} Manucher Farmanfarmaian and Roxane Farmanfarmaian, Blood and Oil, (New York: The Modern library, 1999), 89.
{24} Ibid, 91.
{a} Petroleum exploration and development concessions are contracts between the entity that owns a specific territory, usually the State, and an oil company responsible for finding and developing, usually at its own expense, any resources that may exist on that land.
Bill Totten http://www.ashisuto.co.jp/english/
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