Oil Addiction: The World in Peril - 20
by Pierre Chomat (Universal Publishers, 2004)
translated from the French by Pamela Gilbert-Snyder
Part III. The Power of America: Rooted in Dependency
Chapter 20. The Aramco Egosystem
In 1945, North America could easily have contented itself with the energy resources located on its own continent. Its known reserves of coal, petroleum, and natural gas produced more than enough to meet the needs of the United States, Canada and Mexico combined - and there were more to be discovered. But American industry could not let opportunities to turn a profit in other parts of the world slip by, whether in Venezuela, Indonesia or, of course, the Persian Gulf, which had been making its European competitors wealthy for thirty years. In addition, the American government still believed the communist bloc might try to cut the capitalist nations off from their energy supplies. It could not ignore the power of the Middle East's hydrocarbon reserves.
After World War II, the military's need for equipment declined and the industrial powerhouse built by the United States to triumph over the formidable armies of Germany and Japan had to find civilian markets. The Marshall Plan of economic aid to Europe and the development of foreign oil fields gave American industry just the boost it needed. We are all familiar with what the fabulous Marshall Plan did to get Western Europe back on its feet, but few people know much about what went on in Saudi Arabia during that time.
Just a few years after its creation, Aramco was in a position of strength vis-a-vis not only the Anglo-Iranian Oil Company and the Iraq Petroleum Company, but also other American oil companies that were supplying the world with crude oil. The huge Saudi reserves enabled it to operate at very low costs, so it could sell at whatever price it liked. In addition, this company represented an enormous source of potential business for American construction companies.
Standard Oil of California's initial investment in Aramco consisted of a series of wells whose output turned out to be phenomenal. Aramco showed a profit almost immediately and began assigning construction projects to American companies. With the royalties it paid to Saudi Arabia, King Ibn Saud developed his own country's infrastructure, which, for the most part, also resulted in construction contracts that were very profitable for the United States. Practically all of the proceeds from the sale of Saudi crude found their way to America in one form or another. Of course, the miraculous liquid from the ground was also a windfall for the King, who began to enjoy a certain prosperity, but it was mainly a source of huge enrichment for the United States.
Through Aramco, a great egosystem driven by Saudi oil was up and running very quickly, with American enterprise as the beneficiary. Aramco was circulating colossal sums of money through this very well organized circuit. As American companies became more involved in the development of Saudi Arabia, King Ibn Saud's demands for higher royalties grew apace. As the King's demands rose, so did the price of Aramco crude. The king got rich, his retinue grew, and the kingdom could point to conspicuous signs of progress. The American companies got rich even faster and paid excellent dividends to their shareholders and huge amounts in taxes into government coffers - and political campaigns. The loop was closed!
It did not take long for those who profited from Aramco to realize that they could grow even richer - and of course more powerful, too - simply by making their giant egosystem turn faster.
The free enterprise system was in full swing, incredibly dynamic and completely oblivious to the cultural changes its activities were bringing about in Arab society. American business negotiators never went beyond the King's court. It did not matter to them that the Wahhabi elite, corrupted by wealth, were forgetting some of the Koran's most basic principles, which they continued nevertheless to impose on the Saudi people.
A way to accelerate the Aramco egosystem was soon found. In some financial circles the system surrounding Aramco was already being called the "dollar pump"; now it would be transformed into an incredible "dollar cyclotron'. {27}
With the agreement of King Ibn Saud, Aramco opened its capital to three other American oil giants, Exxon (formerly Standard Oil of New Jersey), Mobil Oil (formerly Standard Oil of New York), and Texaco. In 1946, just one year after the terrible war that had ravaged the globe, Standard Oil of California and its three Aramco partners were distributing Saudi crude around the world. These companies took pride in being referred to as the "majors". By joining forces, the "majors" found a way to control the price of oil everywhere. Three of these companies had been created after the breakup of Rockefeller's Standard Oil Trust ordered by the US Supreme Court in 1911.
The American government, which prohibited companies from forming trusts on its own territory, raised no protest when the former Standard Oil more or less reconstituted itself in Aramco and began practicing a policy of discreet monopoly over both the Saudi government and the international crude oil market. Even the Democratic president who succeeded Roosevelt, Harry S Truman, found nothing in the arrangement to contradict his nation's democratic principles. Many congressmen begged to differ, believing that the extremely wealthy companies operating out of Saudi Arabia were playing rather fast and loose with US law, but fundamentally nothing really changed.
By 1946, the United States, through Aramco, controlled all of Saudi Arabia's major resources - including the biggest hydrocarbon reserve ever discovered. The advice of American businessmen was followed to the letter. Their companies did not waste any time or money involving themselves in the country's societal affairs. To put still more distance between itself and the Saudi people, Aramco even decided to hire American service companies to supply the staff it needed to develop its oil fields and to run its export operations; San Francisco's Bechtel Corporation began meeting all of Aramco's basic needs in this regard. In the decades that followed, Bechtel and a few other American firms were responsible for engineering and managing the construction of all of Aramco's petroleum facilities, on land and offshore, and almost all of Saudi Arabia's other projects: cities, roads, ports, airports and general infrastructure. It is no exaggeration to say that they took charge of developing Saudi Arabia - without ever assuming any financial risk. All of their earnings came indirectly from Saudi crude.
The gigantic egosystem these companies built between Saudi Arabia and the United States extended well beyond the bounds of Aramco.
To ensure the continuity of its phenomenal success, Bechtel hired George Shultz, former Secretary of the Treasury under Richard Nixon, as its CEO in 1974. Shultz ran Bechtel for eight years until he was called to the White House again in November 1982, where he served as Ronald Reagan's Secretary of State until 1989.
With the operations in Saudi Arabia and developments elsewhere in the world, American industry became a powerful juggernaut. Aramco was nationalized by Saudi Arabia in 1976 and re-named Saudi Aramco, but the powerful Arab-American egosystem kept turning, notwithstanding the relinquishment of a few major Saudi industrial projects to corporations from Europe and Japan. By then Saudi Arabia's upper classes were living in total opulence.
Note
{27} This image [not included here] courtesy of Henri Barth, a high school principal in Salon de Provence, France, alluding to CERN's circular accelerator of subatomic particles, which is located near Geneva in Switzerland.
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 20. The Aramco Egosystem
In 1945, North America could easily have contented itself with the energy resources located on its own continent. Its known reserves of coal, petroleum, and natural gas produced more than enough to meet the needs of the United States, Canada and Mexico combined - and there were more to be discovered. But American industry could not let opportunities to turn a profit in other parts of the world slip by, whether in Venezuela, Indonesia or, of course, the Persian Gulf, which had been making its European competitors wealthy for thirty years. In addition, the American government still believed the communist bloc might try to cut the capitalist nations off from their energy supplies. It could not ignore the power of the Middle East's hydrocarbon reserves.
After World War II, the military's need for equipment declined and the industrial powerhouse built by the United States to triumph over the formidable armies of Germany and Japan had to find civilian markets. The Marshall Plan of economic aid to Europe and the development of foreign oil fields gave American industry just the boost it needed. We are all familiar with what the fabulous Marshall Plan did to get Western Europe back on its feet, but few people know much about what went on in Saudi Arabia during that time.
Just a few years after its creation, Aramco was in a position of strength vis-a-vis not only the Anglo-Iranian Oil Company and the Iraq Petroleum Company, but also other American oil companies that were supplying the world with crude oil. The huge Saudi reserves enabled it to operate at very low costs, so it could sell at whatever price it liked. In addition, this company represented an enormous source of potential business for American construction companies.
Standard Oil of California's initial investment in Aramco consisted of a series of wells whose output turned out to be phenomenal. Aramco showed a profit almost immediately and began assigning construction projects to American companies. With the royalties it paid to Saudi Arabia, King Ibn Saud developed his own country's infrastructure, which, for the most part, also resulted in construction contracts that were very profitable for the United States. Practically all of the proceeds from the sale of Saudi crude found their way to America in one form or another. Of course, the miraculous liquid from the ground was also a windfall for the King, who began to enjoy a certain prosperity, but it was mainly a source of huge enrichment for the United States.
Through Aramco, a great egosystem driven by Saudi oil was up and running very quickly, with American enterprise as the beneficiary. Aramco was circulating colossal sums of money through this very well organized circuit. As American companies became more involved in the development of Saudi Arabia, King Ibn Saud's demands for higher royalties grew apace. As the King's demands rose, so did the price of Aramco crude. The king got rich, his retinue grew, and the kingdom could point to conspicuous signs of progress. The American companies got rich even faster and paid excellent dividends to their shareholders and huge amounts in taxes into government coffers - and political campaigns. The loop was closed!
It did not take long for those who profited from Aramco to realize that they could grow even richer - and of course more powerful, too - simply by making their giant egosystem turn faster.
The free enterprise system was in full swing, incredibly dynamic and completely oblivious to the cultural changes its activities were bringing about in Arab society. American business negotiators never went beyond the King's court. It did not matter to them that the Wahhabi elite, corrupted by wealth, were forgetting some of the Koran's most basic principles, which they continued nevertheless to impose on the Saudi people.
A way to accelerate the Aramco egosystem was soon found. In some financial circles the system surrounding Aramco was already being called the "dollar pump"; now it would be transformed into an incredible "dollar cyclotron'. {27}
With the agreement of King Ibn Saud, Aramco opened its capital to three other American oil giants, Exxon (formerly Standard Oil of New Jersey), Mobil Oil (formerly Standard Oil of New York), and Texaco. In 1946, just one year after the terrible war that had ravaged the globe, Standard Oil of California and its three Aramco partners were distributing Saudi crude around the world. These companies took pride in being referred to as the "majors". By joining forces, the "majors" found a way to control the price of oil everywhere. Three of these companies had been created after the breakup of Rockefeller's Standard Oil Trust ordered by the US Supreme Court in 1911.
The American government, which prohibited companies from forming trusts on its own territory, raised no protest when the former Standard Oil more or less reconstituted itself in Aramco and began practicing a policy of discreet monopoly over both the Saudi government and the international crude oil market. Even the Democratic president who succeeded Roosevelt, Harry S Truman, found nothing in the arrangement to contradict his nation's democratic principles. Many congressmen begged to differ, believing that the extremely wealthy companies operating out of Saudi Arabia were playing rather fast and loose with US law, but fundamentally nothing really changed.
By 1946, the United States, through Aramco, controlled all of Saudi Arabia's major resources - including the biggest hydrocarbon reserve ever discovered. The advice of American businessmen was followed to the letter. Their companies did not waste any time or money involving themselves in the country's societal affairs. To put still more distance between itself and the Saudi people, Aramco even decided to hire American service companies to supply the staff it needed to develop its oil fields and to run its export operations; San Francisco's Bechtel Corporation began meeting all of Aramco's basic needs in this regard. In the decades that followed, Bechtel and a few other American firms were responsible for engineering and managing the construction of all of Aramco's petroleum facilities, on land and offshore, and almost all of Saudi Arabia's other projects: cities, roads, ports, airports and general infrastructure. It is no exaggeration to say that they took charge of developing Saudi Arabia - without ever assuming any financial risk. All of their earnings came indirectly from Saudi crude.
The gigantic egosystem these companies built between Saudi Arabia and the United States extended well beyond the bounds of Aramco.
To ensure the continuity of its phenomenal success, Bechtel hired George Shultz, former Secretary of the Treasury under Richard Nixon, as its CEO in 1974. Shultz ran Bechtel for eight years until he was called to the White House again in November 1982, where he served as Ronald Reagan's Secretary of State until 1989.
With the operations in Saudi Arabia and developments elsewhere in the world, American industry became a powerful juggernaut. Aramco was nationalized by Saudi Arabia in 1976 and re-named Saudi Aramco, but the powerful Arab-American egosystem kept turning, notwithstanding the relinquishment of a few major Saudi industrial projects to corporations from Europe and Japan. By then Saudi Arabia's upper classes were living in total opulence.
Note
{27} This image [not included here] courtesy of Henri Barth, a high school principal in Salon de Provence, France, alluding to CERN's circular accelerator of subatomic particles, which is located near Geneva in Switzerland.
Bill Totten http://www.ashisuto.co.jp/english/
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