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A SHORT HISTORY OF OIL
PAUL J. FISCH
“Who rules America?" the beloved reverend Billy Hults asked in an article he wrote last
year for the NCTE: “Who rules the world? Those with power. Power comes from oil. Oil powers
your car, powers the electric plants that run your television, lights and computer, the military
planes, ships and tanks. ”
His article, aptly titled ‘It’s The Oil, Stupid!’also asked “What was Vietnam about? Iraq?
Afghanistan? Colombia? Venezuela? Or, bring it all back home, ANWR, global warming, SUVs,
The Clean Air Act? The Clean Water Act? It is about oil, and has been for the last three-quarters
of a century."
Bill Weinberg asked the same type of questions in an article he wrote 13 years ago at the
advent of the first Persian Gulf War. “Does the war which our country is preparing to fight in the
Middle East have anything whatsoever to do with democracy? Or do the quickly escalating prices
at the gasoline pumps say more about the real reason for the massive troop mobilization."
To answer his own questions (which are uncannily pertinent in the wake of Gulf War 2),
Weinberg provided “a little historical background," which is reprinted from the New York City
weekly newspaper ("The One, The Only, The Original") DOWNTOWN.
BY BILL WEINBERG
At the turn of the 20th century, Iraq and most of
the massive Arabian peninsula were under the control of the
Turkish Ottoman Empire One of the exceptions was Kuwait,
whict) the British empire had secured as a protectorate to check
Turkish and German consolidation of power in the Persian Gulf.
(Germany owned the region's rail lines and was allied with
Turkey.) The Ottomans had dominated this part of the world
for centuries, but the British, French and United States were
acceleratingly playing for power — especially as oil became
an increasingly vital pillar of the world economy and scientists
speculated that the geological structure of the Middle East
deserts promised vast subterranean seas of the substance for
those with money to invest in exploration and development.
With Turkey’s defeat at the end of World War 1, the
victorious allies went about carving up the Ottoman Empire and
dividing it amongst themselves. Britain took Palestine and Iraq,
France took Lebanon and Syria, while monarchies were estab
lished in the Arabian peninsula, mostly under British tutelage.
By far the most powerful of these states was Saudi Arabia —
the only country on Earth named after its ruling family.The royal
Saud family still rules as a monarchy more than 80 years later.
To the east of this massive but sparsely populated state, on
the Arabian shores of the Persian Gulf, ministries such as
Oman, Qatar and Bahrain joined Kuwait as British-protected
monarchies
This carve-up provided the roots for the contemporary
shape of the Middle East Britain had promised the Palestinians
independence following World War 1 if they revolted against
the Ottoman Turks. They had, but Britain had simultaneously
promised the same territory to Jewish Zionist leaders in Europe
Breaking both promises, Britain simply kept Palestine for itself,
eventually leading to waves of both Zionist and Palestinian
nationalist violence and terrorism By 1920, Iraqi nationalists
were leading a popular armed uprising against the British
occupation of Iraq This prompted the British to withdraw,
leaving still another pro-British monarchy to rule in their stead
Simultaneously, the world’s most powerful oil companies
— many of them offsprings of John D Rockefeller's monolithic
Standard Oil, which had been broken up by an antitrust suit a
few years earlier— were negotiating with the Allied governments
for exploration and drilling rights in the former Ottoman Empire.
In one famous 1928 session in Belgium, a notorious “Red Line"
was drawn around the presumed extent of ill-defined borders
of the dismantled empire within which the oilmen divided up
the turf. Standard Oil of New Jersey (today’s Exxon) and the
Anglo/Persian Oil Company (British Petroleum) launched a joint
venture in Iraq, the Iraq Petroleum Company (IPC). Standard Oil
of California (Chevron) and the Texas Oil Company (Texaco)
launched a joint venture in Saudi Arabia, the Arab/American Oil
Company (Aramco). These conglomerates came to dominate
the economies of, respectively, Iraq and Saudi Arabia.
The oil companies began to reshape American society
in anticipation of the seas of petrol which were soon to emanate
from the Middle East. In a joint venture with car and tire manu
facturers such as General Motors and Firestone, they started
creating dummy corporations and buying up the trolley systems
in such cities as Los Angeles, New York and Boston — and
having them dismantled, leaving these rapidly expanding urban
areas almost completely dependent on automobile transport
ation (especially Los Angeles, which had no subway system).
Iran, which had not been part of the Ottoman Empire,
had long been dominated economically by the Anglo/Persian
Oil Company, and was ruled by the dictatorial monarchy of
the Shah which the British had created as a means of checking
Russian influence. With the outbreak of World War 2, the Shah
demonstrated strong pro-Nazi sympathies, so the British quietly
had him ousted and divided Iran between their own occupation
forces and those of Russia, with whom Britain was allied again.
World War 2 was a setback for the development of
the Middle East as a source of global oil. Military campaigns
in North Africa were aimed at keeping the Axis powers away
from Middle East oil — despite the facts that Standard Oil of
New Jersey (Exxon) had recently given the Nazis an edge in
industrial might through a power-sharing agreement with the
German powerhouse I. G. Farben, that the Texas Oil Company
(Texaco) had provided petroleum to the fascist dictatorship of
Generalissimo Franco in Spain, and that Sir Henry Detering,
the man who had built Royal Dutch Shell, had been eased out
of power by his own board of directors for spouting pro-Nazi
rhetoric long after it had started be embarrassingly inapprop
riate.
In World War 2 the Allies were supplied with oil from
Venezuela (sparking a U.S. propaganda and espionage effort
to check Fascist influence in Latin America, which had the
paradoxical result of popular revolutions that toppled U.S.-
supported dictatorships in Guatemala, El Salvador and else
where). Lack of a reliable source of oil for the Axis powers was
instrumental in their defeat in 1945 (a result of intense bombing
campaigns in Nazi-controlled Romanian oil fields and recapture
of Japanese-held Indonesian fields).
It was in the immediate aftermath of World War 2 that
the Middle East became the most important source of global oil
and the United States superseded Britain as the most dominant
power in the region The oil industry boomed. Gasoline stations
and automobile-dependent suburbia took over vast areas of the
American landscape, spreading out rapidly from its Southern
California birthplace The last wilderness areas in Europe, north
ern Scandinavia and southern Italy, were linked by paved roads
to the burgeoning car culture. Cities in the developing world,
such as Mexico City and Cairo, followed the lead of Los Angeles
in becoming almost completely auto-dependent. The petrochem
ical industry exploded, fashioning everything from agricultural
fertilizers to rock&roll "platters" from oil Plastics, basically
chewed-up oil, proliferated
Exploding profits were an inducement for greater
cooperation and centralization in Middle East oil exploitation.
Abandoning the turf divisions that had been established by
the “Red Line" agreement of 1928, Standard Oil of NJ (Exxon)
and Standard Oil of New York (Mobile) joined Standard Oil
of California (Chevron) and the Texas Oil Company (Texaco)
in their Saudi Arabian joint venture, Aramco.The British induced
the Soviets to withdraw from Iran and put the Shah's son on the
throne — who naturally granted British Petroleum very favorable
terms for exploitation. In 1952, when Iranian nationalist Muham
mad Mossadeq was elected prime minister and attempted to
nationalize the oil fields, British intelligence appealed to the
U.S.’s newly formed Central Intelligence Agency to help organ
ize a coup d'etat which would oust Mossadeq and allow the
Shah to consolidate dictatorial power. Then CIA Director Allen
Dulles and his brother Secretary of State John Foster Dulles
were senior members of the New York law firm that represented
Standard Oil of New Jersey. The CIA organized the coup with
the British, and Standard Oil of NJ/Exxon subsequently joined
British Petroleum in the lucrative Iranian oil fields.
The Japanese launched the Arabian Oil Company and
established the emirate of Kuwait as its Middle East mainstay.
Pipelines linking oil fields with tanker ports were built.
In the 1950s- 60s, however, a backlash could be felt.
In addition to resentment against the monarchical elites who
allowed western corporations to exploit oil on such easy terms,
there was also growing animosity against the fact that in 1948
Britain had finally been forced by the United Nations to cede
Palestine to the Jewish Zionist settlers — over the strenuous
objections of the Arab and Islamic nations. This situation led
to war between the new Zionist state of Israel and its Arab
neighbors in 1948, 1956, 1967 and 1973 (October 6 is the 30th
anniversary of the beginning of the Yom Kippur War).Territories
occupied by Israel, chiefly in 1967, have still not been ceded
today despite both Arab pressure and resistance from the Arab
Palestinians who inhabit the occupied territories. As more and
more Arab states became less accommodating to western
interests (primarily oil interests), the United States increasingly
bolstered Israel's formidable military prowess and kept its econ
omy afloat with aid, until Israel was receiving more money from
the U.S. than any other country on Earth. In a vicious cycle, this
merely fueled Arab hostility.
Pro-West Arab monarchies began to fall in military
coups to nationalist strongmen such as Egypt’s Gamel Nasser
and Libya’s Moamar Qaddafi. They had learned from the
negative example of Iran’s Mossadeq that military might was
the key to nationalizing oil fields without fear of being ousted
in retaliation. The coup that ousted Iraq's monarchy came in
1958, and the military regime nationalized the Iraq Petroleum
Company in 1972. By than Saddam Hussein was a rapidly rising
figure in the regime, well on his way to achieving undisputed
power by killing off his rivals in suspiciously mysterious air
accidents — or so it was widely speculated.
The very next year came the first global oil crunch. The
Arab oil producers announced an embargo of exports to the U.S.
in retaliation for American military support for Israel in the 1973
war. The oil companies took the opportunity to jack up prices,
and long lines formed outside U.S. gas stations coast to coast.
This was the most dramatic development in a trend that started
in 1960 when many of the Arab states joined with Iran and
Venezuela to form the Organization of Petroleum Exporting
Countries (OPEC) to cooperate in controlling global supplies
and prices — generally in ways less favorable to the West.
The U.S. elites started to view the Arab nationalist regimes as
a serious threat. Regimes such as that in Iraq were moving the
political center of gravity in the Middle East, and even U.S.-
supported monarchies in Iran and Saudi Arabia were no longer
as compliant as they had once been.
The CIA went into action against Iraq, enlisting the
cooperation of the Shah of Iran in arming the insurgency of the
Kurds, a tribal people in Iraq’s remote northern desert who had
been overlooked in the post-World War 1 carve-up and were
fighting for regional autonomy. The notion that the U.S. had any
genuine concern for Kurdish autonomy was easily dispelled by
the fact that barely a decade later, in Kurdish territory just across
the Turkish border, a Kurdish rebellion was brutally suppressed
by a military regime that received massive American support.
The Kurds were apparently useful in nationalist Iraq but merely
troublesome in U.S.-supported Turkey.
Furthermore, in 1975 the Shah of Iran, seeking to
strengthen his position with OPEC, decided to patch up things
with Iraq, and the CIA lost Iran as an arms conduit to the Kurdish
rebels — the Iraqi regime had made selling-out the Kurds a
precondition for cooperation with Iran in OPEC talks in their
mutual interest. The CIA dropped the Kurds as Iraq unleashed
a bloody offensive and crushed the insurgency. Several thous
and Kurds escaped Iraq's butchery by fleeing across the border
to Iran — only to be forcibly repatriated. The U.S. refused to
admit so much as one Kurdish refugee. The world hardly took
note of this shameful episode, but then National Security advisor
Henry Kissinger did at one point respond to criticism with the
comment, “Covert action should not be confused with mission
ary work."
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