Capitalism's long-standing drive for oil profits in the Middle East

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Today's war against Iraq is not the first time the major capitalist powers have intervened in the region to guarantee their access to 'black Many times in the past, Britain, Germany, France-and later, the U.S.-have used divide and conquer tactics and outright military aggression to maintain their control over the SOCIALIST ACTION MARCH 1991 11 gold.' area.

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Constantinople TURK :MEDITERRANEANE -Damascus SEA -Jerusalem THE MIDDLE EAST IN 1914 MIDDLE EAST IN This article is the first of a two-part series.

Oil is as necessary as blood," said French Premier Georges Clemenceau following World War I. France, Britain, and the United States had just "floated to victory," relying on a wave of petroleum to fuel their ships and other engines of war.

Oil had become so "necessary" to the allied powers, in fact, that millions of people were sent into battle to obtain it. Sir Maurice Hankey, secretary of the British war cabinet at the time, pointed out that control over the oil supplies of Mesopotamia (Iraq) and Persia (Tran) was a "first-class British war aim."

Oil had become a valuable commodity in Europe and America as the gasoline-driven internal combustion engine came into use toward the close of the 19th century. But one country, the United States, supplied practically all the world's petroleum.

Government officials in Europe warned that it was necessary to find other sources of oil that they could control. They looked hungrily toward the Middle East, which seemed ripe for financial and political exploitation. • The Middle East prior to World War I was dominated by two crumbling empires-that of the Persians and that of the Ottoman Turks. Virtually all of the area's railroads, shipping lines, and sources of raw materials were controlled by Western capitalists. But the European powers wanted more.

Britain had already dislodged Egypt from Ottoman rule and was working to pick off Kuwait as well. France had taken Algeria and now hoped to snatch Syria from Turkey. Russia had occupied Turkestan and parts of northern Persia. And Germany was engaged in a financial and diplomatic "drive to the East."

Germans search for oil profits The region that is now called Iraq, then part of the Ottoman Empire, was also up for grabs. As early as 1871, a party of German geologists was sent to scout the provinces of Baghdad and Mosul for oil. They brought back glowing reports of the oil seepages that the local potentate, Midhat Pasha, was gathering there.

In 1888, the Germans ÷ Bal Baku:

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PERSIA •Kirkük •• Euphrates Baghdad Masjid-iTigris Salaman Abadan Basra • • KUWAIT: • • ..ao ARABIA sion from the Turkish sultan to contruct a railroad from Berlin to Bagdad and the Gulf. The rights for the project were soon transferred to the giant Deutsche Bank monopoly, which received all the mineral and oil rights for 20 miles on both sides of the trackway.

But the Germans' interest in oil aroused the suspicions of the Imperial Government. It appointed a young Armenian engineer, Calouste Gulbenkian, to gather all the information he could find on the oil projects in Irag.

On the strength of Gulbenkian's reports, Two of the big "players': William the state lands managed by the Germans were transferred directly to the Sultan's privy purse. Several years later, alleging that the railroad company had failed to meet its obligations, the Sultan informed the Germans that their concession had expired.

That was a blow to the Deutsche Bark; but neither it nor Gulbenkian were yet out of the bidding for Iraqi oil. First, however, a new player would join the oil game-the British capitalist class.

The British find oil in Persia In the 1870s, the British began exploring for oil in Persia. They concentrated their efforts in a region that had been part of Ottoman-ruled Iraq many times in the past and now was within the Persian state. That region was called Arabistan (Khuzistan today).

Arabistan was populated in large part by rebellious Arabic-speaking tribes. These people, despite all the wars for control over their territory, were able to maintain a great deal of autonomy from both the Persian Shah and the Ottoman Sultan.

The British, of course, were only too glad to offer their protection to the tribal leaders—while at the same time offering their services to the Shah and his army.

In 1901, upon the urging of the British goverment, the Shah granted an oil concession to William D'Arcy, an English millionaire. D'Arcy was given rights over 480,000 square miles of Persian territory, By royal decree, the Shah declared that "as a result of the particularly friendly relation which unites powerful Great Britain and Persia," D'Arcy and his heirs would be given "unlimited liberty for a period of 60 years to probe, pierce, and drill at their will the depths of Persian soil; in consequence of which all the subsoil products wrought by him without exception will remain the property of D'Arcy."

First, however, the drilling sites had to be protected from the local inhabitants. A company of Bengal Lancers was sent to one field and a gunboat to another. Still, the oil exploration dragged on for six years. Finally, in 1908, oil was found. A new company, Anglo-Persian (AP, today called British Petroleum), was formed to exploit the discovery.

Stringent measures were taken to ship and protect the oil. A pipeline to the seacoast was constructed after the British government procured the land from the local sheikh. In exchange, the British promised to protect Arabistan's autonomy against the Shah.

A refinery and port was built at Abadan, on the Shatt Al-Arab River. This land had once been part of Iraq, but in 1847 Britain and Russia had arranged a treaty which gave the territory to Persia-thus shrinking Iraq's access to the sea. Nevertheless, large oil tankers still had to load in Ottoman territorial waters. In 1913, Britain and Russia collaborated on a new treaty to shift the border even more in Persia's favor.

Oil for the British Navy Meanwhile, the major imperialist powers were arming for war. Germany had constructed a new fleet of oil-powered submarines. In order to surpass the Germans, the British, too, made plans to expand and modernize their navy.

Winston Churchill, who became First Lord of the Admiralty in 1911, was among those who advocated converting the fleet to oil power.

Coal-fired ships, Churchill pointed out, could only increase their speed significantly if they were provided with extra boilers. But this would cut into the space provided for armaments and would require a larger crew. Coal-powered ships also had the need to refuel in port, whereas oil-powered ones could refuel easily at sea.

Churchill had to acknowledge, however, that while Britain had great reserves of coal, it had little oil of its own. Thus, he said, "we must become the owners or at least the controllers" of oil fields overseas.

With little delay, a bill was introduced into the House of Commons by which the government would buy a 51 percent voting share of Anglo-Persian. Public tax money would be used to guarantee profits to D'Arcy and the other investors. In return, the navy would get cheap oil from the Middle East.

The bill received the Royal Assent only six days before the start of World War I.

By means of its interest in Persian oilthe Anglo-Persian combine-the British government hoped to obtain control of Iraq's oil as well. Unfortunately, the AP group had been beaten out in Iraq by another syndicate, the Turkish Petroleum Company (TPC).

TPC was the brainchild of Calouste Gulbenkian-the former engineer for the Ottoman Sultan—who was now 20 years older, much wealthier, and admired by some as the "Talleyrand of oil diplomacy." Gulbenkian had become a member of the directors of the Turkish National Bank (which, despite its name, was a group designed to promote British interests in the Ottoman Empire).

Gulbenkian was able to convince his fellow bank directors to join the hunt for oil in Iraq. But before they could get down to business, they had to deal with the Deutsche Bank, which already had a claim on oil in the country.

Rather than fight the Germans, Gulbenkian decided to join them. The Deutsche Bank was given a quarter share in TPC, and another corporation-Royal Dutch Shell—was also given a quarter.

The British government, however, was far from satisfied that this new British-GermanDutch combine would serve its interests. British officials set to work to force the company to amalgamate with its own Anglo-Persian group. Anxious negotiations were carried on between the governments of Britain and Germany.

Finally, according to the "Foreign Office Agreement" of March 19, 1914, AngloPersian was given a 50 percent share of the Iraqi concession. The Deutsche Bank and Royal Dutch Shell were allowed to keep their 25 percent shares. This only left Gulbenkian's Turkish National Bank to contend with.

After some prodding, the Deutsche Bank and Shell agreed to give 2.5 percent from each of their shares as payoff to Gulbenkian, who was known from then on as "Mr. Five Percent."

As part of the pact, all of the parties agreed not to have any oil dealings in the whole of the Ottoman Empire outside of the Turkish Petroleum Company. Thus, as Britain and Germany divided up the Middle Eastern oil fields, decades of imperialist rivalry seemed to have come to an end. Many believed that a "New World Order" was in store.

Beginning of the World War Unfortunately, on the very day that the Turkish Grand Vizier signed a memo promising the Iraqi oil concession to TPC, the Austrian Archduke Franz Ferdinand was assassinated in Sarajevo. World War I had begun.

At the time, British shipyards were completing construction on two dreadnought battleships for the Ottoman Empire. Although the Ottomans had not yet entered the war, Churchill commandeered the ships on behalf of the Royal Navy. This act helped to convince the Turks to ally with the Germans in the war.

The British thought victory against the Ottoman Turks would be quick and easy. This was not to be. Thousands of allied troops died storming the beaches of Gallipoli.

Meanwhile, a "valiant" second front was carried on in the boardrooms of the big oil companies. The Deutsche Bank's 25 percent interest in Iraqi oil was taken over by the British Custodian of Enemy Property. Eventually, the share was given to Britain's new ally, France.

But in order to be safe, British troops were sent into the area of the Mosul oil fields to beat out the French in occupying the region.

Although the armistice had already been signed with the Ottoman Empire, the British claimed a "military necessity" to justify their construction of oil pipelines, railways, and refineries in the captured territory.

Very soon, however, the British had to confront a latecomer to the Middle East treasure hunt; the United States was also clamoring for a share of the Iragi oil concession. The Americans and their so-called "Open Door Policy" were a threat that the Europeans could not ignore.

The people of Iraq, for their part, received nothing. Freed from the Ottoman Empire, their land became a direct colony of Britain. In a future issue of Socialist Action, we will describe how Big Oil and the Western governments divided the spoils of the First World War-with consequences that remain

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of the world situation.