excerpted from the book
by Stephen Rosskamm Shalom
Some Crude History
Much of the world's proven oil reserves are located in the
limited area of the Persian Gulf (called by Arab nations the "Arabian
Gulf," and by those who try to keep their gazetteers politically
neutral, simply "the Gulf").
Less than 4 percent of U.S. oil consumption comes from the
Gulf, but, according to the official argument, Western Europe
and Japan are extremely dependent on Gulf oil and hence if the
region fell into the hands of a hostile power, U.S. allies could
be brought to their knees, and U.S. security would be fundamentally
and irreparably compromised. If one examines the history of U.S.
policy in the Gulf, however, protecting the oil interests of Western
Europe and Japan never seemed to be one of Washington's foremost
As far back as the 1920s, the State Department sought to force
Great Britain to give U.S. companies a share of the lucrative
Middle Eastern oil concessions The U.S. Ambassador in London-who
happened to be Andrew Mellon, the head of the Gulf Oil Corporation
(named for the Mexican, not the Persian/Arabian, Gulf)-was instructed
to press the British to give Gulf Oil a stake in the Middle East.'
At the end of World War II, when the immense petroleum deposits
in Saudi Arabia became known, Secretary of the Navy James Forrestal
told Secretary of State Byrnes, "I don't care which American
company or companies develop the Arabian reserves, but I think
most emphatically that it should be American." And it wasn't
the Russians that Forrestal was worried about. The main competition
was between the United States and Britain for control of the area's
In 1928, Standard Oil of New Jersey and Mobil had joined British
and French oil interests in signing the "Red Line Agreement,"
under which each pledged not to develop Middle Eastern oil without
the participation of the others. Nevertheless, after World War
11 these two U.S. firms (together with Texaco and Standard Oil
of California) grabbed the Saudi concessions for themselves, freezing
out the British and French. When the latter sued on the grounds
that the Red Line Agreement had been violated, Mobil and Jersey
told the court that the agreement was null and void because it
In the early 1950s, oil was used as a political weapon for
the first time-by the United States and Britain and against Iran.
Iran had nationalized its British-owned oil company which had
refused to share its astronomical profits with the host government.
In response, Washington and London organized a boycott of Iranian
oil which brought Iran's economy to the brink of collapse. The
CIA then instigated a coup, entrenching the Shah in power and
effectively un-nationalizing the oil company, with U.S. firms
getting 40 percent of the formerly 100 percent British-owned company.
This was, in the view of the New York Times, an "object lesson
in the heavy cost that must be paid" when an oil-rich Third
World nation "goes berserk with fanatical nationalism."
One former Defense Department official has estimated that
it cost U.S. taxpayers about $47 billion in 1985 alone for military
expenditures related to the Gulf; former Secretary of the Navy
John Lehman put the annual figure at $40 billion. What could be
worth these staggering sums?
These expenditures have not been necessary for the survival
of the West. In the extreme, according to former CIA analyst Maj.
Gen. Edward B. Atkeson, if all Gulf oil were cut off, the elimination
of recreational driving (which in the United States accounts for
10 percent of total oil consumption) would reduce western petroleum
needs to a level easily replaceable from non-Gulf sources. Even
in wartime, Atkeson concluded, Gulf oil is not essential to western
needs. And in a protracted global conflict, one can be sure that
oil fields would not last very long in the face of missile attacks.
The billions of dollars, however, are a good investment for
the oil companies, given that they are not the ones who pay the
tab. To be sure, the multinationals no longer directly own the
vast majority of Gulf crude production. But they have special
buy-back deals with the producers, whereby they purchase at bargain
prices oil from the fields they formerly owned. For example, according
to former Senator Frank Church, U.S. firms have a sweetheart arrangement
with Saudi Arabia, notwithstanding the nominal nationalization
of their properties.... Radical regimes want to sell oil as much
as conservative ones do, but a change of government in any Gulf
state might eliminate the privileged position of the oil companies.
The internal security of regimes like Saudi Arabia depends
heavily on outside, particularly U.S., support. Many Saudis believe
that in return their country has set its oil production levels
to please the United States, to the detriment of their nation
s long-term interests. At times, this has meant selling oil beyond
the point at which the proceeds could be productively invested,
an economically irrational strategy particularly given the fact
that oil in the ground appreciates in value. More democratic or
nationalistic governments in the Gulf may not be so willing to
sacrifice their own interests. And such governments will also
be less willing to accommodate a U.S. military presence or to
serve as U.S. proxies for maintaining the regional status quo.
And thus for more than 40 years, through many changed circumstances,
there has been one constant of U.S. policy in the Gulf: support
for the most conservative local forces available, in order to
keep radical and popular movements from coming to power, no matter
what the human cost, no matter how great the necessary manipulation