The Power Game for Iraq's Oil
Part II- The American Connection
(An excerpt from The Great Powers in the Middle East 1919-1939 pp. 243-47)
During the period between WW I and WW II, the United States was by far the world's largest oil producer.
Washington sought to apply the "open door" to the mandates carved from the Ottoman Empire in every respect, but oil was clearly the most important resource involved. The "open door" philosophy neatly combined anti-imperialism with self-interest in promoting American business and strategic concerns. Local governments should have the right to give petroleum concessions to whomever they chose, the United States argued, and mandates should not be treated as colonies. The British felt there was a large amount of hypocrisy in this position.
While the United States wanted to limit European influence in the Western Hemisphere, the Foreign Office noted, it refused to accept any such conditions in other parts of the world. As on so many issues in U.S.-European relations in later years, the United States would see European behavior as shortsighted and greedy, while the Europeans would find American policies inconsistent and self-centered. Still, it is important to remember, the two sides found ways to peacefully and productively bridge their differences.
London complained the United States produced 70 percent of world output while American companies owned three-fourths of Mexican production, estimated at an additional 12 percent. In contrast, the whole of the British Empire plus the holdings of Anglo-Persian Oil Company (APOC) in Persia accounted for only 4.5 percent of the world total.
Secretary of State Bainbridge Colby replied on 20 November 1920, welcoming
"your pledges to the effect that the natural resources of Mesopotamia are to be secured to the people of Mesopotamia and to the future Arab state" and that the British would protect these assets for that people's "further freedom of action." But, Colby continued, this was contradicted by the Anglo-French agreement at the San Remo meeting to divide Iraqi oil on a 75/25 percent basis.
Since the United States had never declared war on the Ottoman Empire, it would not accept the San Remo division of the spoils. Consequently, the State Department pressured the Foreign Office until Britain agreed on a revision, the famous Red Line agreement. This provided a 23.75 percent share in the holdings of the newly established Iraq Petroleum Company for American firms and pledged a similar minimal portion for the participants in concessions gained by the others within the boundaries of the former Ottoman Empire
The Red Line accord maintained British preeminence but with a clearly defined junior partnership role for the United States. Indeed, the British company, Anglo-Persian, received a royalty on all oil produced and continued to control a major share. Still, in the following years, the United States would further chip away at the British regional oil position.
Developments in Bahrain, Kuwait, and Saudi Arabia generally resulted, after prolonged bureaucratic skirmishes, in partial American triumphs. In Bahrain, Standard Oil of California purchased a British company's option in 1928, but the British government wanted the operating company to be registered in their country. The State Department finally obtained British agreement that the concessions could be given through a Canadian subsidiary and with British subjects managing in the field. Exploration began in 1930, and in 1932 oil was discovered in commercial quantities.
Kuwait was outside the Red Line agreement, but there too the British wanted a British company to hold any concession. Finding it difficult to deal with the ruling shaykh, the British and American companies cooperated. The Kuwait Oil Company was registered under British law in 1934; oil was discovered in 1938. In this case, as in the other conflicts, the State Department sought to establish "the right of American interests to participate in the development of the petroleum resources in Kuwait so that American interests may have an equal opportunity to compete."
London claimed that the United States wanted preferential treatment- an accusation strongly denied by the State Department-but Washington was willing to change the rules when it was to its own advantage.
When U.S. companies began to move into Saudi Arabia, the Americans showed no interest in allowing the British any participation. Indeed, King Abdul- Aziz Ibn Saud was perfectly willing to negotiate with the Iraq Petroleum Company, but the British-dominated corporation thought the king's price was too high. An American consortium was willing to come to terms, however, and U. S. companies gained access to this extremely important resource in 1933. British political predominance, though, continued until well into the 1940s.
While the "open door" policy that originated in 1919 tended to focus mostly on oil questions, it also played an important role in other aspects of Anglo-American relations. For example, when Britain terminated the mandate with Iraq in 1932, Washington insisted it be consulted on the terms for Iraq's independence. London declined, arguing that earlier agreements adequately protected American rights. At the same time, however, the United States was willing to recognize the continued "special relationship" between Britain and Iraq, as long as there were assurances that if it should change, American rights and institutions would still be respected.
It is worthwhile to note that Britain's attempt to restructure its relations with Iraq through the 1948 Portsmouth treaty failed when public pressure forced Baghdad to renounce the agreement. London tried to reshape military relationships through Iraq's adherence to the Middle East defense alliance, the Baghdad Pact, after 1954. This move, which the United States supported with some hesitancy, was one factor in producing an upsurge in regional radical nationalism during the mid-1950s.
The United States was far more spectator than actor in the Arab world during the interwar years. Generally, it paid Britain deference and there were clear and narrow limits to the American government's willingness to become involved in regional issues.
The Power Game for Iraq's Oil
Part II- The American Connection
(An excerpt from The Great Powers in the Middle East 1919-1939 pp. 243-47)
During the period between WW I and WW II, the United States was by far the world's largest oil producer.
Washington sought to apply the "open door" to the mandates carved from the Ottoman Empire in every respect, but oil was clearly the most important resource involved. The "open door" philosophy neatly combined anti-imperialism with self-interest in promoting American business and strategic concerns. Local governments should have the right to give petroleum concessions to whomever they chose, the United States argued, and mandates should not be treated as colonies. The British felt there was a large amount of hypocrisy in this position.
While the United States wanted to limit European influence in the Western Hemisphere, the Foreign Office noted, it refused to accept any such conditions in other parts of the world. As on so many issues in U.S.-European relations in later years, the United States would see European behavior as shortsighted and greedy, while the Europeans would find American policies inconsistent and self-centered. Still, it is important to remember, the two sides found ways to peacefully and productively bridge their differences.
London complained the United States produced 70 percent of world output while American companies owned three-fourths of Mexican production, estimated at an additional 12 percent. In contrast, the whole of the British Empire plus the holdings of Anglo-Persian Oil Company (APOC) in Persia accounted for only 4.5 percent of the world total.
Secretary of State Bainbridge Colby replied on 20 November 1920, welcoming
"your pledges to the effect that the natural resources of Mesopotamia are to be secured to the people of Mesopotamia and to the future Arab state" and that the British would protect these assets for that people's "further freedom of action." But, Colby continued, this was contradicted by the Anglo-French agreement at the San Remo meeting to divide Iraqi oil on a 75/25 percent basis.
Since the United States had never declared war on the Ottoman Empire, it would not accept the San Remo division of the spoils. Consequently, the State Department pressured the Foreign Office until Britain agreed on a revision, the famous Red Line agreement. This provided a 23.75 percent share in the holdings of the newly established Iraq Petroleum Company for American firms and pledged a similar minimal portion for the participants in concessions gained by the others within the boundaries of the former Ottoman Empire
The Red Line accord maintained British preeminence but with a clearly defined junior partnership role for the United States. Indeed, the British company, Anglo-Persian, received a royalty on all oil produced and continued to control a major share. Still, in the following years, the United States would further chip away at the British regional oil position.
Developments in Bahrain, Kuwait, and Saudi Arabia generally resulted, after prolonged bureaucratic skirmishes, in partial American triumphs. In Bahrain, Standard Oil of California purchased a British company's option in 1928, but the British government wanted the operating company to be registered in their country. The State Department finally obtained British agreement that the concessions could be given through a Canadian subsidiary and with British subjects managing in the field. Exploration began in 1930, and in 1932 oil was discovered in commercial quantities.
Kuwait was outside the Red Line agreement, but there too the British wanted a British company to hold any concession. Finding it difficult to deal with the ruling shaykh, the British and American companies cooperated. The Kuwait Oil Company was registered under British law in 1934; oil was discovered in 1938. In this case, as in the other conflicts, the State Department sought to establish "the right of American interests to participate in the development of the petroleum resources in Kuwait so that American interests may have an equal opportunity to compete."
London claimed that the United States wanted preferential treatment- an accusation strongly denied by the State Department-but Washington was willing to change the rules when it was to its own advantage.
When U.S. companies began to move into Saudi Arabia, the Americans showed no interest in allowing the British any participation. Indeed, King Abdul- Aziz Ibn Saud was perfectly willing to negotiate with the Iraq Petroleum Company, but the British-dominated corporation thought the king's price was too high. An American consortium was willing to come to terms, however, and U. S. companies gained access to this extremely important resource in 1933. British political predominance, though, continued until well into the 1940s.
While the "open door" policy that originated in 1919 tended to focus mostly on oil questions, it also played an important role in other aspects of Anglo-American relations. For example, when Britain terminated the mandate with Iraq in 1932, Washington insisted it be consulted on the terms for Iraq's independence. London declined, arguing that earlier agreements adequately protected American rights. At the same time, however, the United States was willing to recognize the continued "special relationship" between Britain and Iraq, as long as there were assurances that if it should change, American rights and institutions would still be respected.
It is worthwhile to note that Britain's attempt to restructure its relations with Iraq through the 1948 Portsmouth treaty failed when public pressure forced Baghdad to renounce the agreement. London tried to reshape military relationships through Iraq's adherence to the Middle East defense alliance, the Baghdad Pact, after 1954. This move, which the United States supported with some hesitancy, was one factor in producing an upsurge in regional radical nationalism during the mid-1950s.
The United States was far more spectator than actor in the Arab world during the interwar years. Generally, it paid Britain deference and there were clear and narrow limits to the American government's willingness to become involved in regional issues.
