Using Press to Manipulate Public Attitudes:  
When is dislike of war the same as anti-war and when is it not?

by Jonathan Sumter, Fayetteville, NC Green Daily Journal
 

In these days of support for Iraq's internal conflicts with Iranian, Syrian and Pakistani backed terror insurgencies, the bitter harsh reality of the ongoing war is a difficult thing, at best, to pay attention to, much less like.  But that does not mean it is not essential to the future of Security of the Free world.

Nonetheless, left wing press organizations under control of the Oil Company owners, pander to the notion that disliking a war means you are against it.  That is simply not true, and is not the opinion of the vast majority of Americans.  "The rising tide of Anti-War Sentiment" and other backlash triggers bannered by the ultra left wing Washington Post, is a wishful thought on their part designed to upset an America that is fed up with Terrorism, fed up with Islamist causes and fed up with the intolerance expressed by the Ahmedinejads of Iran, the Chavez's of Venezuela, and the Bin Ladens of Pakistan. (See headline at left: "CIA infiltrated 17 Area Groups, Gave out LSD", an example of falsely connecting Groups, people using LSD, and the mission of the CIA, so as to subordinate readers to engage in anti-american political propagandist activities.  The unsupported behavior claims based on that the CIA allegedly infiltrated these grouips and the use of LSD within them, becomes a 'CIA gives out LSD', accompanied by a Panel that without due process, claimed that the CIA might break the law, when the purpose of the Panel was to help adjust both CIA behavior and the law to become concurrent. Because some government ops have been corrupted by the Rockefellers, it is even possible for them to plant misbehavior for such as the Post to discover.  For the HogWash Post, you get more readers with sensationalism, than not, even if you lie enough to serve a secret agenda.)  Hampered by an even handedness that is bereft in most liberal press organizations, America is in the phase of backlash against nihilism, against anarchy, against liberalism and against those who would deprive the American Military of what is necessary to insure a free Iraq, insure a free Afghanistan, insure a free South America and ultimately, maintain a free America.

The Oil Industry's take on this, that manipulating the irritant against Americans, leading to more military action, more spending and, ultimately, more oil sales AND rising prices for oil, is a rationale that is carefully guarded by the 120 members of the Oil Industry owners, the descendents of John D. Rockefeller.

Since the days of the Red Line Agreement, TPC and IPC and the days of John D. Rockefeller Jr's "secret dealmaker" Gulbenkian (a Nazi, Vichy sympathizer of Armenian-Austrian descent), the principal Standard Oil offshoots, Exxon Mobil, Amoco BP, and Chevron Texaco (at least that is what they call themselves today) have been fighting to regain control of Iraq's oil.  They already have distribution rights over Iran, Syria and Saudi Arabia's oil.  Their owners, still the Rockefellers, receive through the decadency of the TPC and Red Line Agreement, 40% of every barrel of oil pumped in Iran, Syria, Venezuela and Saudi Arabia.  Then, they dominate both the auction pools, where they garner andother 10%, and the refiner/distributors (the gas pumps, etc.) where they make another 15%.  All told, 65% of every revenue droplet  from foreign oil and gas wells ends up in their coffers, hidden for them by an immense financial apparatus that spans JP Morgan Chase Bank (Chase, JP Morgan, Morgan Guarantee, Merrill Lynch), Citi (Citibank, Citigroup, Travelers Insurance, Smith Barney) and Bank of America (spread out across the USA like a great red, white and blue hand.) To this day, the Rockefeller dominant ownership of these vast financial institutions and their energy, communications and industrial counterparts, remains hidden to the US population.

It is the tribal, regional and religious differences within these Middle Eastern countries that is quite significant to revealing the meaning and complexities of appearances in the Middle East.  The Arabic peoples are, political, very "appearance control" oriented.  Often the moderate beliefs of the conservative Saudi Arabian royal family (not really a royal family, but appointed by the Rockefellers nonetheless, as conservancy over the Rockfellers' perpetual concession over oil in Saudi Arabia) descend from their desire for stability on the face of owing the Rockefellers for their political and economic defense and distribution of their product, and owing America for their military defense.  Yet, they are forced to sympathize with and embrace whatever the Rockefellers demand of them, without exception, even if it requires one or more princes to "fall on their sword".  For example, King Faad's middle son took a 35% interest in Citigroup some years ago, on behalf of James Rockefeller, and has with Bill Gates, bought and sold large real estate and businesses, holding on to them for James Rockefeller, who has stepped up to take over the key position in the financial Rockefeller holdings apparatus for his late uncle, John S. Rockefeller, who died a few years ago in his 90's.

As John S. Rockefeller was responsible for financing the GE to Microsoft development relationship that fostered Microsoft's rollout of Windowed Operating Systems, which derived their design from Dr. Jack Shulman's original Windowed Desktop Trading Workstation, developed in 1974 for use by Citibank in their Federal Funds Trading Area, becoming a marvel at the time when Windowing was entirely unknown, since Gates and Paul Allen were hired in the late 70's to take over marketing the GE, IBM related development of Shulman's windowing, it is presumed Gates also has a similar relationship on behalf of John S. Rockefeller's Estate to Microsoft, that Tall-al Bin Faad (prince of Saudi Arabia) has on behalf of John s Rockefeller's Estate in its relationship to Citicorp, it appears both are holding interest now obligated to James Rockefeller, scion of the John S. Rockefeller branch of the Rockefeller family, one in Microsoft, the other in Citigroup, and jointly, in companies purchased such as the Four Seasons Hotel Chain in Canada.  This is a quite common "Holder and Beneficial Nominee" relationship used by the Rockefeller Family to hide family interests dominating major business concerns like Citi and Microsoft and Apple and IBM and GE and AT&T and so on and so forth.  When you have a stock control, board control and people control relationship with companies of this size, getting others to do your bidding is quite simple.

In the case of the Press, you can get them to hire your family relations, like Dana Milbank, a Milbank family scion (Milbank Tweed Esqs has perennially run Law for the Rockefeller Family businesses), who is the White House Correspondent for the Hog Wash Post,  or you can get them to say pretty much whatever you want them to, so long as 50 or so of your businesses pay top dollar to advertise in their publication.

By also using the vastness of their Oil Business and Banking Industry holdings to manipulate the Corporate and Republican interests, the Rockefeller ownership simultaneously populates the objectionist Left Wing and Democratic Party so as to use wealth and influence to manipulate the Labor and Democrat interests, all just to create conflict and adversity for the purposes of triggering more sales, oil sales and price rise justification.  A principal motive is to get one side to pin blame on the other, COMPLETELY missing the Rockefeller's middleman role as instigator of the entire series of conflicts.

In International politics, this applies within nation states, and between nation states, and often leads to war, loss of life, and other conflicts, like the Holocaust of World War II.

In fact, it pre-defines what the Rockefellers are doing as, quite simply, "Organized Crime against Humanity".

A principal mechanism used by the Rockefeller's enormous apparatus of manipulation (the Manipulatum Machinum) is and has always been the Press.  Much as they twist the words every so slightly of the NY Times, the Washington Post and even Fox News and others, they gain discord and polarization.  Internationally, they do the same thing to bully Protestant against Catholic, Arab against Jew and America and Israel, and vice versa.  At the turn of the last century, they acquired control of the Associated Press [(AP) it is called today] and, even though they make it look like a member controlled organization for shared proliferation of News Stories, in reality the controlling board is dominated by Rockefeller financial influence and political control.  This very same relationship mirrors over and over.  The Rockefellers control Sony (created as a lookalike Japanese company by Standard Oil New York long ago to market technology with Japanese and offshore buildout to compete with GE's RCA brand), Disney (control of which was gradually acquired through the Western Electric group and Capital Cities years ago) and GE (which stems from Rockefeller's takeovers of Westinghouse from "old man" Westinghouse, and GE/RCA from Tom Edison), which in turn control CBS, Infinity, ABC, NBC, CNBC and MSNBC.  The political "tow the line" philosophy has created lines of "slightly vary the story" co-communications that sets the story line, political emphasis and key goal of virtually every news story passing through these networks.  In exchange, each gets entertainment and technology fostered by their Rockefeller parent companies, and receives budget through Rockefeller/Morgan related business advertising across the board from the many companies under Rock control.

Democrats tend to support this behavior, having hobnobbed directly with those in the political employ of Rockefeller interests, as well.  This allows Jay Rockefeller to puppeteer Harry Reid, Carl Levin, and others into positions, even reaching over the line to manipulate such as Chuck Hagel and others in the Republican camp, trying to inevitably coax the desired outcome from News stories out of the House and the Senate, and to coax the outcome of bills sponsored and voted on before the Congress.

The real issue with Oil Industry influence began in the wake of the Byzantine Civilization and the discovery of oil outside the USA after Rockefeller had already entrenched himself in Oil, Coal, Gas, Steel and other commodities in the 1890-1918 era, by the end of World War I, Rockefeller was a Billionaire (worth 220 Billion in today's standards) and the growth of Rockefeller wealth continued literally unabated for the next 90 years, doubling every 10 years and correcting 30% for inflation / recession factors every ten, leading to a estimated net worth of 780 Billion in hidden cash value and 5-7 times that in asset control today.  In the following story, read the name "Calouste Gulbenkian" as "hidden dealmaker working for John D. Rockefeller and Rockefeller Jr." from 1915 on and "The Rockefeller's Inside Main inside the French Vichy [Nazi] Government during World War II".

Gulbenkian clearly was more than that, and the following story, involving Gulbenkian, the Rock's secret "thule" partners, is hidden behind intrigue and his demise penniless prior to the restoration of his interest to his family and his family trust, Partex, which is no less significant given Gulbenkian's Nazi / Vichy sympathetic behavior during the war.  Obviously, the Rockefellers had guaranteed his family his interests, kept in a sleeper hold for them and Partex.

I have placed these stories in what I believe is their proper order, first an explanation of the way things got the way they are, post Red Line Agreement, in the Middle East, then the Byzantine Era that led up to same, then a paper on the WWI era.

Note that reading between the lines, you'd find Rockefeller interests grappling with each other for control of oil concessions, while the Rockefellers did everything in their power to not look like a single, octopoid, evil entity, violating every country's laws regarding overt concentration of wealth, on Planet Earth.  However, their true nature is and was, a single, octopoid, evil entity, managed to look like many independent businesses and interests, very cleverly avoiding prosecution and carefully hiding the criminal organization they founded long ago and now run, which is also known as the "Thule".
 

Part I: The Quest for Oil
Great Power Conflict over Iraqi Oil: the World War I Era

Part II: The Reign of a Monopoly

In Part I, we reviewed political ambitions and developments leading to the discovery of oil at Kirkuk. In Part II, we will examine the birth, transformation and demise of an oil monopoly.

The Birth of a Monopoly

In its charter the Turkish Petroleum Company (TPC, later IPC) contained a monopolistic self-denial clause that prohibited any of its shareholders from independently seeking oil interests in the ex-Ottoman territory. Egypt, Kuwait and a small area called “transferred territory” (a patch of land transferred by a protocol from Persia to the Ottomans in 1913/14) at the Iraq-Iran border were excluded from the scope of the clause, but the rest of the ex-Ottoman territory including the Arabian peninsula and today’s Turkey were included.

The self-denial clause meant that new pursuits within the included areas would be made either as a group or not at all. TPC did not want to take a chance with “straying” partners.

The self-denial clause initially met stiff resistance from the State Department and the American companies that had set their eyes on Mesopotamian oil. The clause conflicted with the open-door policy espoused by the Americans. The clause also ran afoul of the equal-access understanding under which Britain was granted mandatory control of Iraq by the League of Nations. But once the American companies joined their European brethren in TPC in 1924, they lost enthusiasm for the open-door policy. They tacitly accepted the self-denial clause. Washington also became muted in its high-principled stand on this issue.

Separate from the self-denial clause, TPC’s concession agreement contained a clause designed to restrain monopolistic tendencies and invite competition within Iraq. But as it will be noted below, that attempt was foiled through new agreements and formation of subsidiaries.

Red Line Agreement

TPC, reorganized in 1924 to include Americans among its partners, having obtained a concession from the Iraqi government in 1925, and having discovered the Kirkuk field in 1927, was now poised to operate in a big way, exploiting the Kirkuk reserves. But there was one more hurdle to overcome: formalizing the corporate structure and binding all partners to the original self-denial clause.

To this end, the partners met in the town of Ostend in Belgium on July 31, 1928 to sign the definitive Group Agreement. They confirmed the existing shareholding structure, with the added provision that Gulbenkian could sell his 5 percent share of oil to the French at the market rate, thus assuring himself cash without the trouble of marketing. In return, the French would have the guarantee of an additional 5 percent oil in their oil off-take. At this time, only 5 companies were represented in the American syndicate.

As to the self-denial clause, Gulbenkian took out a large map, laid it on the table and drew with a thick red pencil an outline demarking the boundaries of the area where the self-denial clause would be in effect. He said that was the boundary of the Ottoman Empire he knew in 1914. He should know, he added, because he was born in it and lived in. The other partners looked on attentively and did not object. They had already anticipated such a boundary. (According to some accounts, the “red line” was drawn not by Gulbenkian but by the French).

Thus came into being the infamous “Red Line Agreement.” It marked the creation of an oil monopoly, or cartel, of immense influence, spanning a vast territory. The cartel preceded easily by three decades the birth of another cartel, OPEC, which was formed in 1960. Excepting Gulbenkian, the partners were the super majors of today. Within the “red line” was included the entire ex-Ottoman territory in the Middle East, including the Arabian Peninsula (plus Turkey) but excluding Kuwait. Kuwait was excluded, as it was meant to be a preserve for the British. Years later, Walter Teagle of Jersey remarked that the agreement was “a damn bad move.”

The Red Line Agreement lasted as long as it served the interests of the partners. By 1934 the American syndicate in TPC (IPC) had trickled down to two companies: Jersey and Socony (later Mobil), the two splitting equally the 23.75 percent American share. In 1935 through 1937 the IPC group, under different names, took oil concessions in Oman, the Trucial Coast and Qatar, all within the “red line.” Also, in 1929 two American oil companies, Socal (later Chevron) and Texas Company (later Texaco) obtained an oil concession in Bahrain. Because these two companies were not part of IPC, the Bahrain concession did not create a fuss within IPC. But another, far more serious threat was looming on the horizon: the lure of Saudi Arabia.

Saudi Arabian Oil Spoils the Deal

In 1933 Socal, after outbidding the IPC group, won an oil concession in Saudi Arabia. In 1936 Socal and Texas Company teamed up to form a joint venture which was later called Aramco (Arabian-American Oil Company). The new company, having expanded its Saudi concession in 1939, needed additional capital, and Jersey and Socony were the obvious sources of new capital to turn to. The four companies agreed to join hands, and they received Washington’s endorsement for their alliance.

The problem was, however, that by the provisions of the Red Line Agreement, Jersey and Socony were prohibited from entering Saudi Arabia. The agreement the two companies had signed years ago was now standing in their way. The new leaders of the giant American oil companies were a new brand of aggressive capitalists who decided that they would not be held back by an arcane agreement that restricted their options. Besides, Jersey and Socony each held a paltry 11.875 percent share in IPC, they reasoned. Oil had been struck (in 1938) in Saudi Arabia, and the new “land of oil” was beckoning.

Starting in 1946, and with the blessing of Washington, Jersey and Socony ran a relentless campaign to squash the Red Line Agreement. Their executives bluntly told their European partners that in their view the old IPC agreement was no longer in effect. As for legal cover, the Americans invoked the doctrine of “supervening illegality.” What the fancy phrase meant was that the war (World War II) had rendered the Red Line Agreement null and void. (Were he alive, Lord Curzon would have chuckled at hearing the argument).

There was a special irony in Washington’s support of the Aramco enterprise. The U.S. Justice Department, which had so diligently and successfully worked to bust the Rockefeller Oil Trust in 1911, was now acquiescing to amalgamation of four American oil giants – three of them spinoffs from the original trust – in Aramco. The Attorney General declared that the deal “should be good for the country.” Times had changed. Besides, Aramco would operate on foreign soil.

Initially, IPC’s European partners wanted to hear none of Jersey’s and Socony’s high-handed protestations. They resisted efforts to have the Red Line Agreement annulled. But the war had created new realities. The British, in particular, holding Iranian oil completely under their control (through APOC, now called AIOC or Anglo-Iranian Oil Company), and having already secured an oil concession (together with Gulf Oil) in Kuwait, were hardly in a position to make a fuss. The Dutch were riding on the coattails of the British. As for the French, they were glad to get back their 23.75 percent share in IPC, which the British had seized from the Vichy government as “enemy property.”

Still, CFP brought a lawsuit in a London court against Jersey and Socony alleging breach of contract. The Americans responded with a countersuit of their own. As a fallback option, the Americans approached King Ibn-i Saud of Saudi Arabia to inquire whether his Royalty would accept the presence of a European company in Aramco. In no uncertain terms, the King said “no.” He wanted Americans and Americans only. (He even asked if Jersey and Socony were solely American). Before matters got out of hand, and with France having other things on its political agenda, the dispute between the French and the Americans quieted down. France received promise of greater oil supply, and CFP withdrew its lawsuit.

Gulbenkian, as usual, proved to be a tougher nut to crack. Collaborating with the Vichy government during the war, and branded by the British “Enemy of the Act,” he too had lost his 5 percent share in IPC. He got back his share in 1943. But the crafty deal maker was not willing to let go so easily a basic construct of IPC (TPC) that he had helped create. Cash, lots of it, was what mattered for him. He instructed his army of lawyers to file a suit against the American oil companies in a London court.

After much wrangling, the Red Line Agreement was unceremoniously scrapped in the grand Hotel Aviz in Lisbon in November 1948. A new Group Agreement was reached in the early hours of a Sunday morning, one day before the scheduled court hearing on Gulbenkian’s lawsuit in London. Gulbenkian withdrew its lawsuit, dropped his opposition to Jersey’s and Socony’s plans to enter Saudi Arabia, and the Americans agreed to surrender their right to restrict Iraqi oil production. This gave “Mr. Five Percent” the chance to vastly increase his income from Iraq. He also received compensation for his “losses” in Bahrain.

By mere coincidence, the concession Gulbenkian wrenched from the Americans was also beneficial for Iraq, which had been feuding with IPC on the latter’s restrictive production policy. Unintentionally, “Mr. Five Percent” had done a favor for the Iraqis.

Thus an oil cartel that was formed quietly behind closed doors in Ostend in 1928 ended quietly in Lisbon – also behind closed doors – 20 years later. The shareholders – all of them except Gulbenkian - were careful to avoid publicity, or wash their linen in public, by settling their differences out of court. Bad publicity was the companies’ worst enemy. The shareholding structure of IPC was not affected by the new agreement; but new terms, i.e. a specific development program and prices for inter-Group sales, were prescribed.

Monopolistic Rule Continues

Dissolution of the Red Line Agreement clipped the monopolistic reach of IPC but did not end it. The monopolistic mantle of IPC, in fact, comprised two layers: one associated with the “red line,” and a second one concerning Iraq only. When the Red Line Agreement was dissolved, only the first layer was discarded. The second layer remained in effect, and IPC continued its operations as a full-fledged monopoly within the country.

A monopoly within Iraq was not meant to be. The original concession agreement IPC (TPC) signed with the Iraqi government in 1925 covered a loosely defined area comprising all of Iraq except the Basra province (in the south) and the “transferred territory” at the Iraq-Iran border. Within 4 years of the agreement, and annually thereafter, a 500 km-square plot in the concession area would be offered by the government to competitors, with TPC acting as the government’s agent. The subleasing arrangement was supposed to bring competition.

In March 1931, IPC signed a new agreement with Iraq giving the company the sole right to exploit territory to the east of the Tigris River. In return, the company would build a pipeline to the Mediterranean and make certain payments to the government in the interim period. The subleasing arrangement contained in the original agreement was abandoned.

In April 1932, a British-dominated international consortium, British Oil Development Company (BODC), obtained a 75-year oil concession for territory lying west of Tigris and north of 33rd parallel. The consortium was intended to be a competitor to IPC in Iraq. Ten years later, before it would start production, BODC was bought out by Mosul Petroleum Company (MPC), a fully owned subsidiary of IPC.

Likewise, in December 1938, Basra Petroleum Company (BPC), another subsidiary of IPC, obtained a 75-year concession for the rest of Iraq. Thus all of Iraq, with the exception of the “transferred territory,” came under IPC’s control. Competition was entirely eliminated.

IPC was not meant to be a profit-making enterprise. It operated as a production and transport company that delivered oil to its shareholders at export terminals (initially Haifa in Palestine and Tripoli in Lebanon) in proportion to participation interest. The partners were charged a nominal fee for the oil. Real profits were made by the partners which shipped, refined and sold the oil in foreign markets. (Until 1948 some of the crude was refined in Haifa).

Until 1940 or so, IPC maintained a strategy to delay production in Iraq. The strategy was aimed at protecting the interests of the British, American and Dutch partners, who had crude production of their own in areas outside Iraq and wanted to shield such production from competition. CFP and Gulbenkian, who had production interests only in Iraq, opposed the delay strategy; but with their minority shareholding, they had limited success. For good reason, the policy of retarding production irritated the Iraqi government as well.

During its operation IPC was frequently at loggerheads with the Iraqi government on a number of issues. The oil revenue structure, the pace of oil development, building refineries, participation in shareholding, and representation at company’s board, were the chief areas of dispute. The disputes led to nationalization of Iraq’s oil industry in 1972.

Conclusions

Iraq’s oil development marks a century of turmoil and high drama. In this two-part series we have covered the first half of this period that was Byzantine in character, filled with armed conflict, political intrigue and corporate rivalry, with episodes of greed and deception.

As destiny would have it, Iraq’s oil development was affected not so much by internal conflicts but by external factors. Iraq significantly benefited from the Iran oil crisis in the early 1950’s, but suffered during the Suez crisis. The biggest setbacks were during the Iraq-Iran war and the Gulf War. And now, the American-led Iraq War has brought a new era of destruction and uncertainty.

The players in the big Mesopotamian oil game included an assortment of foreign countries and nationalistic oil companies that had a symbiotic and at times incestuous relationship with each other. What lip service was paid to free trade and competition, both in word and on paper, was soon discarded and forgotten when rhetoric clashed with self-interest. In many ways, these were not glorious days for the oil companies. Nor were the governments that knowingly supported the monopolistic designs and sometimes clandestine undertakings of these companies without blame.

Judging the players, the British played big poker and won. For Britain, oil was an instrument of imperial ambitions, and at times blood was the sacrifice that had to be accepted – e.g., 2500 British lives lost during the internal uprising in Iraq in 1920. The British camouflaged their true intentions on oil through pretexts, e.g., their righteous claim of being the trustees of Iraqi people’s rights on oil. The Americans were more open in their intentions, although their tacit acceptance of the self-denial clause left them cold and dry on charges of hypocrisy.

Lacking the colonial over-drive of the British, and having relinquished Mosul to British control in San Remo in return for the German share in TPC, the French were relegated to play second fiddle in the big Anglo-American grab for oil in the Middle East. The French never trusted the British, and later the Americans, but were reconciled to their dominance on matters of oil.

As for the Dutch, they were the easiest winners. Thanks to 40 percent British share in RD Shell, the Dutch virtually got a free ride on the back of the British. At the beginning of WWI, RD Shell acquiesced to British control in order to operate freely on the high seas.

Gulbenkian, the legendary “Mr. Five Percent” of Armenian origin, was a big winner in the Mesopotamian oil game. Through twists and contortions that TPC (IPC) went through, he managed to keep his 5 percent share in the company. He defiantly took on the American oil giants Jersey and Socony and came out rather well. A canny businessman and a financial wizard, Gulbenkian trusted nobody and he himself inspired little trust. Born an Ottoman subject, he was suspected at one point of being a British agent by the French and was branded a “Vichy enemy” by the British during WWII. His allegiance to the Ottoman government – of which he was a senior finance advisor - was also dubious at best.

Upon dissolution of the Red Line Agreement in 1948, Gulbenkian became fabulously rich, more than enough to indulge in his expensive art collection – which he called “my children” - and lavish on his mistresses – except that by that time he was 80 years of age. He died in 1955 at Hotel Aviz in Lisbon, his long-time residence, attended to by four nurses. He never set foot in Iraq.

The Turks were the big losers in the oil game. The major reason for that, of course, was defeat during WWI and the headaches that the defeat brought. But Turks, the Ottoman Turks in particular, trailed the West in science and technology, which put them behind in appreciating the strategic value of oil. It is a poignant historical irony that at the time Admiral Slade expedition was surveying the Persian Gulf region for oil on instructions from Winston Churchill in 1913, Grand Vizier (Chief Minister) Mahmut Sevket Pasha, in blissful ignorance, was telling his cabinet in Istanbul that Qatar and Kuwait were “unimportant desert” sheikdoms that were not worth creating conflict with Britain.

The Ottomans, in fact, abandoned claims to Qatar in July 1913. The Industrial Revolution that transformed the West to a new age had come and nearly bypassed the Ottomans. Kuwait’s proved oil reserves today are close to those of Iraq, and Qatar (together with its offshore) sits atop the third largest gas reserves in the world behind Russia and Iran. So much about the tiny “desert” sheikdoms!

The Turks were also at a disadvantage at Lausanne where they were out-foxed by the British who were intimately knowledgeable about the past machinations on Mosul oil and whose less-than-truthful claims on Mesopotamian oil during the Conference passed without significant rebuttal. Ismet Pasha could have used the services of a technical advisor who was well acquainted on matters of oil, in particular Mesopotamian oil. The clout Britain carried at the League of Nations also did not help Turkey’s case.

As for the partners of IPC, the company’s monopolistic character did not help reputation of the oil companies. Had the Red Line Agreement remained in effect (and no nationalization taken place), it would have occasioned the reign of the most powerful monopoly in history. It would have been as though today’s British Petroleum, RD Shell, ExxonMobil and TotalFinaElf and an enterprise called Partex (representing interests of Gulbenkian’s heirs) joining hands to control oil production in the entire Middle East with the exception of Iran and Kuwait. No oil company would have had the gall to compete with such a Goliath. Arguably, there would have been no need for OPEC.

In a wry, sarcastic commentary included in his memoirs, Gulbenkian remarked before his death in 1955 that what the oil companies had received from Iraq was a gift, because “none of the companies had any rights or concessions in Mesopotamian oil.” “Mr. Five Percent” was not the type that would mince words.

Ferruh Demirmen, Ph.D., is a petroleum consultant in Houston, Texas. He occasionally writes on energy issues and geopolitics affecting Turkey and its region.

Part II: The Reign of a Monopoly
Great Power Conflict over Iraqi Oil: the World War I Era

Part I: The Quest for Oil

The U.S. is playing today roughly the same role with respect to Iraq’s oil riches that Britain did early last century. History has a habit of repeating itself, albeit with different nuances and different actors. In this two-part series, we shall review the intricacies of oil-related events in Iraq through the 1950’s.

Early Ambitions

Oil development in Iraq took place against a backdrop of war, political intrigue, deception, secret agreements and oil company haggling. Iraq, historically known as Mesopotamia, was part of the Ottoman Empire since 1534. (“Iraq” was the name given by the British to their newly created mandate). Collapse of the Ottoman Empire in early 20th century gave the Western powers the opportunity to seek political influence and commercial benefits in new territory – in Iraq as well as the rest of the Ottoman territory. Oil was the major prize.

Discovery of oil in 1908 at Masjid-i Suleiman in Iran – an event that changed the fate of the Middle East – gave impetus to quest for oil in Mesopotamia. Oil pursuits in Mesopotamia were concentrated in Mosul, one of three provinces or “vilayets” constituting Iraq under the Ottoman rule. Mosul was the northern province, the other two being Baghdad (in the middle) and Basra (in the south) provinces. Foreign geologists visited the area under the disguise of archeologists.

For a good part of the last century, interests of national governments were closely linked with the interests of oil companies, so much so that oil companies were de facto extensions of foreign-office establishments of the governments. The latter actively lobbied on behalf of the oil companies owned by their respective nationals. The oil companies, in return, would guarantee oil supply to respective governments – preferably at a substantial discount.

This symbiotic relationship manifested itself superbly when Turkish Petroleum Company (TPC), founded in 1911 and named as such in 1912 to exploit Mosul oil, was reorganized in March 1914 at a meeting held in Foreign Office in London where British and German diplomats sat next to executives of British and German banks and British and Dutch oil companies. Notwithstanding its name, TPC did not have Turkish participation. At that time World War I had not broken out yet, and Germans were welcome at TPC.

The British and Dutch were attracted to German participation because German banks had obtained a concession from the Ottomans in 1904 – a concession that in fact had been allowed to lapse. Calouste Gulbenkian, the consummate deal-maker of Armenian origin that helped found TPC, was not present at the meeting, but his interests were well looked after. He ended up with 5 percent share in TPC, though with no voting rights.

Dogged British Determination

Among the foreign powers the British, seeing Iraq as a gateway to their Indian colony and oil as lifeblood for their Imperial Navy, were most aggressive in their pursuits in Mesopotamia, aspiring to gain physical control of the oil region. Winston Churchill, soon after he became First Lord of the Admiralty in 1911, declared oil to be of paramount importance for the supremacy of the Imperial Navy. Churchill was educated about the virtues of oil by none other than Marcus Samuel, the founder of Shell.

During the war, Sir Maurice Hankey, secretary of the War Cabinet, advised Foreign Secretary Arthur Belfour in writing that control of the Persian and Mesopotamian oil was a “first-class British war aim.” Britain captured the towns of Basra, Baghdad and Mosul, capitals of the provinces bearing the same names, in November 1914, March 1917 and November 1918, respectively. Mosul was captured 15 days after Britain and Turkey signed the Mudros Armistice ending hostilities at the end of the war, an event that drew protests from the Turkish delegation at the Lausanne Peace Conference four years later.

In 1913 Churchill sent an expeditionary team to the Persian Gulf headed by Admiral Slade to investigate oil possibilities in the region. More or less coincident with Admiral Slade expedition, Britain signed a secret agreement with the sheikh of Kuwait who, while ostensibly pledging allegiance to the Ottoman Sultan in Istanbul, promised exclusive oil rights to the British. Kuwait became a British protectorate in November 1914.

The British were so concerned about the security of their oil supply prior to the war that they wanted to have guaranteed British dominance in any oil company exploiting Mesopotamian oil. The government favored Anglo-Persian Oil Company (APOC, predecessor of BP) over Royal Dutch/Shell (RDS) in TPC. APOC, already holding oil concession in Iran but not one of the original participants in TPC, was 100 percent British while RDS, an original participant, was 40 percent British.

When the government indirectly asked RDS to drop out of IPC to give way to APOC, Henri Deterding, head of RDS, was infuriated. In 1914 the government acquired majority (51 percent) share in APOC, in part over concerns (unfounded) that RDS may take over APOC.

With government backing, APOC eventually made its way into IPC. Before the war, TPC shareholding stood at: APOC: 47.5 percent, RDS: 22.5 percent, Deutsche Bank: 22.5 percent, and Gulbenkian (with no voting rights) 5 percent. The British had a clear dominance.

Sharing the Oil Trophy

Political dimensions of oil interests in Mesopotamia reached a new height during World War I in the secret Sykes-Picot agreement signed between Britain, France and later Russia during April-October 1916. Designed to partition the Ottoman Asia after the war, the agreement, among others, assigned the Baghdad and Basra provinces to British control and “zone of influence” and the Mosul region and a good portion of what is now Syria to French “zone of influence.” Some in the British government were enraged that Mosul had been “surrendered” to the French.

After the war, with the German and Ottoman Empires defeated and German interests in TPC confiscated by the British, the partition plans changed. At the Paris Peace Conference in June 1919, Iraq, under the League of Nations Covenant, was made a mandate entrusted to Britain. This award was completed in a treaty signed between Britain and France in San Remo, Italy, in April 1920. France accepted Britain’s mandatory control on Iraq in return for receiving recognition to an enlarged French mandate on Syria. A few months later, in August 1920, the mandatory arrangement received further recognition at the Treaty of Sèvres.

In a supplemental oil agreement in San Remo, France was granted 25 percent share in Mesopotamian oil (effectively pre-war German share in TPC). It was stipulated that any company formed to develop Mesopotamian oil fields would be under permanent British control. A “native company” would have the right to 20 percent participation in such company. The agreement called for close cooperation between Britain and France on oil exploitation in Persia and Mesopotamia.

Three weeks after the San Remo oil agreement, the U.S. ambassador in London sent a strongly worded diplomatic note to Foreign Office expressing his government’s concerns (see below).

At about the same time, Gulbenkian, in addition to his 5 percent beneficiary participation, acquired 5 percent voting rights in TPC after bribing a high French official with a furnished flat in Paris.

Enter the Americans

World War I augured another fundamental change in the oil scene in Mesopotamia: assertiveness on the part of the American government for an “open-door policy” on oil concessions. Forcefully advanced by President Wilson, the policy meant equal access for American capital and interests. The policy was in response to reluctance of European oil companies to welcome American companies to the Mesopotamian oil scene.

Before the war, the American Chester Group had tried to get a foothold in the Ottoman territory by applying for an oil concession, but got nowhere. A concession was granted by the newly established Ankara government in April 1923 (drawing protests from Britain and France), but it was canceled in December 1923 after the American banks withdraw their support from the group when it appeared that Turkey might lose Mosul (see below).

A rising demand for oil, fuel shortages and price increases during the war, and rumors of depleting domestic resources soon after the war rallied the American administration to give active support to American oil companies in search of foreign oil. Mesopotamia would not be a preserve for the European oil interests, Washington decided.

The British initially tried to foil the American efforts by stonewalling American requests and by refusing access to American geologists who wanted to survey oil potential in the region. Britain’s tactics drew strong protest from Washington. The American government withheld its recognition of the Draft Mandate for Iraq on the grounds that it sanctioned discrimination against nationals of other countries. The San Remo agreement, in particular, caused consternation in Washington and catapulted the State Department and American oil companies into action. Walter Teagle, the head of Jersey (later Exxon), became the spokesperson for American corporate oil interests.

Among TPC shareholders, Gulbenkian proved to be the most difficult to accept American presence. He considered American presence an intrusion into his beloved TPC. The Americans, in turn, considered him to be a British-inspired trouble-maker. After some wrangling, a provisional agreement was reached in 1922 providing a syndicate of seven American oil companies (called Near-East Development Company, NEDC) to be admitted to TPC.

In 1924 the ownership of TPC was revised to recognize American presence, with Gulbenkian retaining his 5 percent and the rest of the shares equally divided among APOC, RDS, CFP (Compaigne Française des Pétroles, later Total) and the American syndicate (now composed of six companies), each holding 23.75 percent. In return for losing its majority share, APOC was granted 10 percent royalty (reduced to 7.5 percent in 1934) on oil produced by TPC. CFP was formed by the French specifically to represent France’s interests in TPC. As later events would prove, CFP and Gulbenkian became the underdogs in TPC.

High Drama at Lausanne

The Lausanne Peace Conference held in November 1922-February 1923 (1st session) in Switzerland marked the height of political brinkmanship and skullduggery in oil politics. The “Mosul question,” i.e. whether Mosul belonged to Turkey or whether it would be included within the borders of a newly created Iraq, was taken up by a special Council dealing with territorial issues. The Turkish delegation, headed by Foreign Minister Ismet Pasha, came to the Conference with explicit instructions from Ankara to keep Mosul within Turkey, in accord with the National Pact (“Misak-i Milli”) adopted by the last Ottoman parliament in January 1920. The British had a totally different agenda.

The two sides tried initially to resolve the Mosul question through bilateral discussions, but these talks went nowhere. Britain proposed that the issue be referred to the League of Nations for arbitration, which the Turkish side opposed. Turkey had serious reservations about the intervention of the League Nations where Britain carried much clout – e.g. the General Secretary Sir Eric Drummond being British. Turkey was not even a member of the League. As a counter-proposal, the Turkish side offered to resolve the issue through a plebiscite, which the British opposed. The two sides were far apart.

At the official opening of the Council’s session, Lord Curzon, the British Foreign Minister and head of the British delegation, must have marveled at his diplomatic chivalry when he made, without significant challenge, statements that did not accord well with the truth. Ismet Pasha, coming from a military background, was not sufficiently informed about the past intricacies in Mesopotamian oil and did not make a forceful rebuttal. The Pasha expressed his concern about not being fully briefed on oil matters in one of his “coded” telegraph messages to Ankara – messages that were in fact de-coded by British intelligence.

Lord Curzon argued that the policy of His Majesty’s Government on Mosul was not in any way related to oil, that instead it was guided by the desire to protect interests of Iraqi people consistent with its mandatory obligations, that he had never spoken to an oil magnate or an oil concessionaire regarding Mosul oil, but that a company called TPC had obtained a concession from the Ottoman government [in June 1914] before the war that his government had concluded was valid, that his government and TPC had no monopolistic designs on Iraqi oil, and that the Iraqis would be the chief beneficiaries of oil exploitation in Iraq. He added that Turkey would benefit as well.

Considering British governments past knee-deep involvement in Mesopotamian oil, and TPC’s monopolistic charter (see below) and exclusionary tactics, it was almost surreal that Lord Curzon would make such statements, including the intimation that he was unaware of oil-related developments surrounding Mosul. At the time of the Lausanne Conference the British, Dutch, French and American oil companies were negotiating the future of TPC in London, and Lord Curzon was kept fully informed on the progress of these negotiations.

The American observer at the Conference was bemused at Lord Curzon’s high-principled claims. In a vague, convoluted language, he remarked that the character of TPC concession should be evaluated by an impartial tribunal and that his government had not given up on the “open-door” policy. In a subsequent diplomatic note to Britain, the State Department expressed its discomfort on some of the claims made by Lord Curzon at the Conference.

Lord Curzon also misled and appeased a war-weary British public by making similar statements in British press. The British public was longing for peace and did not want a new military conflict for the sake of oil. Similar attempts by the government at the Parliament were less successful. Some members of the Parliament expressed deep skepticism on Britain’s motivations on Mosul, including one MP who complained about the “vein of hypocrisy” running through Britain’s policy on Mosul. The government repeatedly ignored requests from MPs to produce the so-called oil concession agreement, or state clearly its terms.

That was for good reason. Because what Lord Curzon had called “concession” was far from being a proper concession. It was a mere diplomatic promissory note, a short one at that, subject to certain conditions, that was handed in June 1914 by Grand Vizier Said Halim Pasha to the British and German ambassadors in Istanbul. The British establishment had internally concluded that the concession was not valid. In late 1915, the Foreign Office informed APOC that it regarded the TPC concession as invalid and that the company should not hold the British government responsible for not securing its position.

Also, in 1921, when Lord Curzon was already the Foreign Minister, Whitehall was forced to admit that the TPC concession was on shaky legal grounds. That did not deter Lord Curzon from making his preposterous claims a year later at Lausanne.

With no solution in sight, and after receiving veiled threats from Lord Curzon on renewed hostilities in Iraq (which prompted a worried France to urge Turkey not to turn down the British proposal), Ankara reluctantly agreed in March 1923 to British proposal to refer the Mosul question to the League Nations for arbitration if direct negotiations with Britain failed. These talks, indeed, bore no fruit, and Britain took the Mosul question to the League of Nations.

When the Lausanne Conference (2nd session) ended in July 24, 1923, the communiqué issued officially recognized these developments. The British, however, failed in their efforts to have inserted into the treaty a clause indicating Ankara’s acceptance of the so-called TPC concession.

In January 1923, Britain, as the mandatory power, pressured Iraq to forego its right to 20 percent participation in TPC, voiding the provision that was included in the 1920 San Remo Agreement signed with France. (Years later this became a major bone of contention between TPC and Iraqi government, and the issue, appealed to international arbitration by Iraq, had still not been settled by 1991. Most likely, the case is still officially in limbo).

In March 1925, TPC concluded an oil concession agreement with Iraq. The agreement, to be in effect for 75 years, stipulated that TPC would be and remain a British company registered in Great Britain.

TPC was now ready to start oil exploration in Mosul. Except that the official status of the province had not yet been settled. To which country did Mosul actually belong: Turkey or Iraq?

The Mosul question was settled in December 1925 when the League of Nations Council issued its decision against Turkey by accepting the “Brussels Line” (conceived in Brussels) as the boundary between Iraq and Turkey. For Ankara, the decision was no surprise. Having many other issues, e.g. foreign capitulations, Kurdish uprising in the southeast, on its plate, and wanting to join the League of Nations, Ankara reluctantly accepted the Council’s decision. For Turkey that meant the end of the road as far as regaining Mosul.

Joy at Last

With the Mosul question thus settled, TPC immediately turned its attention to the obvious oil prospect near Kirkuk, a small town in northern Iraq. A team of geologists from the partner companies descended on the region. Based on surface indications alone, including extensive oil and gas seeps, it did not take a geological guru to figure that the 100 km-long Kirkuk structure was very likely an oil-bearing deposit of mammoth proportions.

Oil was struck at Baba Gurgur, immediately north of Kirkuk, in October 1927. Black crude and gas gushed violently to the surface with a thunderous sound. It was what the oil hands call a “blowout”: losing control of a live oil well. The countryside was flooded with oil, and a thick pall of gas filled the air. Two drillers lost their lives. It took nine days to bring the well under control. Kirkuk soon became a major oil town.

Discovery of the Kirkuk field was the second major oil-related event in the Middle East history after Masjid-i Suleiman in Iran. The event marked the fulfillment of a long-hoped dream for the TPC partners and shaped the destiny of Iraq, in fact the Middle East, until our times. The field, with reserves of 16 billion barrels, or 2150 million tons, lived up to expectations as to its immense size. In June 1929 TPC changed its name to Iraq Petroleum Company (IPC).

During World War I (1914-18), strategists for all the major powers increasingly perceived oil as a key military asset, due to the adoption of oil-powered naval ships, new horseless army vehicles such as trucks and tanks, and even military airplanes. Use of oil during the war increased so rapidly that a severe shortage developed in 1917-18.

The strategists also understood that oil would assume a rapidly-growing importance in the civilian economy, making it a vital element in national and imperial economic strength and a source of untold wealth to those who controlled it. Already in the United States, John D. Rockefeller, founder of Standard Oil Company, was the world’s richest person.

The British government, ruling over the largest colonial empire, already controlled newly-discovered oil in Persia (now Iran) through the Anglo-Persian Oil Company. Since Britain lacked oil in the home islands, British strategists wanted still more reserves to assure the future needs of their empire. An area of the Ottoman Empire called Mesopotamia (now Iraq), shared the same geology as neighboring Persia, so it appeared especially promising.

Just before war broke out in 1914, British and German companies had negotiated joint participation in the newly-founded Turkish Petroleum Company that held prospecting rights in Mesopotamia. The war ended the Anglo-German oil partnership and it exposed the territories of the German-allied Ottoman Empire to direct British attack.

As war continued, oil seemed ever more important and shortages ever more menacing to the imperial planners. Sir Maurice Hankey, powerful Secretary of the British War Cabinet, wrote to Foreign Secretary Arthur Balfour during the war’s final stage, to argue that oil had become absolutely vital to Britain and that oil resources in Mesopotamia would be crucial in the future. “Control of these oil supplies becomes a first-class war aim” Hankey said enthusiastically, as British troops closed in on Baghdad. (1)

Unfortunately for the British, they had ceded much of the oil-producing area in northern Iraq to their French ally in the secret Sykes-Picot Accord of early 1916, carving up the soon-to-be defeated Ottoman Empire. British diplomacy and military plans changed course to recoup what had already been given away. In August 1918, Balfour told assembled Prime Ministers of the British Dominions that Britain must be the “guiding spirit” in Mesopotamia, so as to provide a key resource that the British Empire lacked. “I do not care under what system we keep the oil,” he said. “But I am quite clear it is all-important for us that this oil should be available.” To this end, British forces raced to capture the key northern city of Mosul several days after the armistice was signed. Britain thus outmaneuvered the French, establishing a military fait accompli in the oil zone of Northern Mesopotamia.

The French were furious. France, too, lacked oil fields in its home terriorites, and its politicians and imperial strategists saw Mesopotamia as a key resource for France’s future industrial and military might. In the months after the armistice, nothing caused greater friction between the two allies than the oil question. During the Versailles Peace Conference, British Prime Minister David Lloyd George and his French counterpart Georges Clemenceau nearly came to blows over Mesopotamian (Iraqi) oil, according to eyewitness accounts. US President Wooddrow Wilson apparently intervened and only barely restrained them. Finally, in the secret San Remo Agreement of 1920, the two rivals agreed to give Britain political control over all Mespoltamia, in return for France taking over the German quarter share in the Turkish Petroleum Company. All this before a drop of oil had been discovered in the disputed territory!

The French government was not satisfied with its secondary role in world oil, fearing the might of the big British and US companies. In an effort to strengthen and “liberate” France, the government in Paris set up the Compagnie Francaise des Pétroles in 1924 to take up the French share in Mesopotamia – now a British colony(2) renamed Iraq . Further French legislation in 1928 referred to the company as an instrument to curtail “the Anglo Saxon oil trusts” and to develop Mesopotamian oil as a strategic resource of the French empire.

The uneasy settlement between the British and the French did not end the great power dispute over Iraq’s oil, however. The United States government and US oil companies were furious at the Anglo-French agreement, which left nothing for them! Before the end of 1920, following the companies’ strategic prompting, the US press began to denounce the Anglo-French accord as “old-fashioned imperialism.” In Washington, some talked of sanctions and other measures against these ungrateful recent allies. Relations between Washington and London cooled swiftly and a young State Department legal advisor named Allen Dulles(3) drew up a memorandum insisting that the Turkish Petroleum Company (TPC) concession agreement with the dismembered Ottoman Empire was now legally invalid and would no longer be recognized by the United States.

Soon London bowed to this transatlantic pressure and signaled that it was ready for a deal that would give the US a “fair” share. In response, Washington told its major oil companies that they should act as a consortium in future negotiations. Walter Teagle, Chairman of Jersey Standard (later Exxon), the biggest US company, took the lead role as negotiator for the consortium. Thus began lengthy secret talks in London. No oil had yet been found, but prospects had brightened.

In October 1927, the British exploration team under D’Arcy hit a gusher, proving oil reserves in large quantities near Kirkuk in northern Iraq. In July 1928, the quarreling parties finally reached a famous accord, known as the “Red Line Agreement,” which brought the US consortium into the picture with just under a quarter of the shares and an agreement to jointly develop fields in many other Middle East countries falling within the red line marked on the map by the negotiators.

Throughout this phase, as in all later phases of Iraq’s oil history, major international powers combined national military force, government pressure and private corporate might to win and hold concessions for Iraq’s oil. The defeated and dismembered Ottoman Empire and its defeated ally Germany lost all oil rights they might otherwise have claimed. At the same time, the three victors of the war – Britain, France and the United States – shared out Iraqi oil among themselves on a basis of relative power. The dominant colonial power, Britain, came out with nearly a half share, while the two lesser powers on the regional stage – the US and France – each won close to a quarter share.

D’Arcy, who discovered Iraq’s oil, died a poor man, while Calouste Gulbenkian, the crafty businessman who had put together the company, managed to extract a five percent personal share, making him one of the world’s richest men.(4) The people of Iraq were not consulted, nor did they derive any benefit from these arrangements.

4. The precise shares in the company were as follows: British Petroleum 23.75%, Royal Dutch Shell 23.75%, Compagnie Française des Petroles 23.75%, US consortium 23.75%, Calouste Gulbenkian 5%.