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Last Updated: 05/09/2005
Oily Iraq
S. S. Tabraz

The elections in Iraq were widely hailed as a tentative success in an otherwise disastrous situation. But considering the history of foreign intervention in the Middle East when it comes to oil interests, perhaps this silver cloud has a dark lining.

The recent flurry of activity in the Middle East whether it is post-Saddam Iraq or, post-Arafat Israeli-Palestinian conflict, or even post-Hariri Lebanon induces a sense of progress which, contrary to what the grand narratives accompanying the events might proclaim, is as false as it is historically repetitive. Out of the three events, the ones in Iraq are truly historic for it is the first time that, owing to the peculiarity of the electoral process, a Shia majority state has arisen, and that out of the debris of the American war on terror in Iraq. Under the pretext of bringing democracy, the recently concluded elections have polarized Iraqi society on communal and sectarian lines, the consequences of which are far reaching but as of yet unclear. What can be explained with relative ease, however, are the obstacles that surround the United Iraqi Alliance (UIA), a Shia coalition brought about by the top Shia spiritual leader in Iraq: grand Ayatollah Ali Sistani.

Held under the shadow of large-scale insurgency, these elections applied a queer system of lists allowing people to elect lists not the candidates, which also facilitated the latter to remain hidden from public recognition. This system boils down to a sectarian pattern of voting where if one is a Shia, one has to vote for Sistani, and if a Kurd, then for a Kurdish list. The UIA has won 140 seats in the 275-member Transitional National Assembly. As of now, Ayatollah Sistani has succeeded in cobbling together different Shia factions and it is hoped that it could, despite being boycotted by the Sunnis, lead to much-needed stability in Iraq. However, by accepting the framework of these elections and hence the inevitable logic of the US occupation, Ali Sistani has put himself in a tight spot. There are elements in this uneasy relation that could lead the two toward a collision course. In its campaign, the UIA had pledged to use the oil wealth for economic development projects and has asked for a timely withdrawal of US troops from Iraq. Both of these demands are highly untenable if one considers the history of relations between the region s natural resources and the changing dynamics involved in securing them.

US, the Middle East and Oil

The American obsession with oil is the first and only umbilical cord still binding it to the Middle East. Many scholars, like Noam Chomsky, Daniel Yergin and Gilbert Achcar, have established a close link between American policies and the struggle of American oil companies for a greater share in one of the world s greatest strategic resources. As a result, it is possible to see the rhetoric of these policies in the context of a struggle for oil between the American, British and French companies, the role of the last two greatly diminished since the end of the Second World War. One of the most important changes of the 20th century, precipitated by the First World War, was the replacement of the politics of coal by that of the oil. After World War I, at the San Remo conference in 1920, the European allies reached an agreement on exploiting oil in the territories of erstwhile Ottoman Empire, which committed the irreconcilable error of throwing in with the defeated party. This agreement gave the British-backed Turkish Petroleum Company (TPC) a monopoly on Iraqi oil production. Anglo-Persian Oil (later British Petroleum, BP) held 50 percent interest in the TPC for the British government, Royal Dutch/Shell a 25 percent, and Deutsche Bank the remaining share, which was confiscated after the War and given to Compagnie Françoise des Petroles (CFP, French company later to become Total).

This division of war spoils the old European imperial powers made among themselves was an affront to the US, the youngest entrant in the imperialism game. Under pressure from US oil companies, the Wilson administration vehemently opposed this colonial division. Subsequently, in 1928, a new agreement was signed which redistributed four equal shares in the TPC among Anglo-Persian, Royal Dutch/Shell, the French CFP and a consortium of US oil companies. This agreement provided for joint exploitation of oil under the TPC if found in ex-Ottoman territories and in lands east of Suez and the whole of Arabian Peninsula. Gulf Oil (later acquired by Chevron), Standard Oil of New Jersey (later Exxon) and Standard Oil of New York (Socony, later Mobil) acquired major shares in TPC after the Second World War. Upon merging to become Exxon Mobil, these two companies have turned into the world single biggest oil company. The two US companies, Standard Oil of California (Socal, later Chevron) and Texaco were not included in the TPC and with their independent initiatives benefited immensely. Socal became the first company in 1933 to have obtained a concession for oil exploration from the nascent Saudi Kingdom, and roughly a decade later, in 1946, Washington established a military base at Dhahran, which is the heart of the Saudi oil fields. This was also the time when US vociferously advocated an Open Door policy in international economic relations, while strategically resorting to a policy of containment (whose author, George Kenen, died recently) of the communist threat. However, the United States was about to confront in the Middle East what no imperial power before it ever came to terms with, and that was the rise of radical Arab nationalism, which emerged as a corollary of the larger process of Third World decolonization.

The age of classical empires of the European model came to its conclusion following the decade right after the end of Second World War. Syria became independent in 1945, while Egypt and Iraq had their nationalist revolutions in 1952 and 1958 respectively; yet the first spectacle of this radicalized national consciousness was seen in Iran when in 1951 Dr. Mohammed Mussadiq came to power. Washington, filling in the role of British imperialism, orchestrated his military overthrow and the Shah s regime was restored in 1953. More important than this coup d'état was the dispensation that came along with the restoration of the Shah. Earlier, Britain had had a major share in the Anglo-Iranian Oil Company (AIOC-BP) and after the coup it was redivided. A consortium was formed in which the share of the AIOC-BP was cut back to 40 percent, with another 40 percent split between five US companies (Exxon, Socany, Socal, Texaco and Gulf Oil, with a share of 8 percent each) and the remaining 20 percent divided between Royal Dutch/Shell (14 percent) and the French CFP (6 percent).


This is not the place to recount every US misadventure in the Middle East. The point is that every one of its interventions has been accompanied by a major shift in the distribution of oil. Even in the current Iraqi dispensation, in what is one of the symbols of the US-British alliance, the task of restructuring the Iraqi oil industry has been assigned to Philip Carrol, former CEO of the US branch of Royal Dutch/Shell. In this context, one is hard pressed to find any reason that the US would, or indeed could, ignore the massive interest of its own oil conglomerates and allow, as has been proclaimed by the UIA, the use of oil wealth for Iraq s own national development. Indeed, after so much effort has gone into securing American oil interests in Iraq, not to speak of the equally important American strategic interests in the region, it is highly unlikely that it will waste this opportunity. As for the demand of timely withdrawal of all foreign troops from Iraq, President Bush unequivocally stated in his State of Union address on 2 February that the US was prepared for the long haul in Iraq.

As far as the fate of the rest of the region, much will depend on what happens in Iraq in the coming months. Syria and Iran have called upon each other to assist in warding off the American threat in the form of mounting pressure on Syria, while Iran still remains the choicest prize of all in the contemporary Middle East. Syria has completed its troop withdrawal from Lebanon, which may witness growing Israeli intervention on the pretext of vanquishing Hezbollah. What is absolutely conspicuous in the Israeli-Palestinian front is the extreme poverty of historical imagination in finding a solution to the age-old problem. Why does it seem the road to peace does not go forward to uncharted terrain but seems to go nowhere?

S.S. Tabraz is a Research Associate at the Society for the Study of Peace and Conflict, New Delhi