Peace in the Middle East: Empire, Oil, and the Reshaping of the Middle East After World War I

0:00In discussing the settlement of international issues after the First World War, I think context is pretty much everything. Our understanding of the Middle East must, it seems to me, fit into the larger context of what historians call the New Imperialism carried out by the West from the 1860s to World War I. The New Imperialism generally started with individuals on the ground who represented particular business or other interests, and it called for the support of their governments when their security was threatened in these faraway places. The European governments in question then, or the related government, would then intervene militarily in the situation and plant the flag to protect its nationals or to restore order.

0:47Especially in the conquests of more modernized regions, the Western power might take advantage The financial interests working hand-in-glove with the growing bureaucratic state not only are really welcomed, but pushed for policies of strong economic intervention, both at home and in the colonies, since their influence and power depended on the manipulation of the state's resources. For their own part, the great international banks that increasingly stood behind this process began to develop very, very complicated strategies for imperialism by the last years of the 19th century.

1:42In connection with the revolutions that broke out in a number of countries just after the turn of the 19th century, so Russia, 1905, Persia, 1905, Ottoman, Turkey, 1908, etc., etc., these global brains trusts began to work out elaborate schemes for pooling resourcesividing the markets in the conquered areas and doing planning on a very vast strategic scale, as in the Chinese consortium loan just before World War I. These imperializing teams became expert at the public relations of manipulating collectivist nationalism, both at home and in colonial areas, sometimes using upstart proto-nationalist leaders to topple older regimes standing in the way and then removing or controlling the new local leader.

2:35leader. Not only did Western bankers and arms makers stand behind the revolts, but they got in on the ground floor of controlling wealth flows under the new regime, whatever it turned out to be. So where was the Middle East in all of this? Well, the Ottoman Empire, which you see pictured up here, it's labeled Turkey, the Ottoman Empire protected a very large part of the region to some extent and warded off outright conquest from the West before 1914. So it was in the Middle Eastern states that lay outside Ottoman control where the new imperialism first struck, that is Egypt and Persia. Egypt had been more or less independent from the empire, yet the building of the Suez Canal, the British closeness to Egypt connected with the canal, British loans, and British desires to control the best route to India. All these factors led to near protectorate status for Egypt. Persia, on the other hand, an old but surprisingly cohesive state trying to modernize itself, was simply caught between

3:44Russian and British imperialisms and divided in the happy moment of the Triple Entente, famous for being the predestined allies together, brought together in 1907 so they could fight Oil enters the picture at this juncture. British oil exploration has been going on in Persia since 1901. One year after the British and Russians divided Persia into spheres of influence in 1907, the British discovered there one of the largest oil fields in the world. The British government immediately helped to organize the Anglo-Persian Oil Company, a private concern closely tied to the British government. Meanwhile, that great creature of empire, Winston Churchill, became First Lord of the Admiralty in 1911 and accelerated an existing program to convert the Royal Navy from coal power to petroleum.

4:41Anglo-Persian oil company officials argued at this stage that if their company was not subsidized by the British government, then Royal Dutch Shell or Standard Oil might well move in to compete. Churchill was able, just before World War I, to gain parliamentary approval for the British government to buy a controlling share of Anglo-Persian, at the same time that the Navy was finishing its conversion to oil power. The British government thus became the company's controlling shareholder and its biggest customer. More generally, the world was shifting to oil as the basis of power production, though it does give one pause to contemplate the possible alternative paths of energy history if petroleum production had not from its infancy relied on aggressive rent-seeking behavior.

5:36Hence, in any case, the great modern oil companies that emerged from World War I, in particular Royal Dutch Shell under the leadership of Henry Deddening, who took over the company and brought it into the British fold during World War I and was knighted by the British during the war. Hence Standard Oil Company and various other branches of the Rockefeller Empire and some others. Here indeed is the beginning of that shift in financial power discussed by Rothbard in the context of the 1930s, a shift in which the Rockefeller interests moved ahead of the J.P. Morgan Empire. Indeed the partly state-sponsored increase in the need for oil allowed a whole range of tycoons, frustrated academics, slick operators, retired admirals, arms merchants and others To create policy, and in the case of our subject, to shape strategies for Western policies in the Middle East, since that is where the greatest known oil reserves now appear to be.

6:43To clarify, if I'm critical of these freewheeling companies and individuals who shaped Western foreign policies, it's not because I'm critical of the influence of free market business impacting government decisions. Rather the opposite, I'm critical because these forces were instrumental in forging the status regimes of the 20th century and beyond. As historian Gareth Jones somewhat approvingly commented on the British case during the period of World War I, quote, the assault on laissez-faire was partly led by private industry itself. One of the most noticeable assaults came from the British oil companies. The famous British wartime promises that shaped the modern Middle East were very much a part of this world of slick operators, bureaucrats and imperialists.

7:32These promises were briefly as follows, the Hussein-McMahon correspondence from 1915 and 1916. This amounted to a British promise to support independent Arab governments after the war. The pivotal Sykes-Picot Agreement of May 1916 divided up the Ottoman Empire after the war, assigning Syria to France and Iraq and Palestine to Britain. And then the Balfour Declaration of 1917 declared British support for the establishment of a national homeland for Jews in Palestine. Note that these commitments were mutually exclusive in a variety of ways and certainly impossible to keep. By the time of the peace conference in Paris, countries lined up to acquire parts of the Ottoman Empire, which was of course on the losing side.

8:20In the queue of those seeking pieces of this particular rock were Italy, Greece, the Arab dynasty of Faisal, Persia, certain Armenian political organizations, France, Britain and some others. In the end, outside of the newly slimmed-down Turkey, European power became dominant, above all, British power. Let me focus now on a single issue by looking for a moment at the question of the Mosul boundary, which was a part of this whole peacemaking process, so it's kind of a microcosm of my point here. This region on the border of three successor states to the Ottoman Empire and Persia became an important diplomatic issue, but an even more important financial one.

9:13And just to show, let me just point out, this is the region we're talking about in this area. In other words, it's where Turkey meets Syria, meets Iraq, meets Persia. So it's a kind of borderland among four different modern countries. It was all Ottoman Empire except for the Persian part beforehand. And you'll see here it's called, in this older 19th century map, Kurdistan, which is just an older way to spell Kurdistan. and then here we have mountain Nestorians and Nestorians are of course Christians and this is a reference to those Assyrians who lived there and were descendants of the famous Assyrians but had become Christianized so it was they were called here mountain Nestorians so that's the region we're talking about and this map is an older map where you get a better sense of this being not carved into arbitrary nation-states in the 20th century.

10:27The district named after the city of Mosul, and there's a little plan of the city of Mosul, and you see also right here, oops, sorry, also here are the ancient ruins of Nineveh within the city. But this is a modern map of the region to show how those countries come together. But the district named after Mosul was a villayet or province of the Ottoman Empire, home to a wide ethnic variety, Arabs, Assyrians, Armenians and others. The predominant ethnic stock was Kurdish. These peoples had lived in isolation until the mid-19th century when the Ottomans crushed to their last resistance to centralized rule.

11:17Still, the Villette of Mosul, especially the northern section of it, was a remote mountain area, including some of the least known terrain in the world from the standpoint of European geographers by the early 20th century. There was also the promise of oil. Famous tar and gas seepages in the area had attracted serious attention since the 1870s. Just before World War I, there were positive indications of a vast oil field close to Kirkuk, just south and east of Mosul, and an American rear admiral, Colby Chester, having visited the region in 1899, smelled oil and returned as a private entrepreneur a few years later to lobby with the Ottoman Sultan for just such an oil concession as British adventurers were negotiating at the same time with Persia.

12:10After much talk between Chester and the Ottomans, suddenly, from offstage, the Anglo-Persian oil company and some Deutsche Bank suitors appeared in Istanbul, and the famous Red Sultan, Abdul Hamid, as he was called because of the blood on his hands, surmising the value of the area, quickly transferred the Mosul province from state ownership to his own private property. The Sultan was about to sell both to the Germans and the British, but the Young Turk Revolution of 1908 intervened. Actually Chester, the Admiral, secured from the new Young Turk regime a promise of future acquisitions or a future oil concession complete.

12:57But in 1912, the British and the Germans founded the Turkish Petroleum Company, a concern which went out of business when the First World War started, but which is going to reemerge after the war. Once the war began, so did planning for the post-war settlement, as we've seen, and both the British and French kept the Mosul border in mind as they redesigned the region. The Sykes-Pico agreement in 1916 represented for the French not only control over historic Syria but also the potential for exploitation of Mosul. Whether the British intended to stick by this promise, the issue of whether Mosul and its resources would end up in Syria, Iraq or Turkey became more and more disputed as the end of the war approached. Strangely, just as the war ended, France renounced its claim to the Mosul district in a puzzling move.

13:49Maybe France hoped to keep the whole Sykes-Picot agreement intact by giving away a part of it so that the British would support them in other areas, or maybe so that the British would support them in Europe. Probably, the French renounced an immediate claim to Mosul because the government was following a complex plan featuring Sir Basil Zaharoff, international man of mystery, arms merchant extraordinaire, supplier of both sides in World War I, and by the end of the war, an agent of British petroleum interests. Zaharoff, it seems, induced Clemenceau and other French figures to renounce Mosel so that it would be available to the new, nearly fully British Royal Dutch shell, although he was able to offer the French a share of the profits.

14:40Zaharoff had a good bit of experience in this area as an agent of the Rothschild oil interests in Tsarist Russia earlier in the century. Moreover, much of the famous arms merchants' activities at the end of the war were directed toward a complex scheme of getting up a bank for the exploitation of Middle Eastern oil, which was actually an international bank, and 45% of which would be owned by the Anglo-Persian oil company. Connected with these Anglo-French dispositions over the Mosul boundary, Standard Oil had taken active measures to associate itself with the French oil market and with French oil policy generally. And so Standard became a kind of standard bearer for the French because that enabled them to edge out the British just a little bit.

15:33To make things more complicated, exciting times followed. In early 1920, Faisal became a king of Syria, made so by a Syrian council, but the allied San Remo Conference confirmed France's control of Syria, and the French then defeated Faisal's forces and expelled him from the country. Then he moved on to become king of Iraq. The story behind these events, though, is that before the French and British met to conclude the mandate system at San Remo, the British had offered an oil piece which would appease the French, but which left out the Americans in any form. So the deal now was Mosul to be split in just in terms of the oil concessions, 75-25 British and French.

16:23It should be mentioned here that the Mosul villae had been promised, in essence, to the Hashimites, to Faisal's family, and had been occupied by the British since late 1918. So it was now left under Hashimite Iraq as it remains to this day, or in Iraq as it remains to this day, but in reality it was in the hands of the British to be exploited mostly by Sir Henry Dedding of Royal Dutch Shell. Well, to move through some elements of this paper that are very interesting, another aspect of this that I'll touch on just briefly before I close is that there was a huge war in this area that most Americans are not particularly aware of in 1921-1922 when the Greeks invaded Turkey, the French invaded Turkey, what was left of Turkey, there were parts of Turkey internationalized, and a huge attack by the Greeks with forces of two or three hundred thousand troops fighting by the middle of 1920.

17:30The Turks armed, they brought a famous general, Mustafa Kemal, the man who later was renamed Ataturk, to the fore. He was a great general, he beat the Greeks, they withdrew and so there's this huge rumble that happened there. Behind these events stood oil, that of Mosul in particular, just as the British, well actually the British were financing the Greek attack through Zaharoff and standard oil was in support of the Turkish government. I have some quotations about that from contemporary times, a lot of contemporaries realize this. This was eventually settled, although the Mosul boundary was a problem up until 1926 when that was finally settled to the temporary satisfaction, but let me, after moving on from this example, just close the paper with a couple of points here.

18:38First, in the period after World War I, the British and the French maintained strategies in the Middle East which relied on manipulating individuals and groups for political and economic and strategic purposes, and the British surpassed everybody. Second, by the second decade of the 20th century, the manipulation of wealth in enormous increments involved in the new imperialism had led to new long-range and often extremely callous strategies for the control of investments and market fields. The not completely adventitious rise of oil to supreme importance in the leading industrial countries led to still more elaboration of such long-range plans. Third, many of the postwar arrangements could not have been calculated more readily for instability.

19:31If not from all parties, at least on the part of some, the groundwork in this period was laid for certain political manipulation later on, for later violence and especially for taking advantage of such violence as a foothold for further stages in strategic planning. Finally, in a very real sense, all these strategies depended on the division of the region along fairly precise lines as illustrated in the Mosul boundary. The post-Ottoman Middle East might have reshaped itself in a variety of ways after the empire fell if it fell at all. But the divisions like those imposed worked both toward profit for others and a special intensification of violence in the modern world. It is perhaps too much to claim that the whole script for a century's worth of Middle Eastern affairs was written in the years just after World War I, but I think a rough draft of it was.