British Petroleum and the Redline Agreement--The West’s Secret Pact to Get Mideast Oil. Edwin Black. 277 pages. 2011.
" British Petroleum and the Redline Agreement is only the latest of his several volumes on the geopolitics and diplomatic machinations that led to the carving up of the Mideast the creation of oil states following the fall of the Ottoman Empire nearly one hundred years ago-- and eventually to the two costly wars the United States fought in Iraq. Black is said to be the man who coined the term "petropolitics."
Mavi Boncuk |
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.