Ghosts of Empire

by Kwasi Kwarteng

The mood between the former allies, the United States and Great Britain, soured during 1920, as angry memoranda flew across the Atlantic Ocean, between 10 Downing Street and the State Department. What the Americans called the ‘open door’ policy really meant allowing US interests to exploit the resources of other countries on the same basis as the British and French were already permitted. No one really cared very much about the Italians, as their oil industry was negligible. The Germans and Turks, defeated powers, could be safely ignored, but the Americans grew louder and more aggrieved. In November 1920, Walter Teagle himself, the president of the Standard Oil Company of New Jersey, later known as Esso, addressed the American Petroleum Institute. In his speech he gave an admirable defence of the American position. The Americans were, at that time, already responsible for 70 per cent of the world’s oil production, so their attitude could be interpreted by the oil-industry professionals of other countries as one of sheer greed. This was not the case, maintained Teagle. ‘Our British friends . . . have argued that if the United States is now supplying 70 per cent of the world’s [oil] production, we should be content with things as they are. This is an entirely fallacious view.’ Was it reasonable, Teagle asked, ‘to ask that Americans go heedlessly on to the quick exhaustion of their own supply and then retire from the oil business’? The American petroleum industry could not ‘accept such a conclusion’. American oil interests now would be compelled to look to the ‘development of petroleum outside the United States’.20

  By early January 1921, Congress was beginning to agitate on this issue. A Democratic senator from Tennessee, Kenneth McKellar, was now arguing for an oil embargo on Great Britain in retaliation for the exclusion of US interests from Iraq. McKellar pointed out that the British navy was still heavily dependent on US oil, and that this fact had provided the initial stimulus for Britain to exploit Iraqi oil; but it would take a long time for oil to be produced in Iraq, despite the rich deposits which might be found. In the meantime, McKellar argued, Britain still needed US oil. He went on to explain to the Senate that ‘if Great Britain is not permitted to get oil from this country her navy will be severely handicapped’. This was true. Britain would ‘be obliged to come to terms’ with the US.21 On the Republican side, Frank Kellogg, a senator from Minnesota who would later serve as secretary of state himself, was equally belligerent. Speaking in the same debate, Kellogg argued that the US government should ‘by treaty provide for the protection of American interests in the development of oil lands in foreign countries’. He spoke darkly of ‘retaliatory legislation if Great Britain refuses the square deal to Americans’. Serious journals even discussed the possibility of an Anglo-American war.22

  Against such a storm of protest from the Americans, the British government found itself increasingly impotent. Lord Curzon alluded to the fact that Britain controlled only 4.5 per cent of the world’s petroleum supply, while 82 per cent was controlled by the US, because in addition to the 70 per cent that the Americans produced themselves, American companies operating in Mexico supplied a further 12 per cent.23 As far as the Americans were concerned, however, these facts were irrelevant. The new Republican Secretary of State, Charles Evans Hughes, who took Bainbridge Colby’s place in March 1921, even argued that the US enjoyed the same rights as Britain by right of conquest, since America had also been victorious in the First World War. The rights of Iraqis and other oppressed peoples which Woodrow Wilson had been widely expected to champion in 1918 were again completely overlooked. For Hughes, ‘in view of American contributions to the common victory over the Central Powers, no discrimination can rightfully be made against us in a territory won by that victory’. Might may well have been right, but it was rare even for an American secretary of state to put the case so bluntly.24

  In the face of pressure from the American Congress and American business, the British government simply gave up. Winston Churchill, the Colonial Secretary, could not see how he could justify keeping the Americans out.25 In January 1922, the Colonial Office, still under Churchill’s control, decided to admit American oil interests into Iraq, and negotiations between the British champion, the Anglo-Persian Oil Company, and the Standard Oil Company were initiated. Two months later, Churchill persuaded Anglo-Persian to accept a memorandum calling for a minority US shareholding in the Turkish Petroleum Company.26 The shareholding was agreed in 1923 and implemented fully in the Red Line Agreement in 1928. Under the new dispensation, Calouste Gulbenkian would still retain his 5 per cent. The Anglo-Persian Oil Company, Royal Dutch Shell, the Compagnie Française des Pétroles and an American consortium, led by Standard Oil of New Jersey, would each own 23.75 per cent of the company’s shares. The odd number was merely the result of each company giving Gulbenkian 1.25 per cent of the shares from its holding. In 1955, the year Gulbenkian died, his share in the oil company, by then renamed the Iraqi Petroleum Company, or IPC, brought him an income of £5,000,000 a year, a vast sum comparable to £100 million in 2011 prices.

  Coupled with the British desire to satisfy American and French interests was the need to keep the Iraqis and Turks out of the company. One Colonial Office memorandum stated that the ‘admission of Turkish interests in our oil projects would be extremely inconvenient’.27 Immediately after the war, liberals like Edwin Montagu, the Liberal Secretary of State for India, had suggested that the Iraqis should participate in the Turkish Petroleum Company, and that the British should control Iraq ‘primarily in the interests of its inhabitants’.28 By the mid-1920s, however, Iraq was already seen as the ‘weakest party’. The San Remo Agreement had promised the Iraqis a 20 per cent share of the oil in their own country, but this was difficult to realize since the Americans, the French and, of course, Gulbenkian needed to be satisfied with an adequate stake. There were now too many interests for the Iraqis to be given a share in the company which had been formed specifically to extract their oil.

  In the meantime, relations between the various shareholders became fractured and difficult. The Americans, it is true, were not that interested in Iraqi politics, because as long as their dividends kept pouring in, they remained unconcerned about the internal situation of the country. Provided a measure of political stability was maintained, all would be well. Britain, however, was overextended. The British Empire by the 1920s needed helpers or assistants in the enterprise of governing other countries. Sir Robert Borden, the Prime Minister of Canada, had said in 1918 that ‘the more we can induce the United States to undertake its just responsibilities in world affairs the better it will be for the world’. And also, he added, ‘for the British Empire’. But the Americans were more interested in money-making than in imperial administration. Much of the agitation to secure their oil interests came, as we have seen, from private enterprise. As early as 1910 the head geologist of Standard Oil of New Jersey had visited Iraq and returned convinced that the Euphrates valley contained a large quantity of oil.29

  The US government of the time merely acted as a cheerleader of American private enterprise. The British had strategic interests in Iraqi oil. They needed oil for their navy which they could control. The Americans had enough oil of their own. Private US companies wanted to make more money and, once those private interests were secured, the State Department simply had no interest in dealing separately with the Iraqi leaders. On at least four separate occasions, Iraqi ministers approached the US Consul in Baghdad, because they wanted to encourage American bids for oil-exploration rights in Iraq. On each occasion, these efforts were disregarded in Washington. The State Department did not wish to disturb the general political situation. The US could be a free rider, while Britain did the dirty work of running the politics. The British knew how to deal with Iraqis, so the Americans believed. The British had people who could speak the languages; they had a historic engagement with Islam and the Middle East.

  Yet, despite American disengagement from politics, there were tensions. Individuals who worked for American interests could often be sceptical, and even rude, about British policy. By 1928
, a year after the first oil had been struck, Sir Henry Dobbs, the British High Commissioner in Baghdad, was complaining about a ‘Mr F. P. Stuart Morgan’, a British subject who had once been employed in Teheran by the Anglo-Persian Company and was now working for ‘American interests in the Turkish Petroleum Company’. The High Commissioner believed that Stuart Morgan was making a nuisance of himself. He had spoken badly of King Faisal and the British and was generally undesirable. He favoured the Hashemite family’s enemies, the Ibn Sauds, who had consolidated their power in the Gulf and would, in the 1930s, found the Kingdom of Saudi Arabia. Stuart Morgan had claimed that the King ‘was screwing as much money for himself out of the country as the Turks in their worst days’. He also suggested that this was the general opinion that Americans had of Faisal, and that in the US it was believed that the King was ‘intent on making money for himself . . . and did not care for the interests of the people of Iraq’. This was not the case, as far as Dobbs was concerned. Besides, even if it were true, the King was no worse than the Americans themselves.

  British officials found it difficult to tolerate men like Stuart Morgan, whom they regarded as ‘bounders’ and ‘cads’. In a letter to Sir John Shuckburgh, Assistant Under-Secretary at the Colonial Office, in December 1928, Dobbs had insinuated that the Anglo-Persian Company had sacked Stuart Morgan because he had ‘got too much under the influence of Russian Wein und Weib’. The lapse into German is characteristic of the cultured British civil servants of the period; Sir John would know that Wein und Weib literally meant ‘wine and woman’. Stuart Morgan’s predilection for Russian women had not been appreciated in Teheran, and the Anglo-Persian Company conveniently arranged for the Americans to take him on in Iraq ‘as a favour’. The man had an ‘indifferent moral reputation when out here before, and was unpopular owing to his conceit’. Stuart Morgan was ‘now throwing his weight about a great deal and talking as if he had the American group in his pockets’. He had also been ‘talking against Faisal in private houses’.

  Dobbs identified Harry St John Philby as the chief architect of the anti-British line adopted by Stuart Morgan. Dobbs spoke of Philby’s ‘mischievous anti-His Britannic Majesty’s Government and anti-Faisal ideas’.30 He openly speculated that Stuart Morgan was ‘under the influence of Philby’. In the same letter Dobbs referred again to ‘Philby’s intrigues’. But who was Philby? What did he want? What did he represent?

  Although his fame has been rather overshadowed by that of his son, Kim, who would be revealed as a Soviet spy, Harry St John Philby was a man of distinction. He had been born in Ceylon in 1885. His family were part of the professional, imperial-service middle class, and he was educated at Westminster and Trinity College, Cambridge, where, bored with the Classics, he switched to Modern Languages and graduated with first-class honours in 1907. He joined the Indian Civil Service in 1907–the ‘first socialist’ to do so, he said–and was posted to Lahore in 1908. There he added to his impressive command of Latin, Greek, French and German by becoming fluent in Urdu, Punjabi and Baluchi. By the end of the First World War, he had established himself as a noted Arabist, being able to speak two or three Arabic dialects fluently. A distinguished career beckoned. He was made minister of internal security in Iraq after the great revolt in 1920, but he soon became disillusioned. He was transferred to Transjordan, part of the Palestine mandate, and finally left British government service in 1924.

  Philby was committed to supporting the family of the Ibn Sauds and that year began acting as an adviser to Ibn Saud himself. The Sauds were the great enemies of the Hashemite dynasty, which the British had installed in Iraq and Jordan. They eventually manage to oust the Hashemites from their traditional role as sharifs of Mecca, guardians of the holy city, in 1924. Their success in regaining Mecca increased Philby’s prestige and confidence. His anti-Hashemite stance defined his politics. In the 1930s, his career involved negotiating oil deals with the Americans, and with Germany and Spain, powers hostile to British interests. Those oil deals became the basis of American dominance of the Middle Eastern oil industry, as well as the basis of the vast wealth of the Saudi royal family. Philby is the archetype of the ‘Brit who went native’. He converted to Islam and took, as his second wife, a sixteen-year-old girl he had purchased from a slave market. This was in 1945, the year of his sixtieth birthday.31

  In the 1920s, while intriguing with the Al-Saud family, Philby constantly criticized and mocked British policy, with the Hashemites the principal object of his withering contempt. His career is important because it represented an important strand of British imperial life. Consistently, throughout the empire, there were people who refused to play by the rules. These mavericks were indistinguishable by class and education from their more conventional colleagues; they had been forged by the same elite schools, by Oxford and Cambridge universities; they had been educated in Classics or in the army, but they were often subversives opposed to British policy. In the long run, Philby’s support of the Ibn Saud family has proved the more successful: the House of Saud still rules in Riyadh, while the Hashemite Kingdom of Iraq is now hardly even a memory. The story of the insider who, opposed to official policy, gets the right answer occurs frequently in British imperial history.

  The various rivalries among the colonial powers, in Middle Eastern politics and the world in general, strained international relations to an extent that is now forgotten. If the United States and Great Britain had been rivals in the decade or so after Versailles, it was the French who continued to annoy the British in their Iraq policy, well into the 1930s. In fact, despite the recent alliance against Germany, France had never vanished from the British imagination as the eternal foe. Curzon, speaking generally about French influence, claimed that ‘a good deal of my public life has been spent in connection with the political ambitions of France’. What he had learned over his years of experience was that ‘the great Power from whom we may have most to fear in the future is France’.32

  In regard to the politics of the oil industry, the French had started the 1920s in a compliant, subordinate position. We have seen how the Americans loudly forced their way in to participate in the Iraqi oil concessions. The diplomacy of the French was more subtle. They were allowed a seat at the table. They sat quietly and got used to the game. Then they pursued their interests with tenacity and skill. The problems arose over the pipeline.

  The oil in Iraq had to be removed from that country and then taken to be refined elsewhere. That was where the real money could be made. During the whole period of its operations in Iraq, the Turkish Petroleum Company, and the Iraqi Petroleum Company in its post-1929 incarnation, never built a refinery there. Iraq was simply the source of the oil. The oil would be extracted and then carried to refineries outside Iraq. The original San Remo Agreement had anticipated this arrangement: though it allowed the French a seat at the oil table with a 25 per cent stake in the company, the accord also determined that they would agree not to ‘put any legal or fiscal obstacles’ in the way of the construction of a pipeline. It was clear that the pipeline would transport oil from Iraq and Iran through French spheres of influence to ‘a port or ports on the Eastern Mediterranean’.33 Where that port might be situated was not specified. The French had assented to the treaty. They had not objected to the clause about the pipeline and had agreed not to introduce any obstacles in its way. Once the Agreement had been signed, it was inevitable that the pipeline would have to be built. It was, however, at this moment that a row erupted which would, in many ways, define the French relationship with the British in Iraq.

  At least both the British and French were clear about what they wanted. The British wanted the port ‘on the Eastern Mediterranean’ to be located at Haifa, now in northern Israel, but then a city of only about 22,000 in the British mandate territory of Palestine. The French wanted a port in Tripoli, in northern Lebanon, but then more commonly referred to as Syria, about 122 miles to the north of Haifa. (Lebanon had been carved out of Greater Syria only in 1920 and contem
poraries, as is often the case, were slow to adopt this term.) This second location was within their sphere of influence. The debate over which of these two harbours should be the port at which the pipeline terminated continued for years.

  In the letter complaining about the ‘mischievous’ Stuart Morgan, written in December 1928, Sir Henry Dobbs, the High Commissioner in Baghdad, referred to the ‘railway and pipe-line question’. He pointed out that he thought the ‘port of Tripoli is less suited to the loading of oil tanks than Haifa owing to the winds which prevail in Tripoli’. He was worried that the Americans would agree with the French on this issue. Needless to say Philby was ‘pushing the Tripoli line’. The question involved the Foreign Secretary, Sir Austen Chamberlain, and the Colonial Secretary, Leopold Amery, who both took different approaches. Each approach was entirely in character. Sir Austen, a milder politician than his father, ‘Radical Joe’ Chamberlain, took a more conciliatory line. Leo Amery, of whom it was said he would have been prime minister if he had been six inches taller and his speeches thirty minutes shorter, displayed the pugnacity for which he was well known.

  By 1929, Sir Austen Chamberlain was a very experienced politician. He had been foreign secretary since 1924, in which office he had won the Nobel Prize for Peace in 1925. Educated at Rugby and Cambridge, he was faultlessly polite, charming and elegant. After he had left Cambridge in 1885, his father had arranged for him to spend nine months studying in Paris, followed by twelve months in Berlin, thus equipping him with the linguistic skills which were thought necessary for high diplomatic and political office. He was elected to the House of Commons in 1892 when he was only twenty-nine. In 1903 he started a three-year stint as chancellor of the exchequer at the age of forty. Now, at the beginning of 1929, Sir Austen was enjoying his final months at the Foreign Office. The Conservative government would lose the general election, held on 31 May that year, and in those last months was grappling with Iraqi questions. Chamberlain was a conciliator. At the beginning of February he declared himself ‘strongly of the opinion’ that an attempt should be made to find ‘some solution of the differences which had arisen with the French Government’. He wrote the letter to the Under-Secretary of State at the Colonial Office, William Ormsby-Gore, but the message was clearly meant for the Secretary of State himself, the aggressive Amery. This letter provoked a robust response. Less than two weeks later, Amery complained that ‘a definite surrender to the French Government’s views’ was being contemplated. The views of the two governments, he argued, were ‘diametrically opposed’. He thought the difference was ‘fundamental’. He also pointed to the fact that, even though the Foreign Secretary might have been gentlemanly about the matter, the French were behaving deviously and were ‘directing their energies to detaching the American Group from the British and Anglo-Dutch bloc’ in the Turkish Petroleum Company.34