Reese Schonfeld on Oil and War

This is an interesting tale of US-Russian cooperation that worked. From Me and Ted.com

Monday, July 31st, 2006
The Oil Caldron

This is a background story. It serves to define the background for the Eisenhower administration’s termination of the Anglo-French occupation of Suez and to explain Prime Minister Blair’s participation in the war in Iraq. It involves the who, why and how of it all, especially the why. It is based on two sources and includes quotes from Kevin Phillips’s American Theocracy and Paul Roberts’s The End of Oil.

Who: Robert B. Anderson, Secretary of the Navy (1953-1954), Deputy Secretary of Defense (1955), in private industry (1956), Secretary of the Treasury (1957-1961); a Texas oil lawyer who represented, among others, the rough and ready Texas oil barons, Clint Murchison and the Richardson-Bass family, Anderson was a particular favorite of Ike who was widely reported to have hoped that Anderson would get the Republican Presidential nomination instead of Richard Nixon.

Why: To establish U.S. primacy in the oil world.

How: By forcing the Anglo-French out of Suez with their tails between their legs.

The story begins in 1957. I was going to Columbia Law School while working at UPI/Movietone News. Henry Simon Bloch, one of my professors, who was also a partner in E.M. Warburg and Company, in explaining to us the use of economic power in international affairs; used as his prime example the success of the United States and Russia in forcing the British and the French out of Suez by threatening to destroy their currencies. The U.S. and the Soviets had said they would dump pounds and francs until they were worthless. That was something I had not known and that was not known to UPI or, to the best of my knowledge, by any other news organization. The Suez War was long over. It wasn’t a story anymore, and we didn’t put it on the wire.

During the Suez affair, it was Secretary of State John Foster Dulles who had delivered the hard line messages to our British and French allies. It wasn’t until the 80’s that a friend of mine who was a member of America’s corporate establishment told me of Robert Anderson’s role in the affair. My friend said that in 1956, Anderson, while representing Texas oil interests, had convinced Ike to cut the legs out from under the British and the French by attacking their currencies. He got his way and, since then, the flow of oil has been controlled by Washington and Houston, not London and Paris.

[My friend was no fan of Robert B. Anderson. He told me that in the oil industry, Anderson was referred to as ‘Robert the Bad” in contrast to Robert O. Anderson, who had created Arco and was known as “Robert the Good.” Years later, I met with “Robert the Bad” at the request of Arthur Taylor, the former President of CBS. Anderson wanted me to help him establish a television news service to be funded by South African money that would covertly push the cause of the Apartheid government. I declined but I still think of him as “Robert the Bad,” and I still see his hand as making mischief in Suez.]

Flash forward to spring, 2001. Paul Roberts writes in The End of Oil, “Months before the September 11th attacks, when Vice President Cheney…was drawing up a new national energy policy, he and other White House energy strategists had poured over maps of Iraqi oil fields to estimate how much of Iraqi oil might be dumped quickly on the market.” Roberts reports that Cheney and his oil industry allies thought, “If Iraq could be convinced to ignore its OPEC quota and start producing at maximum capacity the flood of new oil would effectively end OPEC’s ability to control prices….The oil markets, free at last from decades of manipulation, would seek a more natural level, which according to some analysts, would be around fourteen dollars a barrel, or even lower.” In short, if we could get control of the Iraqi oil fields, we would regain control of the flow and price of oil.

There are four great worldwide oil companies: ExxonMobil, ChevronTexaco, BP and Royal Dutch/Shell. The first two are American, the last two, British. Kevin Phillips, in American Theocracy, writes, “Were ExxonMobil, ChevronTexaco, BP and Royal Dutch/Shell to divide up Iraq, their receipts over several decades would be in the trillions of dollars.” This came at a critical time for BP and Shell. Phillips reports that Michael Meacher, Britain’s Environment Minister, who resigned to protest the Iraq War, had reported that “four months ago [Autumn, 2003], Britain’s oil imports overtook its exports, underlining a decline in North Sea oil production that was already well underway.”

I had never understood Prime Minister Blair’s willingness to join the “coalition of the willing.” Now, perhaps, I do. If in 2001, Cheney and the American oil companies were poring over maps of Iraq getting ready to divide the spoils of an easy war, BP and Shell wanted to be at the table, too. If getting there meant sending British troops to Basra, if getting there meant remaining there and taking casualties, Blair thought it worth the price. (The French, who no longer play in the worldwide oil game, could oppose the war with nothing to lose.) Blair could not chance an American victory that would leave BP and Shell high and dry.

To summarize, American wrested control of the world’s oil supply in 1956, gradually lost it to OPEC and saw Iraq as a chance to get it back. The Brits had lost military and political power in 1956 but still retained an economic role in the oil business realized that if the U.S. won the war on its own even that would be in jeopardy. For the U.S. the Iraq war may have been an option, but once the U.S. was committed to going in, for Tony Blair and the British oil industry, it was a necessity.

Thursday, July 27th, 2006

It Seems Like Old Times

Fifty years ago, in the same week as Andrea Doria, Gamal Abdel Nasser, the President of Egypt, nationalized the Suez Canal. The British and the French, who had previously controlled the canal, along with the U.S. launched the Suez Canal Users Association to take over its management. Egypt rejected the SCUA. The U.N., which had been participating in the negotiations with Egypt made no progress.

The U.N. dithered, but finally, early in October called a meeting of the Security Council to endorse the USCA. The Council never voted. On October 29, Israel, which had been colluding with the allied Brits and French, invaded the Sinai Peninsula, moving its troops down to the canal. On the 31st, the allies began bombing Egypt, and Naser sank forty ships in the canal to end its usefulness.

The U.N. General Assembly meets and calls for an immediate ceasefire. It offers to send a United Nations Emergency Force (UNEF) into the canal zone within a few days. The French and Brits veto the Assembly proposal and drop 1,000 paratroopers onto the canal. America pressures the French and the Brits to get out by threatening to dump British pounds and French francs, breaking their currency. The Soviets do likewise. Britain, France and Israel bow to the pressure and agree to withdraw. A month later the UNEF troops arrive and Egyptians celebrate their victory over the West. Fifty years later, the canal belongs to Egypt.

Israel had agreed to play the catspaw on behalf of the West in the battle with Islam. Now, fifty years later, Israel is once again fighting a war on behalf of Western Civilization against an even more militant Islam. Once more, the U.N. is dithering, ringing its hands and proposing meaningless ceasefires. To the credit of President Bush, the U.S. is vetoing all attempts to impose a ceasefire until Hezbollah is defanged. The U.S. currency is not yet so weak that the Russians and Chinese can pressure us by dumping dollars.

Israel is spending lives and America is spending dollars to preserve Western civilization. If we had done that fifty years ago, the British and French might be on our side now -- better late than never.

[There is more to the “why we did it” in 1950 and other results of that decision. I know something of it, and I’ll write more about it later.]