|BUSINESSWEEK ONLINE : MARCH 22, 1999 ISSUE|
How the Near East Was Won
OIL, GOD, AND GOLD
The Story of Aramco and the Saudi Kings
By Anthony Cave Brown
Houghton Mifflin 420pp $30
A trip to a single industrial installation in the harsh Saudi desert can give you an idea of the power, the glory--and the sheer uniqueness--of Saudi Aramco, the world's mightiest oil producer. Abqaiq, 30 miles from the Persian Gulf, is a processing plant through whose spotless tanks and pipes pass 6 million barrels of crude oil a day--more than the total output of the continental U.S. In other words, one out of every five barrels of the world's oil exports runs through this facility: Abqaiq is pretty much the epicenter of the greatest strategic prize of all time.
But there is something even more impressive about Abqaiq. Around the plant is a replica of a perfect mid-American town, with low-rise bungalows, baseball diamonds, and manicured roads--all built for Aramco employees. It is jolting to come across this reality in the midst of Saudi Arabia's stern Islamic monarchy.
The fascinating story of how Saudi oil reserves--one-quarter of the world's total--were prospected for, fought over, and finally won by the U.S. is the subject of Anthony Cave Brown's Oil, God, and Gold: The Story of Aramco and the Saudi Kings. But perhaps most remarkable is how well Aramco, once the jealously guarded joint property of Exxon, Chevron, Texaco, and Mobil, functions today as a 100% Saudi company. The nationalization of what Brown rightly calls ''the largest and richest consortium in the history of commerce'' took place so smoothly in the 1970s and 1980s that most managers barely noticed. That is in stark contrast to the violent expropriations of Western assets that left crippled oil industries in countries such as Iran and Iraq.
Aramco, after all, was one of America's greatest colonial experiments--and a hugely profitable enterprise that underpinned U.S. postwar might. By the 1950s, Brown writes, Aramco's empire in Saudi Arabia ''became a showpiece of the superiority of U.S. capitalism in comparison with Soviet Communism.'' And even more, of how America now outshone Britain, whose sway in the region was waning rapidly.
The world would be a far different place if the British had won the Saudi oil concession--and they nearly did. The cat-and-mouse game between U.S. and British diplomats and political agents, and between the countries' rival oil companies, is superbly detailed by Brown. The drama played out in the 1920s and 1930s is full of extraordinary characters, from con men such as New Zealand's Major Frank Holmes to the warrior-king Ibn Saud, founder of the modern Saudi state.
No character was more colorful in those early years than H. St. John Philby, Ibn Saud's British adviser. Remarkably, Philby went against the British and helped persuade Ibn Saud to go with the Americans (an example of high treachery eerily repeated decades later by his son Kim, the British intelligence agent turned Soviet spy). In May, 1933, thanks to Philby, Standard Oil of California won a 60-year concession from Ibn Saud in exchange for an up-front payment of 35,000 British pounds.
It was to be an imperialist project with a difference. Unlike the Shell-led consortium that was pumping oil in Iran, Aramco conceded essential points to the Saudis from the start. For one thing, Aramco employees would enjoy no immunity from strict Saudi laws. And Aramco adopted a policy of bringing benefits to its host country, from roads and power plants to badly needed water wells. No one could accuse the Americans of venality--unlike the British elsewhere in the Near East.
One reason is that Aramco--and the four U.S. companies behind it--were always worried about losing the concession. In fact, Aramco had to perform a delicate balancing act between the interests of U.S. owners, the U.S. government, and the Al Saud rulers, whose need for cold cash mounted constantly. As Brown shows--making remarkable use of a treasure trove of Aramco papers collected by a senior Aramco executive, William E. Mulligan--Aramco kowtowed to Saudi interests, working, for example, during the 1950s on clandestine military operations to evict British forces from South Arabia.
But the company's growing Arabian Affairs Div. was also a veritable intelligence service on Saudi Arabia. Not surprisingly, the U.S. used Aramco to get information on the secretive royal family. In one operation in 1945, Aramco worked with the Office of Strategic Services--precursor to the CIA--to inspect the contents of the aging and ailing Ibn Saud's toilet to assess his durability. ''Only rarely could a foreign potentate's stool and urine have been of such interest to our intelligence people,'' reflected one State Dept. official.
Brown is an expert on the history of intelligence services, and he excels in unveiling the interplay of agents, diplomats, and company men as they conspire to claim the treasure of Arabian oil. But he is less surefooted in things Middle Eastern and has had to rely heavily on secondary sources, including Elizabeth Monroe's 1973 book, Philby of Arabia. And the more modern history of Aramco, from the quadrupling of oil prices after the 1973 Arab-Israeli War to the nationalization of the company, is rushed. Despite those shortcomings, this is an epic and engrossing tale.
BY JOHN ROSSANT
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
BACK TO TOP
PHOTO: Cover, ``Oil, God, and Gold''
E-Mail to Business Week Online