by Sally Denton
CHAPTER SEVEN
The Largest American Colony
“Bechtel Corporation, which is to the United States what the Bin Laden construction firm is to Saudi Arabia, a colossus itself and a maker of colossi . . . emerged from the building of the Hoover Dam to become a major force in reshaping the West and then the world,” wrote journalist Rebecca Solnit in 2009 about the exploitation of the Colorado River. Bechtel, boasting of its benevolent efforts to “modernize this ancient region and bring prosperity to its peoples,” vowed to build the first contemporary nation in the Arabian Desert. “If only the pharaohs could have hired Bechtel,” a press commentator once quipped about the company’s creation of modern kingdoms.
A major part of Steve’s postwar restructuring of the company involved creating International Bechtel Inc.—an entity that would be the backbone of his and Simpson’s vision of expansionist capitalism. From the beginning, the new division was meant to capitalize on the cultivation of Saudi leaders. Allen Dulles and the OSS were simultaneously seducing the Saudis with millions of dollars in financial inducements designed to guarantee a steady supply of oil to the United States. Geologists working for Standard Oil Company of California—the company in which Steve was invested and McCone was the second-largest stockholder—had discovered this ostensibly inexhaustible supply of fossil fuels. As a result, SOCAL received an exclusive fifty-year right to search for oil across 395,000 square miles. Bechtel prepared to transform primitive Saudi Arabia—the most oil-rich nation on earth—into “a country that could match any in the world with highways, utilities, airports, and the other manifestations of modernity.”
Reminiscent of Black Canyon on the Colorado River, eastern Saudi Arabia was an inhospitable wasteland where temperatures rose to 120 degrees Fahrenheit. When Steve arrived there in July 1947, he found one of the least explored regions of the world, with no vegetation or potable water—not “even a Bedouin camp to break the monotony.” Undaunted, Steve was prepared to tackle what he saw as the biggest job since Hoover Dam—the Trans-Arabian Pipeline from the Persian Gulf to the Mediterranean Sea. “This thirty-inch, four-hundred-thousand-barrel-per-day line will be the mightiest pipeline ever laid,” Steve crowed to company managers, “bigger than any oil line yet completed and almost as long as the Big Inch line running from Texas to New York.” Prior to this project, oil moved from the Middle East to Europe through a time-consuming, circuitous, and costly tanker route from the Gulf through the Indian Ocean and the Red Sea, and then through the unpredictable Egyptian-controlled Suez Canal. The new 1,100-mile “Tapline,” as it was called, would deliver four hundred thousand barrels of oil a day from Saudi Arabia to “Europe’s back door” at a fraction of the previous cost, while also creating what Bechtel proclaimed to be “the largest American colony between France and the Philippines.”
Bechtel described it as “one of the most extraordinary of all engineering and construction projects ever carried out by private enterprise in a far country.” It would have been a dream contract for any American company, but for Bechtel it was only the beginning, kicking off an eighty-year monopoly of the lucrative economic and industrial development of the Middle East. Apart from the oil companies, no other American company was as embedded in the region, thanks to the close personal relationships Steve established with the Arab leaders who were keen to modernize their desert kingdoms. His friendship with ibn Saud was particularly intimate, especially after Bechtel built a project dear to the king’s heart: the first operating railroad in Saudi Arabia since T. E. Lawrence—Lawrence of Arabia—led his guerrillas in attacks against the Hejaz section of the Ottoman rail line during World War I.
“For all their obvious differences, the warrior king and the builder shared a pragmatic, unsentimental understanding of how the world worked,” wrote Laton McCartney in his 1988 book about Bechtel. Indeed, once Steve pledged to King Saud that Bechtel would not hire Jewish elements in building the Tapline and assured him further that Bechtel didn’t “possess any plant, firm, or branch in Israel,” their bond was sealed. Arab outrage at US backing for a Jewish state in Palestine carried over to American companies, but Steve—one of the largest contributors to support Palestinian refugees—assuaged that indignation. Bechtel was “part of the corporate-intelligence team fighting against the Zionists,” as the 1997 book The Secret War Against the Jews described the milieu of the time.
That Steve also promised to secure a $10 million loan to Saudi Arabia through the Export-Import Bank of the United States (Ex-Im) must have provided further enticement for ibn Saud, for he called upon Bechtel to build “everything from pipelines and gas-oil separating plants to houses and office buildings, and from power plants and transmission lines to hospitals and bowling alleys,” according to the company’s official historian. Soon Bechtel would build all of the sewer systems, roads, and airports in the thriving nation, and as oil profits amassed, the royal family contracted Bechtel for castles and palaces for the various crown princes.
“STEPHEN BECHTEL INFORMED ME TODAY HIS FIRM HAS ASSOCIATED ITSELF FOR EXTENSIVE OPERATIONS NOW PLANNED IN THIS COUNTRY,” US ambassador J. Rives Childs cabled from Saudi Arabia to the secretary of state in Washington in February 1947. “BECHTEL STATES WORK CONTRACTED FOR WILL REQUIRE AT LEAST 2000 AMERICANS AND 10 TO 20 THOUSAND SAUDIS.” Called the “Camel Legionnaires,” the thousands of Bechtel laborers were soon building the new desert empire in a land where sweltering heat and a shortage of drinking water took a devastating toll on workers. The Bechtel-built work camps, called “Little Americas,” were hotbeds of brawling and drunkenness, and, as with Hoover Dam, complaints of worker abuse were settled privately by “a payment or bribe to the Arab,” as the American Consulate in Dhahran wrote to the State Department.
“The king and his advisers asked their new American friends for materials and construction help,” wrote Steve Coll in his book The Bin Ladens: An Arabian Family in the American Century, “but Aramco and the companies it had invited to Saudi Arabia, led by the Bechtel Corporation of San Francisco, were busy constructing infrastructure for the new oil economy.”
Saudi Arabia was just the staging ground. From there Bechtel moved up the Persian Gulf to Kuwait, where it built the largest oil-loading jetty in the world. Representatives of the Kuwait Oil Company “came down to take a look at what we were doing in Saudi Arabia, and we went up there to check out their operations,” Steve recalled in an interview. “Pretty soon they had us building refineries in Kuwait. Then their parent company, British Petroleum, which also owned Iraq Petroleum, asked us to build the pipeline from Kirkuk to the Mediterranean for Iraq Petroleum.” That pipeline route crossed the Syrian Desert, through the ruins of Palmyra—a “city-state that existed as far back as the twelfth century before Christ,” as the company described it, while claiming that the “gangs of Arabs with hand shovels” working on the line “may have been descendants of the very people who built roads for the ancient Romans through the same area.” That line increased the world’s oil supply by over three hundred thousand barrels per day.
At the time, the six-thousand-square-mile desert country of Kuwait was inhabited by Bedouins, herders, and pearl fishers who for generations had lived a precarious lifestyle given that “apart from a few brackish wells, it had no potable water,” according to a contemporaneous account. All of that changed in 1947, when Kuwait’s crude oil reserve was among the largest in the world. Bechtel moved into that country and replicated all that it was undertaking in Saudi Arabia, including the drilling of dozens of water wells for the commodity even more precious than oil. Making “life easier for man and beast in a harsh environment,” Bechtel depicted its altruistic role in the Middle East. “As one well after another was brought in, concrete troughs were set up. The word spread among the Bedouins. Soon thousands of camels, sheep, and goats were brought to drink their fill.”
From its Saudi base, Bechtel expanded operations into Yemen, Lebanon, Iraq, Libya, Palestine, Syria, and Iran. “In this business, you get to kn
ow people, sit on their boards, and one day when something comes up, they ask you to take on a project,” Steve explained the company’s good fortune and fortuitous connections. “One thing leads to another.” Indeed. By midcentury, Bechtel was the largest engineer-constructor of oil transportation and processing facilities in the Middle East. From 1944 to 1957, Bechtel’s work for Aramco alone “was of such volume and variety that any detailed description of it would become unwieldy and bewildering,” according to the company’s own privately published account, Bechtel in Arab Lands, which is dedicated “to the oil companies.”
Throughout the Middle East during that thriving period, Bechtel executives also gathered intelligence information of both economic and military significance for the US government’s newly created CIA. In the postwar run-up to the Cold War, American agents coveted information about the Soviets’ encroaching spheres of influence. The US government reciprocated by providing Bechtel with vital, often classified, information that benefitted the company’s foreign operations. Allen Dulles, along with other high-level government officials, had been pushing Arab regimes into infrastructure development as a bulwark against the Kremlin. “As oil flowed during the late 1940s, the Bechtel Corporation negotiated a cost-plus contract with the Saudi government to undertake an ambitious plan, influenced by Washington, to help lift the kingdom into the modern capitalist age,” wrote Coll. The company so mirrored the CIA by participating in intelligence gathering and providing cover to CIA agents that it was widely considered a government surrogate, if not a full-fledged government enterprise by both the political leaders of the countries in which it operated, as well as by its rivals in industry.
Upon the recommendation of William Donovan, the chief of the OSS, Congress had created the CIA with the National Security Act of 1947 to confront the dangers of the new postwar world. President Truman signed the act into law, and formed what one account described as “an elite East Coast Ivy League Wall Street clique, patriotic but arrogant, and often amateurish.” Soon to be at its helm was Steve Bechtel’s friend and colleague Allen Dulles, known for his “weakness for old-boy grandstanding, OSS-style.” At the heart of US foreign policy directing the embryonic Cold War establishment—of which creating the CIA was a cornerstone—was an intense belief in free-market mechanisms combined with an ardent anti-Communism. The godless Soviet Union was the designated superthreat, with its Moscow-sponsored proxies throughout Eastern Europe, Africa, Asia, Latin America, and the Middle East. The Dulles worldview—endorsed by Steve Bechtel and John Simpson—held that “threats to corporate interests were categorized as support for Communism.” Dulles thought Soviet leaders were at the center of a global conspiracy bent on annihilating the West and capitalism, what diplomat George Kennan described as “a great political force intent on our destruction.”
These Cold Warriors saw the Middle East as the epicenter for Soviet expansion into areas of vital commercial and security interest to the United States. As the Ivy League spymasters launched the covert operations that would eventually scandalize the new intelligence agency in the public’s eye, the ever-patriotic Bechtel and Simpson were eager to assist. When the civilian Syrian government that was hostile to the United States and Bechtel was overthrown in 1949 and replaced by a Bechtel-friendly military dictatorship, deposed officials suspected Bechtel of providing arms and funding to the rebels. Though Bechtel denied any involvement in the coup, the US State Department credited an unnamed “multinational corporation” with assisting.
“I have talked this over with Steve,” Simpson wrote to Dulles in December 1952 about the CIA’s request that Bechtel determine whether the Iranians had the technical capability of building a pipeline to Russia, “and he entirely agrees with me that we should like to do anything we possibly can to be of service.” Steve assigned George Colley Jr.—Bechtel’s pipeline chief and senior vice president—to oversee a study of Iran’s technological capability. Concluding that Iranians could indeed build a Russian pipeline, Colley’s report alarmed the CIA, which, along with the oil cartel, had begun plotting against the popularly elected prime minister, Mohammad Mossadegh, who had nationalized British Petroleum the previous year in a move that unleashed “political forces he could not control.” Convinced that Mossadegh was not strong enough to resist a Soviet-backed coup, the CIA hatched Operation Ajax to overthrow him. Restoring Shah Mohammad Reza Pahlavi to the Peacock Throne secured “Persia’s oil petroleum for the five major U.S. oil companies,” as former national security advisor Roger Morris depicted the American motives.
The 1953 CIA-supported coup installed one of the most vicious and brutal dictatorships in the region, and “Bechtel’s 12-volume industrial-development plan for the country has strengthened, not loosened, the Shah’s grip,” investigative journalist Mark Dowie concluded twenty years later.
CHAPTER EIGHT
Going Nuclear
While Allen Dulles was masterminding the “New ‘Cold War’ Plan Under Secret Agents,” as the Boston Globe headlined it, John McCone, who had become an extreme hard-line anti-Communist and major defense contractor, was moving up the ranks in Washington. In 1950 US defense secretary James Forrestal had appointed McCone undersecretary of the US Air Force, which had been formed three years earlier out of what had been a division of the US Army, and where he was in charge of procurement and where, according to an FBI report, “he favored his friends in the granting of contracts.” In that capacity, he organized the top secret nuclear Strategic Air Command (SAC), “which put planes in the air twenty-four hours a day armed with nuclear bombs ready to bomb Russia if so ordered,” according to one account. Throughout the 1950s, McCone played a key role in developing defense policy, urging President Truman, unsuccessfully, to build a guided missile program. He helped pen a report entitled Survival in the Air Age that led to a historic increase of the defense budget.
A “rightist Catholic,” as one political pundit called him, McCone was fanatical about the designs of the Soviet Union, which he considered to be nothing short of global domination. The only way to combat that godless tyranny, as McCone saw it, was a massive military buildup with an intensive emphasis on creating a vast nuclear weapons stockpile. In addition to fashioning a muscular air force, complete with a robust anti-Soviet doctrine promoted by the hawks in the Truman Cabinet, he prepared the first two budgets of the newly unified National Military Establishment—a merger of the Department of War and the Department of the Navy created by the National Security Act of 1947—and worked with Forrestal in the creation of the CIA. “The strong-willed, stern-looking multimillionaire was not of the stuff to inspire love among the bureaucrats,” wrote two journalists of McCone’s unpleasant demeanor. A man so rigid that he flinched when addressed by his first name. “When he smiles, look out,” a CIA official was once quoted as saying.
Along the way, McCone developed close personal relationships with like-minded anti-Communist crusaders—most notably, in addition to Dulles and Forrestal, the five-star general who would soon be president, Dwight Eisenhower. This powerful clique, comprised of devotees of media baron Henry Luce’s pleas for internationalism as an extension of American influence throughout the world, embodied what Luce called “The American Century.” Published in 1941 in his Life magazine, the editorial was the interventionists’ call for America to forsake isolationism and assume the role of world leadership in the face of Nazi aggression and the Soviet Union’s expansionist geopolitical designs. “We are the inheritors of all the great principles of Western Civilization,” Luce wrote. “It now becomes our time to be the powerhouse.”
McCone was a zealous promoter of this “devil theory” of the Soviet Union as an evil empire intent on America’s destruction. In his fanaticism he joined an elite group of what a Luce biographer described as “men of great mental vigor who sank to narrowest parochialism in the area where the molten materials of their religion, patriotism, and politics fused into one great cold and flinty mass.” McCone’s unwavering support of this radical st
rategy against the Soviet Union manifested especially in the atomic warfare theories he embedded in the inchoate air force. Truman had responded to McCone’s recommendations for an atomic buildup by tripling the capacity of the principal nuclear weapons plant at Oak Ridge, Tennessee, and constructing gaseous-diffusion facilities for uranium enrichment in Portsmouth, Ohio, and Paducah, Kentucky. Proud of his influence at the highest levels of government, McCone was even more gratified that his longtime friend Steve Bechtel would be the chief contractor on all three projects.
While McCone’s sway within the Truman administration was impressive, it was minor in comparison with the authority he would wield with Eisenhower—his golfing buddy and the commander of the North Atlantic Treaty Organization (NATO)—who had solicited, and then followed, McCone’s advice about running for the White House on the Republican ticket in 1952. President Eisenhower would reward his friend with an appointment in 1957 as chairman of the Atomic Energy Commission—an agency with a $2 billion budget. With an eye once again toward helping Bechtel, McCone’s tenure at the AEC expedited the transfer of the control of atomic energy from military to civilian hands, with Bechtel positioned to rake in billions along the way.
Bechtel and McCone had been involved with atomic energy long before the AEC was created, dating back to the Manhattan Project. Officially established in 1942 in response to the report from scientist Albert Einstein to FDR that Nazi Germany was building an atomic bomb, the top secret project was under the direction of J. Robert Oppenheimer at Los Alamos Scientific Laboratory in New Mexico. Bechtel-McCone was in on the ground floor of the largest, most complex scientific undertaking in the history of the world: the $2 billion Allied project, dispersed among numerous laboratories, which involved more than two hundred thousand people. Bechtel’s role began with the construction of a facility at Hanford, Washington, and it would go on to obtain the first AEC contract at Los Alamos.