In the short term things blew over, largely because Knox D’Arcy’s project seemed doomed to failure. Work was slow thanks to the difficult climate, the large number of religious festivals and the regular and dispiriting mechanical failure of the rigs and drills. There was open hostility too in the form of complaints about pay, about working practices and about the small number of locals who were employed, while there was also no end of trouble with local tribes wanting to be bought off.28 Knox D’Arcy grew nervous about the lack of progress and how much of his money was being spent. ‘Delay serious’, he cabled his drilling team less than a year after the concession was agreed; ‘pray expedite’.29 A week later, he sent another dispatch: ‘have you free access to wells?’ he asked his chief engineer in despair. Logbooks reveal large quantities of pipes, tubes, shovels, steel and anvils being shipped from Britain, alongside rifles, pistols and ammunition. Wage slips from 1901–2 also show funds being spent in ever increasing quantities. It must have felt to Knox D’Arcy that he was burying his money in the sand.30
If he was anxious, then so too were his bankers at Lloyds, who became increasingly perturbed about the size of the overdraft of a man they had assumed had limitless funds at his disposal.31 What made it worse was that there was little to show for the hard work and high costs: Knox D’Arcy needed to convince other investors to buy shares in the business and thereby take pressure off his personal cash flows and provide the capital to take things forward. His teams were producing promising signs of oil; what he needed was a major strike.
As he grew increasingly desperate, Knox D’Arcy sounded out potential investors or even buyers for his concession, travelling to Cannes to meet with Baron Alphonse de Rothschild, whose family already had extensive interests in the oil business in Baku. This set off alarm bells in London. In particular, it caught the attention of the British navy: Sir John Fisher, First Lord of the Admiralty, had become evangelical in his belief that the future of naval warfare and of mastery of the seas lay in switching from coal to oil. ‘Oil fuel’, he wrote to a friend in 1901, ‘will absolutely revolutionise naval strategy. It’s a case of “Wake up England!”’32 Despite the failure to deliver a knock-out discovery, all the evidence suggested that Persia had the potential to be a major source of oil. If this could be secured for the exclusive use of the Royal Navy, then so much the better. But it was essential that control of such resources should not be surrendered into foreign hands.
The Admiralty stepped in to broker an agreement between Knox D’Arcy and a Scottish oil company that had met with considerable success in Burma. After offering a contract to the latter in 1905 to supply the navy with 50,000 tons of oil per annum, the directors of the Burmah Oil Company were persuaded to take a major stake in what was renamed the Concessions Syndicate. They did so not out of patriotic duty but because it was a sensible diversification strategy, and because their track record also enabled them to raise more capital. Although this allowed Knox D’Arcy to breathe a sigh of relief, writing that the terms he had achieved ‘were better than I could have obtained from any other company’, there was still no guarantee of success – as the ever sceptical British diplomatic representative in Teheran noted drily in his reports home. Finding oil was one problem; handling persistent attempts at blackmail was another.33
True enough, the new partnership had little to show for its efforts over the next three years. Wells that were drilled failed to bear fruit, while expenditure ate away at the finances of shareholders. By the spring of 1908, the directors of the Burmah Oil Company were openly talking about pulling out of Persia altogether. On 14 May 1908, they sent word to George Reynolds, leader of operations in the field and a man described by one of those who worked with him as single-minded, determined and made of ‘solid British oak’, to prepare to abandon operations. He was instructed to drill two wells that had been established at Masjed Soleymān to a depth of 1,600 feet. If no oil were found, he should ‘abandon operations, close down and bring back as much of the plant as is possible’, and ship it to Burma where it would prove more useful.34
As the letter made its way through the post houses of Europe and the Levant and on to Persia, Reynolds carried on with his job, unaware of how close he was to being shut down. His team kept drilling, forcing a way through rock so hard that it forced the drill bit loose. The bit was lost in the hole for several days; as the clock was ticking down, it was finally recovered and reattached. On 28 May, at four in the morning, they hit the motherlode, striking oil and sending black gold shooting high into the air. It was a huge find.35
Arnold Wilson, a British army lieutenant who was in charge of the security of the site, sent a coded cable back home with the news. It simply said: ‘See Psalm 104, verse 15 second sentence.’36 The verse entreated the good Lord to bring forth from the earth oil to make faces shine with happiness. The discovery, he told his father, promised fabulous rewards for Britain – and hopefully, he added, for the engineers ‘who have persevered so long, in spite of their top-hatted directors . . . in this inhospitable climate’.37
Investors who piled into the Anglo-Persian Oil Company, the vehicle that controlled the rights to the concession, after shares were offered in 1909 reckoned that the first well at Masjed Soleymān was just the tip of the iceberg and there would be high rewards in the future. Naturally, it would take time and money to build up the infrastructure necessary to allow oil to be exported, as well as to drill new wells and find new fields. Nor was it easy running things smoothly on the ground, where Arnold Wilson complained he had to spend time bridging the cultural gap between the British ‘who cannot say what they mean and Persians who do not always mean what they say’. The British, he declared, saw a contract as an agreement that would stand up in court; the Persians simply saw it as an expression of intentions.38
Nevertheless, a pipeline was soon built to connect the first field to the island of Ābādān in the Sha al-Arab, which had been chosen as the location for a refinery and export centre. It took Persia’s oil to the Gulf, where it could then be loaded on to ships and brought back to Europe to be sold at a time when the continent’s energy needs were rising sharply. The pipeline itself was highly symbolic, for it marked the first strand in what was to become a web of pipelines criss-crossing Asia that gave new form and life to the old Silk Roads.
Problems were brewing. The discovery of oil made the piece of paper signed by the Shah in 1901 one of the most important documents of the twentieth century. For while it laid the basis for a multi-billion-dollar business to grow – the Anglo-Persian Oil Company eventually became British Petroleum – it also paved the way for political turmoil. That the terms of the agreement handed control of Persia’s crown jewels to foreign investors led to a deep and festering hatred of the outside world, which in turn led to nationalism and, ultimately, to a more profound suspicion and rejection of the west best epitomised in modern Islamic fundamentalism. The desire to win control of oil would be the cause of many problems in the future.
On a human level, Knox D’Arcy’s concession is an amazing tale of business acumen and triumph against the odds; but its global significance is on a par with Columbus’ trans-Atlantic discovery of 1492. Then too, immense treasures and riches had been expropriated by the conquistadors and shipped back to Europe. The same thing happened again. One reason for this was the close interest paid by Admiral Fisher and the Royal Navy, who monitored the situation in Persia closely. When Anglo-Persian experienced cash-flow problems in 1912, Fisher was quick to step in, concerned that the business might be acquired by producers like Royal Dutch/Shell, which had built up a substantial production and distribution network from an initial base in the Dutch East Indies. Fisher went to see the First Lord of the Admiralty, a rising political star, to impress on him the importance of converting the engines of naval battleships from coal-burning to oil. Oil is the future, he declared; it could be stored in large quantities and was cheap. Most important, however, was that it enabled ships to move faster. Naval warfare ‘is pure c
ommon sense’, he said. ‘The first of all necessities is SPEED, so as to be able to fight – When you like, Where you like and How you like.’ It would allow British ships to outmanoeuvre enemy ships and give them a decisive edge in battle.39 Listening to Fisher, Winston Churchill understood what this meant.
Switching to oil would mean that the power and efficiency of the Royal Navy would be raised to ‘a definitely higher level; better ships, better crews, higher economies, more intense forms of war power’. It meant, as Churchill noted, nothing less than that the mastery of the seas was at stake.40 At a time when pressure was rising in international affairs and confrontation looked increasingly likely in some form or other, whether in Europe or elsewhere, considerable thought went into how this advantage could be established and pressed home. In the summer of 1913, Churchill presented a paper to the Cabinet entitled ‘Oil Fuel Supply for His Majesty’s Navy’. The solution, he argued, was to buy fuel forward from a range of producers, and even to consider taking ‘a controlling interest in trustworthy sources of supply’. The discussion that followed did not lead to a definite conclusion, other than an agreement that the ‘Admiralty ought to secure its oil supplies . . . from the widest possible area and the most numerous sources of supply’.41
Less than a month later, things had changed. The Prime Minister now believed, along with his ministers, in the ‘vital necessity’ of oil in the future. He therefore told King George V in his regular round-up of noteworthy developments that the government was going to take a controlling state in Anglo-Persian, in order to secure ‘trustworthy sources of supply’.42
Churchill was vocal in championing his cause. Securing oil supplies was not just about the navy; it was about safeguarding Britain’s future. Although he saw that coal underpinned the empire’s success, it was oil on which much depended. ‘If we cannot get oil,’ he told Parliament in July 1913, ‘we cannot get corn, we cannot get cotton and we cannot get a thousand and one commodities necessary for the preservation of the economic energies of Great Britain.’ Reserves should be built up in case of war; but the open market could also not be trusted – because it was becoming ‘an open mockery’ thanks to the efforts of speculators.43
Anglo-Persian therefore seemed to offer the solution to many problems. Its concession was ‘thoroughly sound’ and, with sufficient funds behind it, could probably be ‘developed to a gigantic extent’, according to Admiral Sir Edmond Slade, formerly director of naval intelligence and head of the task force in charge of running the rule over the company. Control of the company, with the guaranteed oil supply this would entail, would be a godsend for the navy. The key, concluded Slade, was taking a majority stake ‘at a very reasonable cost’.44
Negotiations with Anglo-Persian moved quickly enough that by the summer of 1914 the British government was in a position to buy a 51 per cent stake – and, with it, operational control of the business. Churchill’s eloquence in the House of Commons saw a large majority vote in favour. And so it was that British policymakers, planners and military could take comfort in the knowledge that they had access to oil resources that could prove vital in any military conflict in the future. Eleven days later, Franz Ferdinand was shot dead in Sarajevo.
In the flurry of activity that surrounded the build-up to war, it was easy to overlook the importance of the steps Britain had taken to safeguard its energy needs. This was partly because few realised just what deals had been done behind the scenes. For in addition to buying a majority stake in Anglo-Persian, the British government had also agreed terms in secret for a twenty-year supply of oil for the Admiralty. This meant that Royal Navy ships that put to sea in the summer of 1914 did so with the benefit that they could bank on being refuelled should confrontation with Germany drag on. Conversion to oil made British vessels faster and better than their rivals; but the most important advantage was that they could stay out at sea. Not for nothing did Lord Curzon give a speech in London in November 1918, less than two weeks after the armistice had been agreed, in which he told fellow dinners that ‘the Allied cause had floated to victory upon a wave of oil’. A leading French senator agreed jubilantly. Germany had paid too much attention to iron and coal, he said, and not enough to oil. Oil was the blood of the earth, he said, and it was the blood of victory.45
There was some truth in this. For while the attention of military historians focuses on the killing fields of Flanders, what happened in the centre of Asia was of major significance to the outcome of the Great War – and even more important to the period that followed. As the first shots were being fired in Belgium and northern France, the Ottomans were pondering what role they should play in the escalating confrontation in Europe. While the Sultan was adamant that the empire should stay out of the war, other loud voices argued that cementing traditionally close links with Germany into an alliance was the best course of action. As the great powers of Europe were busy issuing ultimata and declaring war on each other, Enver Pasha, the mercurial Ottoman Minister of War, contacted the commander of the army headquarters in Baghdad to warn him of what might lie ahead. ‘War with England is now within the realm of possibilities,’ he wrote. If hostilities broke out, he went on, Arab leaders should be roused to support the Ottoman military effort in a holy war. The Muslim population of Persia should be roused to revolution against ‘Russian and English rule’.46
In this context, it was not surprising that within weeks of the start of the war, a British division was dispatched from Bombay to secure Ābādān, the pipelines and the oilfields. When this had been done, the strategically sensitive town of Basra was occupied in November 1914, whereupon the town’s inhabitants were told by Sir Percy Cox during a flag-raising ceremony that ‘no remnant of the Turkish administration remains in this place. In place thereof, the British flag has been established, under which you will enjoy the benefits of liberty and justice, both in regard to your religious and secular affairs.’47 The customs and beliefs of the locals mattered little; what was important was protecting access to the natural resources of the region.
Aware that their hold over the Gulf region was tenuous, the British made overtures to leading figures in the Arab world, including usayn, Sharīf of Mecca, who was offered a tempting deal: if usayn ‘and the Arabs in general’ were to provide support against the Turks, then Britain ‘will guarantee the independence, rights and privileges of the Sharifate against all external foreign aggression, in particular that of the Ottomans’. That was not all, for another, even juicier incentive was offered up too. Perhaps the time had come when ‘an Arab of true race will assume the Caliphate at Mecca or Medina’. usayn, guardian of the holy city of Mecca and a member of the Quraysh, and descendant of Hāshim, the great-grandfather of the Prophet Muammad himself, was being offered an empire in return for his support.48
The British did not really mean this, and nor could they really deliver it. However, from the start of 1915, as things took a turn for the worse, they were prepared to string usayn along. This was partly because a swift triumph in Europe had not materialised. But it also stemmed from the fact that the Ottomans were finally beginning to counter-attack against the British position in the Persian Gulf – and also, worryingly, in Egypt too, threatening the Suez canal, the artery that enabled ships from the east to reach Europe weeks faster than if they had to circumnavigate Africa. To divert Ottoman resources and attention, the British decided to land troops in the eastern Mediterranean and open a new front. In the circumstances, cutting deals with anyone who might take the pressure off the Allied forces seemed an obvious thing to do; and it was easy to over-promise rewards that might only be paid far in the future.
Similar calculations were being made in London about the rise of Russian power. Although the horrors of war quickly became apparent, there were some influential figures in Britain who were concerned that the war would end too soon. The former Prime Minister Arthur Balfour was anxious that a rapid defeat of Germany would make Russia more dangerous still by fuelling the ambitions of the latter to the ex
tent that India might be at risk. There was another worry: Balfour had also heard rumours that a well-connected lobby in St Petersburg was trying to come to terms with Germany; this, he reckoned, would be as disastrous for Britain as losing the war.49
Concerns about Russia meant that ensuring its loyalty was of paramount importance. The prospect of control of Constantinople and the Dardanelles was the perfect bait to retain the bonds that united the Allies and to draw the tsarist government’s attention towards an acutely sensitive topic. Mighty though Russia was, its Achilles heel was its lack of warm-water ports other than in the Black Sea, which was connected to the Mediterranean first by the Bosporus and second by the Dardanelles, the narrow stretches of water separating Europe from Asia at either end of the Sea of Marmara. These channels served as a lifeline, connecting the grainfields of southern Russia with export markets abroad. Closure of the Dardanelles, leaving wheat to rot in the storehouses, had inflicted devastating damage on the economy during the Balkan Wars of 1912–13 and had led to talk of war being declared on the Ottomans who controlled them.50
The Russians were delighted, therefore, when the British raised the question of the future of Constantinople and the Dardanelles at the end of 1914. This was ‘the richest prize of the entire war’, Britain’s ambassador announced to the Tsar’s officials. Control was to be handed to Russia once the war was over, though Constantinople ought to remain a free port ‘for goods in transit to and from non-Russian territory’, alongside the concession that ‘there shall be commercial freedom for merchants ships passing through the Straits’.51
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