(Excerpted from Chapter 1: David Rockefeller & The Shah of Iran: Big Oil & Their Bankers in the Persian Gulf…)
State Department insider George Kennan saw US control over the Persian Gulf oil patch as a control valve on Japanese military and economic expansion. The State Department once called the Middle East, “a stupendous source of strategic power and one of the greatest material prizes in world history, the richest prize in the world in the field of foreign investment.”
Chicago Tribune columnist William Neikirk articulated the US modus operandi for grabbing this “prize” when he wrote that the US must exploit its “virtual monopoly in the global security market…as a lever to gain funds and economic concessions from Germany and Japan”.
Oil revenues financed the Shah of Iran’s military procurement program. He agreed to recycle surplus petrodollars into US banks, mainly Chase Manhattan, which his good friend David Rockefeller chaired. Iran’s Central Bank, the Bank Markazi, acted as wholly-owned subsidiary of Chase Manhattan.
Oil revenue also went to banks like BCCI where it funded CIA covert operations. Somalia, Chad and Oman were all recipients of arms from the Iranians at the request of the CIA. In Oman, Iran deployed troops to help quell the Dhofar rebellion. The Shah even sent a fleet of Northrop F-5 fighters to General Nguyon Van Thieu in 1973 as the US was pulling out of Vietnam. But his most ambitious role as CIA conduit was through his support for Kurdish rebels in Iraq.
A 1958 Iraqi coup deposed the US puppet regime of General Nuri es-Said and gave rise to a succession of nationalist leaders starting with Kareem Abdul Qassim. In the late 1960’s the Shah began to funnel arms to Patriotic Union of Kurdistan (PUK) Kurdish rebels on behalf of the US and Israel.
Iraq made peace with the Kurds in 1970, but by 1972 Henry Kissinger and John Connelly were on their way to Tehran to enlist the Shah’s support in destroying the truce. Colonel Richard Kennedy, a Kissinger aid, met with PUK leader Mustafa Barzani’s son to deliver $16 million in CIA military aid. Richard Secord became the point man in keeping the Kurds re-supplied.
In 1972 Iraq had troops fighting in Syria. By arming the Kurds the US was able to open a second front in its covert war against the al-Bakr government in Baghdad, which had been calling for Arab unity as the solution for getting a fair price when selling oil to the Four Horsemen.
Libyan President Mohamar Qaddafi and Egyptian President Gamal Abdel Nasser had made similar statements and were also targets of CIA shenanigans. The people in the Persian Gulf region have always backed Arab unity within OPEC, but Iran and Saudi Arabia served to undercut the majority in their role as “swing producers” for the West.
They ignored calls for production cuts to support prices and instead opened the spigots whenever Big Oil called on them to do so. Thus, the designation “Twin Pillars”.
A more important reason for CIA backing of the Iraqi Kurds was the desire of Big Oil to have Iran gain control over the strategic Shatt al Arab waterway, which was at that time controlled by Iraq. The BP-led Iranian Consortium wanted to be able to move its crude from upstream wells down the Shatt to their hulking Abadan refinery- then the world’s largest- which sits at the mouth of the Shatt where it drains into the Persian Gulf.
The CIA destabilization paid off and in 1975 Iraq was forced to sign the Algiers Agreement with the Shah. Iraq would cede half interest in the Shatt al-Arab in exchange for an end to Iran’s support for the Kurds. Suddenly the Kurds’ funding dried up.
Mustafa Barzani wrote personal pleas to Henry Kissinger that his people were now being slaughtered by Iraqi troops, but he heard nothing in return. Pressed on the fact that the CIA had effectively used the Kurds, then left them for dead, one US official stated tritely, “Covert action should not be confused with missionary work.”
The Shah served as cop on the beat for the US in the Persian Gulf, while Israel filled that role in the Mediterranean. President Truman called Israel, “a stationary aircraft carrier to protect US interests in the Mediterranean and the Middle East”. The 1967 Israeli invasion of Egypt and Syria was a test run for the US policy of using surrogate nations to carry out its will in the Middle East.
The US conducted a massive military buildup throughout the Middle East during the 1970’s, including a huge increase in its Persian Gulf Naval presence. In 1976 the Israeli right-wing Likud Party defeated the Labor Party for the first time since Israel’s 1947 inception. The US backed Likud, funding its policy of building yet more Jewish settlements on Palestinian lands.
When Egyptian President Anwar Sadat signed the Camp David Accords, Egypt became the first Arab nation to sign a peace treaty with Israel. Jordan and Turkey would soon follow. All three countries were rewarded with massive US military aid.
When the Shah fell, Egypt became the number two recipient of US military aid after Israel, followed by Turkey, Pakistan and Jordan. The US spent $91 million to beef up its military base at Ras Banas, Egypt, $255 million for military facilities in Oman and $435 million on its B-52 forward base on the Indian Ocean island of Diego Garcia.
For his efforts as loyal servant in supplying cheap oil to the Four Horsemen, the Shah would become one of the richest men in the world. When Israel invaded Egypt’s Sinai Peninsula in 1967 Egyptian President Gamal Abdel Nasser, a strident nationalist and foe of Big Oil, responded by closing the Suez Canal to tanker traffic, then called on OPEC to launch an oil embargo. Even the Saudis concurred. But the Shah ordered Iran to step up oil production.
The huge refinery at Abadan was upgraded, providing Big Oil with enough crude to break the embargo. The Suez closure ended up hurting independent oil companies most, since the majors had already developed supertankers, which were too large to pass through the canal anyway. Still the Shah’s decision radicalized many moderate members of OPEC.
Led by Algeria and Iraq, the nationalists began to exert their influence. In 1969 Colonel Mohamar Qaddafi took power in Libya following a bloodless palace coup which toppled that country’s monarchy. Palestinian guerrillas targeted TAPLINE, a pipeline owned by ARAMCO, the Saudi consortium and largest oil company in the world, which is controlled by Exxon Mobil and Chevron Texaco. TAPLINE crosses Syria on its way to the Mediterranean port of Sidon in Lebanon.
After one such attack, Syria guaranteed Libya that it would keep the pipeline down for 270 days to drive up oil prices. But again the Shah opened the spigots and prices remained stable. Part of the reason the Israelis came to occupy parts of southern Lebanon was so they could guard the strategic port of Sidon for Big Oil.
Qaddafi responded to the Shah’s moves by initiating the Tripoli I and II plans, which placed non-negotiable demands on Big Oil. Both plans gained quick support among OPEC nations, but again the Shah countered, this time with the Tehran Agreement, which guaranteed the oil companies unlimited supplies of crude.
With this guarantee in place, the Four Horsemen were actually able to stockpile petroleum during the ensuing Arab oil embargo of 1973. Though the Saudis cut production by a full 25%, world output actually increased 8% due to the flood of oil coming out of Iran.
While US consumers saw gasoline prices quadruple at the pump, Big Oil reaped a huge windfall from the embargo. Had the whole event had been staged as a pretext to permanently raise gasoline prices in the US? Indeed, prices have never returned to pre-1973 levels. In 1972, the year before the embargo, the Four Horsemen showed a collective profit of $5.4 billion. The year the embargo ended their combined profits jumped to $8.4 billion, a 56% increase.
Exxon’s profit during 1973, the year the embargo began, was $2.5 billion, which was at that time the best yearly profit ever in the company’s long history. The embargo also ran many independent oil companies out of business, wiping out Four Horsemen competition. It was not the first time the Horsemen would profit from a crisis. Nor would it be the last.
Dean Henderson is the author of five books:Big Oil & Their Bankers in the Persian Gulf: Four Horsemen, Eight Families & Their Global Intelligence, Narcotics & Terror Network, The Grateful Unrich: Revolution in 50 Countries, Das Kartell der Federal Reserve, Stickin’ it to the Matrix & The Federal Reserve Cartel. You can subscribe free to his weekly Left Hook column @www.hendersonlefthook.wordpress.com