BOOKS

Lubricating world history

Anthony Sampson

THE PRIZE by Daniel Yergin

Simon & Schuster, £20, pp. 826

When I want some oil, I'll find it at my grocer's, Clemenceau was quoted as saying before the first world war. In the following 80 years oil has emerged from the groceries to become one of the secret rulers of the world. But it is still widely regarded by historians or journalists as if it belonged in the groceries or the garage to be relegated to industrial history and the business pages.

Today the political power of oil is more evident than ever before. Eastern Europe is being forced further into economic disas- ter by the doubling of the oil price. Lithuania was denied its independence as soon as Moscow turned off the oil supply. And Saddam Hussein went to war in Kuwait in order to push up the oil price. Whatever settlement may emerge in the Gulf, oil will have to be at the centre of it. For Saddam's opportunity and Kuwait's vulnerability both derived from the bitter argument about the oil price, and the feud between Iraq and Kuwait literally rests on oil — on the disputed oilfields that lie beneath both countries.

For most of this century oil has flowed in and out of the world's diplomacy, and has had a decisive effect on two world wars as the author of this book recounts with impressive mastery. Daniel Yergin is both an oil consultant and a historian, who has written about the origins of the cold war. He is as well equipped as anyone to build the bridge between oil and world diploma- cy: and this formidable and highly readable history of oil shows the dangers of trying to ignore the slippery stuff. Yergin traces the political and social consequences of oil from its first discovery in Pennsylvania in 1859 right through to the autumn of 1990. He uncovers much new material, begin- ning with a fascinating account in the opening chapter about Professor Silliman, who first detected the possibilities of the fluid in Oil Creek, Pennsylvania. But the chief importance of his book is the broad view of global power-politics as seen through the oil-gauge, after the car, the plane and the tank had made transport dependent on oil in peace and war. He attempts nothing less than a rewriting of world history, to bring oil out of the garage into the cabinet-rooms.

Clemenceau's first contempt for oil was soon transformed in 1914, when the French army was rescued by Paris taxis dependent on gasoline; by 1917 he was appealing to President Wilson in Washington for another 100,000 tons of tanker capacity, explaining that gasoline was 'as vital as blood in the coming battles'. The first world war looks very different when seen through the pipeline. From this view it was American oil more than American troops which was the Kaiser's undoing — particu- larly after the Rumanian oilfields had been set ablaze by the British adventurer Col- onel Norton-Griffiths. It was the British destruction of the Baku oil plant which denied the Germans their access to Rus- sian oil at the last critical moment before the surrender.

But generals and politicians preferred not to admit their dependence. When the Ottoman empire was carved up at the end of the war the secretary of the British war cabinet Maurice Hankey described oil as 'a first-class British war aim': and the British were determined to hold sway over Meso- potamia, now Iraq. But they dressed up their control as a 'mandate' which they could manipulate through their puppet King Faisal. Lord Curzon knew that Iraq meant oil for Britain, but he took care not to mention it in public.

Even in the second world war, where oil 'It's a fair cop, Guy.' played a far more central role, it was still played down by popular history. Hitler knew his success depended on oil: back in 1936 Mussolini had told him that if the oil embargo had been applied against him in Ethiopia he would have had to withdraw within a week. Hitler pressed ahead with the synthetic oil which was essential for his Luftwaffe. When that was not enough, he invaded Russia with the prime objective of capturing the Baku oilfields; but ironically, as Yergin puts it, 'the Germans ran short of oil in their quest for oil'. In Stalingrad the German army surrendered because they lacked the oil to move.

In the North African desert, Rommel was defeated not so much by Monty and the British tanks as by the RAF sinking his oil tankers. 'The battle is fought and decided by the Quartermasters before the shooting begins', Rommel wrote bitterly afterwards, and told his wife: 'Shortage of petrol! It's enough to make one weep!'

In the Pacific war, oil was still more decisive in defeating the Japanese. After they had captured the oilfields in the East Indies they thought they had solved their perennial oil shortage, which had caused so much of their insecurity. But American submarines devastated their supplies and crippled their navies and airforce. If the Japanese had made a third strike at Pearl Harbor, as they had planned, they could have destroyed the US navy's fuel-base, and might (according to one estimate) have extended the war for two more years. As it was, the Americans had the oil, and they did not. The mighty fleets and the brave fighter-pilots were useless without it.

In the post-war decades the rich coun- tries became far more aware that oil was indispensable in peacetime, as it fuelled their cars, factories and heating; but their politicians and statesmen still relegated oil to the tradesmen's entrance. 'Don't talk to me about barrels of oil', complained Kis- singer. 'They might as well be bottles of Coca Cola. I don't understand!' It was not until the oil embargo in the Arab-Israel war of 1973 that America, which had long overflowed with oil, woke up to their dependence on imported oil. 'As war was too important to be left to the generals,' says Yergin, 'so oil was now clearly too important to be left to the oil men.' The oil crisis of 1973 and the quadrupling of the price caused more than a tidal wave of inflation and a sudden shift of wealth to the Middle East. It also changed — or should have changed — the concept of sovereignty and national security. As Yergin puts it: `The very substance of power in interna- tional politics seemed to have been trans- muted by its oleaginous reaction with petroleum'.

But oil played tricks on its producers as much as its consumers, and the hopes it aroused could drive people mad. The Mexicans who have now accumulated a hundred-billion $ debt by borrowing against their oil, had a saying: 'God gave us the land, the devil gave us the oil'. Perez Alfonso, the Venezuelan who invented Opec, was soon disillusioned by Opec's lack of interest in conservation, and called oil 'the excrement of the devil'. Oil every- where added an explosive element to nationalism, encouraging national pride as well as power, and creating hopeless cross- purposes with the Western powers. Yergin (who has a marvellous eye for a good story) describes how the American states- man Averill Harriman tried to negotiate with the eccentric Iranian leader Mos- sadeq, in bed in his pyjamas, after he had nationalised the oilfields in 1951. Harriman tried to agree some basic principles, for instance that nothing can be larger than the sum of its parts. 'That is false', replied Mossadeq, and went on: 'Consider the fox. His tail is often much longer than he is'. And he put a pillow over his head and rolled back laughing. (Many of the charac- ters whom Yergin vividly describes, from Calouste Gulbenkian to Deterding, from the Shah to Yamani, became obsessed by the power of oil, and overreached them- selves. The colossal fortunes which oil could suddenly conjure up created prepost- erous new characters like Paul Getty, the billionaire whose favourite relaxation was totting up his detailed expenses, or Bunker Hunt who gambled away his oil inheritance by trying to corner the world's silver.) Presidents and prime minsters could also easily become bogged down in oil. Chur- chill, who had first created Anglo-Iranian (later BP) as a national rival to Shell, was later secretly hired by Shell (as this book first reveals) to lobby for a take-over of Anglo-Iranian — which was only frustrated by the general election of 1923. Eden made a private blunder when he was foreign secretary confronting Mossadeq in Iran: he sold his own Anglo-Iranian shares at the bottom of the market and thus lost his chance to build up a nest-egg. The Suez war was Eden's own contribution to oil- mania: he launched the invasion in the name of protecting Britain's oil interests without consulting the oil companies, and caused an immediate oil crisis when the canal was closed. Eisenhower was tempted to use oil sanctions to pressurise Britain and France — to 'boil in their own oil' until they backed down. Only when they prom- ised to withdraw did Ike authorise the programme to resupply Europe.

But America itself provides the most dramatic case-history of oil-madness: hav- ing been the biggest oil exporter, it is now the biggest importer, and more hooked on the stuff than anyone. But like anyaddict it finds it hard to accept its dependence — or to impose an import tax to limit its con- sumption. Paradoxically, it is Japan, with no oil of its own, which is now much better able to stand up to any oil crisis, having stepped up its manufactured exports with each new oil shock, and maintained a flexibility which America has lost.

Which brings us to the present con- frontation in the Gulf, which provides a caricature of oil nationalism. Yergin clear- ly finished his book in a hurry, to take account of the invasion of Kuwait. His later chapters are less original than his earlier ones; and he does not fully assess the significance of Saddam Hussein, who `No, Julian, Mummy can't afford to save the planet this year.' really provides a climax to the relationship between oil and diplomacy.

For Saddam's invasion was really the first Oil War, in the sense of being wholly motivated by the ambition to use military power first to control, then to push up the oil price. Many other wars have been partly provoked by the need for oil; but Saddam's speeches and interviews before August last year clearly signalled that he aimed to go straight for the jugular. By seizing Kuwait and thus terrifying Saudi Arabia he thought he could henceforth be the master of Opec, and able to double the oil price at will. Ironically he did double it, but was deprived of the rewards.

Saddam's crude perception — that milit- ary power can be translated into oil power — introduces a new phase to the extra- ordinary story of the fluid. Inevitably Saddam invites an equally crude response from America: the use of military force, not just to deter the aggressor but to protect cheap oil. But the equation be- tween oil and guns can never be so simple; for it is impossible to defend oil supplies in foreign countries for long through force alone; and oil can still fuel nationalism more effectively than anything else. The West can only achieve secure access to oil through a much broader agreement, which has to include the thorny question which Western diplomats are carefully avoiding: the question of the oil price. The Nineties will probably see many dangerous con- frontations over natural resources, but particularly over oil; for oil is now at the heart of national security.

The Americans have no serious fear of invasion: but they have a growing and well-based fear of being cut off from oil. They are still inclined to believe, like Britain in the Fifties, that military forces can guarantee their oil. In fact it can only be ensured through international bargain- ing and agreement.

In the Soviet ex-empire the equations between oil and power are still more immediate. The Soviets remain the world's biggest oil producers and can still export part of their production in spite of their technological foul-ups; and they may still be able to use oil-power to control their dissident regions — provided the oil regions do not themselves successfully revolt. As Washington could use oil to force Britain out of Suez, so Moscow can still use it to bring leverage on its rebels Lithuania is the prime example.

But the most critical question about the power of oil remains to be answered. When the next real energy shortage hap- pens — perhaps in the middle of this decade — will the Western world be once again dependent on four or five Islamic nations round the Gulf? And will Western military intervention have given them the political unity that has so far eluded them?

Anthony Sampson is the author of The Seven Sisters.