Summary of section from the book A Century of War by William Engdahl

In William Engdahl’s book A Century of War: Anglo-American Oil Politics, he discusses the role of oil in world politics. Chapter 7, Oil and the New World Order of Bretton Woods, outlines the tug of war over control between the major Anglo-American oil companies and those who tried to rebel. What follows or Below is a summary of the events in the chapter. 

The British Empire

The effects of World War II left the British Empire in shambles; it was losing control of its colonies abroad, international trade was rapidly declining, and national debt was reaching record heights. Britain soon realized that they desperately needed the postwar support of the United States, who in turn recognized that to dominate in a postwar world, they needed the global expertise of London. It was through this special relationship that the two countries began a new form of global influence through indirect control, rather than Britain’s former method of directly imposing their will. 

During the war, the U.S. greatly developed its intelligence programs, learning much from the joint cooperation with their British counterparts. Those same connections between the agencies would later prove detrimental to U.S. policy making. 

In 1946, Winston Churchill traveled to the United States to talk with President Truman about Joseph Stalin in his famous ‘Iron Curtain’ speech. While his intentions were seemingly pure, he also endeavored to deepen the relationship between the U.S. and Britain to his advantage. One such convenience was Truman’s purge of anyone in his administration who held anti-anglo views. A much larger benefit was the co-creation of the World Bank and International Monetary Fund (IMF), that the two countries retained voting power in. The IMF was also set up in conjunction with the Bretton Woods system, under which a country’s currency was pegged to the U.S. dollar which was then pegged to Gold. At the time the U.S. dollar was in turn set at an official rate of $35 per fine ounce of gold, greatly enhancing the influence of the dollar abroad. 

Under the Bretton Woods system U.S. oil companies flourished and during that time Roosevelt offered a one-of-a-kind lend-lease agreement to Saudi Arabia which ensured their cooperation in American oil interests. Oil also played a significant role in the European Recovery Plan, or what is colloquially known as the Marshall Plan. The State Department released records indicating that 10% of all funds received by participating countries was used to buy oil, and not just any oil, but American oil. Over the span of 3 years, during which the U.S. was the major supplier of oil, they more than doubled the average price. Notably, some countries such as Greece, were paying 200% more than Britain. 

Iran’s Oil Rebellion

It was during this time that the powerful New York banks began to merge into a top five, all of which were under the control of David Rockefeller. Rockefeller not only had the banks in his pocket, but the major U.S. oil companies as well, empowering him beyond measure. Oil was becoming the world’s new currency of control, something the U.S. and Britain soon realized and took advantage of. 

Britain held a very valuable oil asset in the most oil rich country in the world at that time, Iran. When Iran realized their concessions from the Anglo-Iranian Oil Company were unfair, they demanded 50-50 pay, such as that between American oil companies operating in Venezuela and the Venezuelan government. Britain was unyielding and delayed the conversation for as long as possible. In Iran, Mohammad Mosaddegh ran as candidate for prime minister while campaigning on the issue of more money from Britain for exploitation of its world class oil reserves. During his presidency, Mossadegh personally defended his country before the World Court, pleaded the U.S. to help out, and nationalized the Anglo-Iranian Oil Company. All of his efforts amounted to sanctions on Iranian oil by not only the British, but by the Americans too. Mossadegh found his country to be poorer than before his presidency and struggling to continue to maintain economic prosperity. His 2.5 year presidency ended when British and American special forces staged a coup and removed him from power. Anglo-American backed Reza Shah Pahlavi was put into power and the oil sanctions were lifted; Anglo-American oil interests prevailed. 

Rise of Enrico Mattei

There was one country who was rather successful in the fight against the big 7 Anglo-American oil companies, nicknamed the Seven Sisters. Enrico Mattei, public administrator, of Italy was determined to rebuild the country after WWII. One of Italy’s biggest holdups was its dwindling supply of U.S. dollars used to pay for oil from the Seven Sisters. When Mattei came into power he began exploring Italy for oil and gas deposits and upon finding them he invested heavily in their exploitation. Despite Britain and America’s best efforts, Mattei held them off from intervening in his new-found oil reserves. He used the profits of ENI, Italy’s national oil company, to rebuild the country and further enhance its independence from Anglo-American oil by building his own gas stations, refineries, and shipping fleets. 

The last straw was when Italy began negotiations with Iran about establishing a 25-year long deal for oil in Iran which granted Italy 25% of total profits and Iran 75%. This was contrary to the typical 50-50 agreements between British and American oil companies and developing countries, and they feared the Italy-Iran deal would throw off the world oil order. Their protests to the Shah of Iran were to no avail as in 1957, Mattei and the Iranians made it official. 

Mattei continued his rebellion against the Seven Sisters by expanding ENI to not only Iran, but those discarded by the Seven Sisters as being too small and not worth their time. Mattei would enter into agreements with Egypt, Morocco, Sudan, Tanzania, Ghana, India and Argentina and offer to build refineries for them, ensuring the home country’s development and breaking the mold set by the Anglo-American companies. Suspiciously, in 1962, after Mattei signed a deal with the Soviets for oil in exchange for metal oil pipelines, his plane crashed and all inside were killed. 

End of an Era

Oil has been the source of life and death throughout modern history, the stories of Enrico Mattei and Mohammad Mosaddegh are no different than those that continued after their deaths. Read more about it in William Engdahl’s book A Century of War: Anglo-American Oil Politics. 

Engdahl, F. W. (2012). A century of war: Anglo-american oil politics and the New World Order. Progressive Press.