Empire of Oil and World Crisis in Oil: Harvey O’Connor. Monthly Press Review, New York. $5.00 and $7.50 372 pp. and 432 pp.
These two books can best be regarded as practically two volumes of the same work. In “Empire of Oil”, first published in 1955 and now reprinted, Harvey O’Connor, a former editor and research worker of the American Oil Workers’ Union, traces the rise of the great international oil cartel of seven Companies.footnote＊ “World Crisis in Oil” deals with the impact of the cartel on the oil-producing countries of Latin America and the Middle East, and was first published this year. The theme of the second work is therefore the same as the first, but there are nonetheless significant changes in emphasis. In 1955 the power of the cartel was at its height: it controlled over 90 per cent of all oil produced in the West outside the US itself; it was unchallenged in the control of markets in the great consuming countries of western Europe and their dependencies. It had, with the help of CIA, just brought down a government in Iran which had dared to nationalize its oil industry and, with a pliant government in power, was busy re-establishing the western commercial way of life in the oil fields. Harvey O’Connor, an American radical who has attracted the witch-hunters’ attentions and who knows what the inside of a federal gaol is like, saw only gloom when he surveyed the oil scene in 1955, with the cartel companies in an almost impregnable position, subject only to occasional sniping from small US companies limited to domestic fields and markets, and excluded by the cartel from access to the lusher hunting grounds abroad.
In 1962 this picture, although still true in outline, was substantially altered. For the first time for half a century, the power of the cartel had suffered some major set-backs. “World Crisis in Oil” chronicles these defeats, as also occasions when the cartel companies have still, when challenged, been able to maintain their grip (e.g. Venezuela).
The earliest set-backs came in the Middle East. Here the Egyptian nationalization of the Suez Canal was crucial. The canal had been linked with the oil business since the early days of the century, and by 1956 some 70 per cent of canal revenues came from oil companies. More significantly, however, the position of
A large section of the book deals with Latin America. It is not often realized now how much the oil companies contributed to the final break between the US and Cuba. For the first 18 months of the Castro regime the State Department played a watching game; it was only after the Cubans nationalized the oil refineries that the US really began to turn the heat on. The cartel, of course, not only stopped all sale of oil to Cuba, but used its control of tanker fleets to prevent two enterprizing small American companies from stepping into the breach. Washington obediently fell into line and American diplomats throughout the world exerted maximum pressure to prevent any country with “independent” oil such as Mexico, from selling to Cuba. In addition, practically all other was stopped, and by the early autumn of 1960 Cuba faced economic isolation. Then began what Mr. O’Connor correctly calls “the great ‘waterlift’ from the distant Black Sea comparable to the airlift organized by the West for Berlin in 1948”. There can, of course, be no doubt that it was Russian assistance that saved Cuba from economic paralysis, especially as far as oil was concerned, in 1960–61. But it is interesting to notice the sequence of cause and effect. After all, as Mr. O’Connor points out, it was not in fact in the interests of American capitalism generally that Cuba should be forced into economic and military dependence on Russia. If this happened, the only way of removing Castro was to be by military action (and we know what in fact happened to that). The Cuban affair was yet another, and particularly dangerous, instance of State Department policy being directly conditioned by oil company pressure. The book is filled with dozens of other examples. O’Connor notes, for instance, that one of the latest of the numerous foreign aid banks that spring to life in Washington, the Inter-American Development Bank, purportedly in the hands of Latin Americans themselves, has a firm rule: no aid for national oil companies, such as exist in Brazil and one or two other minor producing countries. In fact, whereas the State Department will often put cold war requirements above the sectional interests of particular companies (e.g. as in its “liberal” policies in South and Central Africa), the oil companies nearly always get the policies they want, there and then. This offers a lesson that can be vitally useful in assessing American policies in the Middle East and Latin America.
One of the very few occasions when the cartel failed to impose its policies occurred in 1938–40. Mexico, after a successful political revolution, nationalized her oil industry. The cartel companies responded by economic blockade and pressed for military intervention from the US and Britain (for Shell was one of the victims). But Britain was engaged elsewhere and Roosevelt refused to spoil his “Good Neighbour” policy by solitary intervention. In 1942 the Allies, short of fuel, insisted on a compromise and the companies agreed. So Mexico kept her nationalized industry—the only exporting country in the western world to have one. The industry has done some unobtrusive good work in the past few years in training experts from other Latin American countries (the head of the Cuban Petroleum Institute formerly worked in the Mexican industry for many years).
There are further interesting chapters on the companies’ struggles with nationalist movements in Brazil and elsewhere in Latin America. There is only one thing to be regretted; O’Connor has omitted from his story one of the most important colonial fiefs of the international oil cartel: Western Europe (including Britain). In the years since the war the great companies have created a stranglehold on the markets of all west European countries, with the single exception of Italy; and even there the institutions of the Common Market are trying to undermine Italy’s independence of the cartel by preventing her buying from the only available non-cartel sources: Russia and Rumania. Standard of New Jersey, through its 100 per cent owned subsidiary Esso, used American “counterpart” aid to Britain immediately after the war to build up a commanding position in the United Kingdom. The oil companies have spilled over from refineries into a variety of subsidiary industries, affecting a wide range of the British economy: petrochemicals, fertilizers, plastics, shipping, not to mention pipelines (for which Standard of New Jersey has recently been given compulsory purchase powers in a private Act of Parliament, the Esso Act, 1961). O’Connor, after surveying the scene in Latin America and the Middle East, is able to head his last chapter “Decline of the Cartel”. If, as is to be hoped, he turns his analytical eye on the position in Europe, he could hardly be so optimistic. There exists in this country and on the continent a state of affairs the Labour movement cannot regard with complacency.