The Oil Kings

Anyone who's ever driven down an American highway, idled in America's city streets surrounded by gas-guzzling SUVs, or shivered in the Arctic-cold air conditioning of a US office building, knows the truth: the United States has an insatiable thirst for oil. Certainly Iran's shah, Mohammad Reza Pahlavi, understood that need, and for eight years, 1969 to 1977, exploited it, negotiating a series of secret oil-for-arms deals with America's best and brightest.The effect was to leave the United States pleading for lower oil prices - and its own economic survival - at the hands of arch rivals Iran and Saudi Arabia. The Oil Kings: How the US, Iran and Saudi Arabia Changed the Balance of Power in the Middle East looks closely at those deals. Using newly declassified telephone transcripts, cables, policy briefs and extended interviews with ageing officials in the Middle East and Washington, Andrew Scott Cooper (who is an academic based in New Zealand), reveals the frightening truth of the Nixon-Ford administration's fervent courting of the shah. Forget those smiling White House photo opportunities: the reality is that Washington's mismanagement of its "special relationship" with the shah played a big role in fomenting Iran's 1979 Islamic Revolution, the 1974 oil embargo, and the 1970s near-financial collapse of the developed world."My search for understanding," writes Cooper, "uncovered a hidden history of US-Iran-Saudi oil diplomacy from 1969 to 1977, the back story of the crucial eight-year period when the United States went from being the world's number one oil producer to the biggest importer of petroleum, and when Saudi Arabia's House of Saud replaced Iran's Pahlavi king as Washington's indispensable ally in the Gulf." Cooper's tale begins in 1969 at the funeral of a war hero and former president - Dwight D Eisenhower - where Nixon made his first real acquaintance with the shah. The British were preparing to pull out of the region and Nixon and Henry Kissinger were anxious to secure the oil fields and shipping lanes from Iran's northern neighbour, the Soviet Union. Vietnam had already "exposed the limitations of US power", Cooper writes, and the Nixon Doctrine required that henceforth only foreign proxies would "guard freedom's forts". The oil-rich shah allied himself with the West in order to transform Iran into a modern power. That won him attention in Washington, as did his instant accord with Nixon. They were "essentially two lonely and insecure men who found relief in the isolation their high positions afforded", Cooper writes, in one of many asides that make these events accessible and compelling. By late 1969, Nixon was so friendly with the shah that he had granted the leader his own special oil quota. In exchange, the shah pledged to spend every cent of those additional oil revenues on US military and intelligence hardware. This worried Nixon's aides. "It was one thing to fly the flag for the West," Cooper writes, "another to arm it to face down Iraq, India and regional rebellions, pacifying a vast swath of the Middle East and Indian Ocean. Rearmament on the scale proposed by the shah," Cooper adds, "had the potential to bankrupt Iran." Still, Nixon persisted, advising Iran's lead diplomat, Ardeshir Zahedi to "tell the shah you can push [us] as much as you want [on oil prices] ..." In short, the shah could "raise oil prices at will and pressure western oil companies and consumers" - all via a back channel implemented without cost assessment or risk analysis. Who cared what happened to the real Iranians not benefiting from oil dollars? The US had its precious outpost in the Middle East. Yet while decision makers like Kissinger couldn't care (or know) less about economics, others did. "We don't know just how keenly the shah appreciates the limits of financial elasticity," the CIA's Office of National Estimates reported in 1971. The shah, the report warned, was digging himself into a debt and inflationary spiral.