Standard Oil of California (Socal)

The discovery of oil in the Gulf region changes all this.

Oil is first discovered in Iran, and by 1911 a British concern, the Anglo-Persian Oil Company (APOC), is producing oil in Iran.

The British find oil in Iraq after the First World War.

In 1932 Standard Oil Company of California (Socal) discovers oil in commercial quantities in Bahrain.

Socal obtains a concession in Saudi Arabia in 1933 and discovers oil in commercial quantities in 1938.

A flurry of oil exploration activity occurs in the Persian Gulf in the 1930s with the United States and Britain competing with one another for oil concessions.

One reason for the increased activity is that in 1932 the new Iranian government of Reza Shah Pahlavi revokes APOC's concession.

Although the shah and the British later agree on new terms, the threat of losing Iranian oil has the the British in particular convinced that they must find other sources.

The small states of the Persian Gulf are a natural place to look.

Geological conditions are similar to those in Iran, and, because of treaties signed between 1820 and  1916, the British have substantial influence and can restrict foreign access.

Oil exploration does not mean immediate wealth for Arab rulers of the Gulf region.

Although the oil companies strike large deposits of oil in Bahrain almost immediately, it takes longer in other countries to locate finds of commercial size.

Oman, for instance, will be unable to export oil until 1967.

The Second World War delays development of whatever fields had been discovered in the 1930s; so it is not until the 1950s that countries still technically dependent on Britain for their security begin to earn large incomes.

The oil fields in Kuwait are developed the most quickly, and by 1953 that nation becomes the largest oil producer in the gulf.

Considerably smaller fields in Qatar come onstream in commercial quantities in the 1950s, and Abu Dhabi begin to export offshore oil in 1962.

Dubayy begins to profit from offshore oil deposits in the late 1960s.

Foreign companies own and manage the gulf oil industry until the 1970s.

In most cases, European- and United States-based concerns form subsidiaries to work in specific countries, and these subsidiaries pay fees to the local rulers, first for the right to explore for oil and later for the right to export the oil.

When the first arrangements are made, local rulers have a weak bargaining position because they have few other sources of income and are eager to get revenues from the oil companies as fast as possible.

Moreover, in 1930 no one knows the size of gulf oil reserves.

As oil production increases and the extent of oil deposits becomes known, indigenous rulers improve their terms.

In the 1950s, rulers routinely demand an equal share of oil company profits in addition to a royalty fee.

By the 1970s, most of the gulf countries, which by now are independent of British control, buy major shares in the subsidiary companies that work within their borders.

By the early 1990s, many of these subsidiaries will have become completely state-owned concerns.

They will continue to employ Western experts at the highest decision-making levels, but the local government will have ultimate responsibility and profits.

Ten families rule the Arab coast of the gulf, with the exception of Saudi Arabia and Iraq: in Kuwait the Al Sabah; in Bahrain the Al Khalifa; in Qatar the Al Thani; in the present- day UAE the Al Nuhayyan in Abu Dhabi, the Al Nuaimi in Ajman, the Al Sharqi in Al Fujayrah, the Al Maktum in Dubayy, the Al Qasimi in Ras al Khaymah and Sharjah, and the Al Mualla in Umm al Qaywayn; and the Al Said in present-day Oman.

These families owe their positions to tribal leadership, the traditional basis on which the British negotiate treaties with their leaders in the nineteenth century and the early twentieth century.

A major provision of these treaties is the recognition of sovereignty.

The British are concerned that rulers of the weaker gulf families will yield some of their territory under pressure from more powerful groups, such as the Al Saud or the Ottomans.

Accordingly, the treaties signed between 1820 and 1916 recognize the sovereignty of these rulers within certain borders and specify that these borders cannot be changed without British consent.

Such arrangements help to put tribal alliances into more concrete terms of landowner ship.

This means that the Al Nuhayyan of Abu Dhabi, for example, not only command the respect of tribes in the hinterland but also own, as it were, the land that those tribes use—in this case, about seventy-two thousand square kilometers of Arabia.

Controlling, or owning, land becomes more important with the discovery of oil.

When oil companies come to explore for oil, they look for the "owner" of the land; in accordance with British treaties, they go to the area's leading families and agree to pay fees to the heads of these families.

As oil revenues increase, the leaders become rich.

Although the leaders spend much of their new wealth on themselves, they also distribute it in the area they control according to traditional methods, which initially consist mostly of largesse: gifts for friends, and food for whomever needs it.

As time passes, the form of largesse becomes more sophisticated and includes, for example, the construction of schools, hospitals, and roads to connect principal cities to towns in the interior.

Oil revenues do not change traditional tribal ideas about leadership.

New money, however, increases the influence of area leaders by giving them more resources to distribute.

Because of oil exploration, tribal boundaries become clearer, and areas are defined more precisely.

Distinctions among tribes also became more evident.

A new sense of identity appears in gulf shaykhdoms and arouses a growing expectation that they should rule themselves.

To do this, shaykhs have to cut themselves off from British control and protection.

This voluntary isolation by the sheikhs is something to which the British have little objection by the early 1960s.

India and Pakistan had won their independence in 1947, meaning that Britain no longer has to worry about protecting the western flank of the subcontinent.

Britain is also burdened by the tremendous sacrifices it made during the Second World War and cannot be as globally involved as it had been before the war.

Therefore, Britain yields many of its strategic responsibilities to the United States in the postwar period or gives them up entirely.

However, the British are bound to the gulf by treaties and so remain in the region, but it is clear by the 1960s that they seek to leave the gulf.