One hundred years ago, at a remote spot in the Persian mountains, the earth suddenly started to rumble and, as men shouted with jubilation and trepidation, a stinking black torrent burst through the ground. After several years of seemingly fruitless work, a maverick British explorer, George Reynolds, had pioneered the discovery of oil in the Middle East.

The May 26 centenary of this find occasions a timely lesson about the nature and limits of American power in the contemporary world. Washington hawks argue that the global dominance of the United States is synonymous with its material might and superiority. Unless it possesses a clear military edge over its competitors, they allege, and maintains a strong and visible presence in strategically important parts of the world, it cannot maintain global superiority.

History argues otherwise. In the years that followed the 1908 discovery, when international rivals competed to win concessionary rights to explore for oil in Middle Eastern kingdoms, the U.S. enjoyed one distinct advantage: it was not viewed as an imperial power and therefore enjoyed a degree of influence that others did not. American companies gained an upper hand against the British and were offered preferential treatment purely by virtue of their nationality. Of course, Great Britain was then the pre-eminent imperial power in the Middle East and beyond. It had more resources—financial, military, and economic—at its disposal and also exerted strong cultural, or “soft,” power. The United States, however, had greater influence.

In 1901, British oil hunters won the first concession to explore for petroleum for the simple reason that a cash-strapped Persian government had no one else to choose. But after 1908, as international interest in the region grew, the shah and his ministers had much more room to maneuver. In 1920, Tehran adopted a policy of trying to lure American investment to the kingdom and succeeded not only in recruiting a U.S. citizen, Morgan Shuster, to advise them on financial matters, but also in offering U.S. oil companies a first option on a new concession to search for and exploit petroleum in areas that fell outside the scope of the 1901 deal. Tehran’s Washington representative, Hussein Ala, persuaded State Department officials to coax American companies into taking an interest, and in November 1921, Standard Oil (New Jersey) beat its British rival to the mark and signed a concessionary deal with the Iranian authorities.

In contrast to Great Britain, the shah and his ministers did not see the United States as a threat to Persia’s national independence and felt that any concessionary deal would come without political strings. The British government had vast financial assets and a strong military presence in the region, capable of overawing Persian armed forces. Britain’s soft power was pervasive, not least because Persian liberals had long viewed the British system of parliamentary democracy as the very model of fairness and moderation. But British influence in Persia was marred by the perception that its power posed a clear threat to the kingdom’s sovereignty. The 1919 Anglo-Persian agreement had aroused nationalist ire, prompting London’s local representative to comment, “it is essential to realise the bitter and widespread feeling against everything British at the present time.”

The bid for a concession to explore for oil in Saudi Arabia took a similar course. Negotiations heated up considerably in 1932, when the discovery of oil in nearby Bahrain raised hopes of similar finds nearby. The directors and geologists of Standard Oil of California—known ubiquitously as Socal—reasoned that if they had struck black gold in such fabulous proportions there then numerous other deposits must lie along the same geological fault lines.

Pitched against the American oil giant was the Iraq Petroleum Company, which was essentially British-owned and controlled. Because Whitehall was a majority stakeholder in its equity, the IPC was widely perceived as an instrument of British imperial power.

In order to win the highly valued prize, both parties needed to win the sympathy of Saudi Arabia’s ruler, Sheikh Abdul Aziz Ibn Saud. The real obstacle was the rabid xenophobia of a people who were intensely suspicious and mistrustful even of rival Arabian tribes, let alone infidel Westerners who appeared to pose a clear threat to the kingdom’s independence, way of life and, above all, religion.

The king finally offered Socal the deal in May 1933. There can be little doubt that he was swayed by his perception that the United States posed less of a risk to his kingdom’s sovereignty and integrity than Great Britain. If the IPC won the concession, he reasoned, the British government would not waste a minute before meddling in Saudi’s domestic affairs. As Muhammed al Mana, a key Saudi official closely involved in the negotiations, recalled:

We all felt that the British were still tainted by colonialism. If they came for our oil, we could never be sure to what extent they would come to influence our government as well. The Americans on the other hand would simply be after the money, a motive which the Arabs as born traders could readily appreciate and approve.

The same nationalistic reaction to British imperial power was discernible during the highly protracted negotiations for an oil concession in Kuwait. International interest in the region had started somewhat earlier than in Saudi, in the wake of the discovery of Mesopotamian oil at Baba Gurgur in 1927, but the contestants were essentially the same.

Again American interests, represented by Gulf Oil and an intrepid New Zealander, Frank Holmes, acting as its local representative, were pitched against the British government and the Anglo-Persian Oil Company. And once more, Great Britain’s imperial dominance weighed heavily against her chances.

Like his local counterparts, the Kuwaiti leader Sheikh Ahmad perceived British power as a much clearer threat to his kingdom’s independence than the Americans. This was the single most important reason that the sheikh decided to keep Anglo-Persian’s bid at arm’s length. In a revealing 1928 letter, Holmes wrote that the sheikh had started a meeting by telling that him he was “a friend of the Arabs and would be more likely to help them than any other party, and that I had no political aspirations, being purely commercial as had been proved in Bahrain.” Holmes’s ability to strike an anti-imperial chord was noted by his envious British counterpart, Archibald Chisholm, who wrote, “there is no doubt that Holmes will now make more play than ever with his pro-American and anti-British argument, and at this particular juncture such an argument unfortunately must have some appeal to the sheikh.”

A century later, the differentiation between power and influence is no less relevant. The relative growth of American power during the post-Cold War years of unipolarity has not necessarily augmented Washington’s influence in some parts of the world. The size and sophistication of its Armed Forces and its economy have undoubtedly increased sharply, and American fashions and tastes have seeped into the popular culture of many countries the world over. But strong nationalist reactions inhibit America’s wider influence. A classic case in point is Pakistan, where Coca Cola and fast food can be readily bought, and the economy is dependent on American aid, but there is a strong and growing popular resentment toward Washington’s foreign policy. Far from being in retreat, Islamism has been gaining ground in recent years.

On the other hand, the United States may be able to exploit the influence-power divergence to its advantage if, in the years ahead, its global hegemony is threatened or even surpassed by China. Because of its dramatic rates of economic growth—China’s economy has quadrupled over the past quarter century—and its aggressive acquisition of valuable natural resources in foreign countries, many have predicted that China will eventually become the pre-eminent player in global affairs, pushing the United States firmly into second place.

Should this happen, Washington could do worse than to recognize that diminution in its global power will not necessarily lead to a loss of influence. On the contrary, China’s strong presence in some parts of the world, notably Africa, has already provoked a strong nationalist reaction. In Zambia, workers have staged numerous bloody demonstrations against Chinese bosses whom they accuse of cruel exploitation. One opposition presidential candidate, Michael Sata, has made protesting against alleged Chinese mistreatment central to his highly successful electoral platform. And China’s close association with some of the continent’s most brutal regimes, such as Robert Mugabe’s government in Zimbabwe, could easily produce a huge backlash of public opinion. The U.S. can exploit nationalist reactions against Chinese power to its own advantage.

Thus the United States should not view China’s rise with undue alarm. A more measured perspective suggests that its ascension can be used to increase American influence over global affairs. That is one enduring lesson of the early oil hunters: sometimes it is best to stand back from events elsewhere in the world and let others approach us.
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Roger Howard is the author of The Oil Hunters: Exploration and Espionage in the Middle East 1880-1939, due out this summer from Hambledon Continuum.