The French Connection: A New Perspective on the End of the Red Line Agreement, 1945-1948*

Abstract

For almost twenty years, the so-called Red Line Agreement compelled the members of the multi-national Iraq Petroleum Company (IPC) to operate collectively within the Persian Gulf. In 1946, however, the two American members of the IPC announced that they were acquiring a 40% stake in the American-owned Arabian American Oil Company (ARAMCO), which held the most important oil concession in Saudi Arabia. The French member of the IPC (and by extension, the French Government, which was a major shareholder in the company) strongly protested, but eventually accepted a settlement that abrogated the Red Line Agreement and allowed for the expansion of ARAMCO. Although many studies have analyzed these events as an important episode in the history of the international oil industry, this article examines them within the context of U.S.-French relations and the early Cold War. It argues that the major American oil companies and the U.S. Government expended considerable effort in brokering an amicable settlement, and that the French received more favorable terms than previously assumed.