British–French Oil Agreement

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BRITISH–FRENCH OIL AGREEMENT

agreement that placed palestine and iraq under british mandate and the newly partitioned syria and lebanon under french mandate.

The British–French Oil Agreement was announced on 5 May 1920 at the meeting of the Supreme Council of the League of Nations. It was held in San Remo, Italy in response to and in repudiation of the March 1920 Damascus resolution of the General Syrian Congress that proclaimed the independence of Syria. Under the agreement, Greater Syria was partitioned into Syria and Lebanon, which were placed under French mandate while Palestine was placed under British mandate. The British mandate for Palestine was charged with implementing the Balfour Declaration of 2 November 1917, which called for the establishment of a homeland for the Jewish people without having to "prejudice the civil and religious rights of existing non-Jewish communities in Palestine." Under the terms of British–French Agreement, Iraq in its entirety came under British mandate.

The agreement also gave the British permanent control over any entity exploiting Mesopotamian oil, including the Turkish Petroleum Company (TPC), which was established with the successful manipulation of the Armenian businessman Calouste Gulbenkian. Mesopotamia was strategically important to the British because of its military and commercial routes to India. With its decision before World War I to replace coal with oil as the main source of energy for its naval fleet, Britain planned to control the possible sources of the Iraqi oil even before the TPC was established in 1912. Even though Iraq became a British mandate in 1920, there was no guarantee that TPC was to be given a concession for oil exploration in Iraq. Complications arose from terms of the San Remo Agreement, which stipulated that Iraq could hold 20 percent interest in TPC if it invested. In spite of Iraq's objection, it was decided that Iraq would receive a flat fee as royalties per ton payable in British pounds, but with a gold clause, meaning in units of gold per pound on the day of the agreement. Iraq meant to safeguard the future payments it receives from royalties from possible devaluations of the pound. TPC won the oil exploration concession in Iraq in 1925, and the discovery of oil in the vicinity of Kirkuk occurred on 15 October 1927. TPC was renamed Iraq Petroleum Company (IPC) in 1929.

In its quest to have control over Iraq, the British–French Agreement—known also as the San Remo Agreement—was preceded by several relevant developments. The most important one was the conclusion of the secret 1916 Sykes-Picot Agreement by Britain, France, and Russia, which divided the spheres of influence over Syria and Iraq, the latter of which would be under the domain of the British. In fact, the French–British Agreement was simply a formulation of what had been secretly agreed. Following the communist revolution in 1917, terms of the Sykes-Picot Agreement were revealed by Moscow in order to embarrass both England and France and to give a push to Arab revolt and nationalism.

see also compagnie franÇaise des pÉtroles (cfp); gÜlbenkian, calouste; iraq petroleum company (ipc); petroleum, oil, and natural gas; san remo conference (1920); sykes-picot agreement (1916).