Iranian politics and the origins of the Anglo-Iranian oil dispute of 1950-1951
This study is primarily concerned with answering several important questions
surrounding the Anglo-Iranian Oil Dispute of 1950-1951 which have remained
unanswered. What were the detailed origins of the disputes between the Iranian
Government and the Anglo-Iranian Oil Company? Why was such a favourable oil
concession granted to a British citizen? What was the impact of the occupation
of Iran on the Iranian people's way of political thinking and how did oil become
an issue for public debate? Why was there an oil crisis in 1951 ? What were the
motivations of the parties to the oil dispute? Was the crisis mainly over economic
grievances ? What was the role of nationalism ?
These are answered within a framework that highlights the salient variables
such as politics, economy, international relations and diplomacy. The methodology
adopted is a descriptive analysis of archival material and literature on the related
subjects. The emphasis is on the Iranian view of the crisis for the reason that,
although it received international attention and was in many ways an international
crisis, it originated in Iran. There were features unique to it which were Iranian.
Given the nature of Iranian society with its strong oral traditions, the past
is important to an explanation of the crisis. It is alive in Iranian mind in a way
not apparent to western society. Conceptions of the past and an awareness of
the weakness of Iranian autonomy are important in the context of the 1950 crisis.Consequently, it is necessary to examine the concept of history prevalent in Iran.
This takes the staring point of the thesis to the D'Arcy oil concession.
In 1900, Iran was bankrupt in Western terms, the Shah needed immediate
cash payment,I authorities were financially corrupt and politics was riddled with
foreign intrigue. Oil had been sought in Iran since 1878 without much success. By
1900, the demand for Iranian oil was supported by the British Legation. D'Arcy,
an English financier, managed to obtain, through connections with a string of individuals,
an oil concession for 60 years. The Iranian authorities had every reason
to believe that this oil concession, like all other oil concessions would eventually
lapse. However, D' Arcy worked the concession to the point of bankruptcy and
his engineer, to the point of exhaustion. As a result an oil industry was established
which "was to see the Royal Navy through two world wars, and to cause
Persia more trouble than all the political manoeuvrings of the great powers put together".
2The world oil rivalry, compounded with the British government's desire
for oil independence, turned the Iranian oil industry into the largest oil industry
of the time and an important source of income for the British Treasury.
The exploitation of the oil reserves of Iran by an industrial power soon became
a matter of great controversy as disputes developed between two parties which
extended over several decades. Iran received some funds in revenues. However,
the revenues did not improve the Iranian standard of life considerably although
they affected the balance of payments, currency reserves and purchase of arms.
Iranian society was in the process of transition from a traditional society to a
modern one. The Constitutional Movement of 1906 had an impact on the public's political way of thinking. Reza Shah suppressed the society but the desire for a
democratic system continued to exist. During the reign of Reza Shah (1925-1941),
a large portion of the rural population moved to urban areas. The industrialisation
of Iran helped in developing a new class of urban middle class and artisans. It
was obvious that the relationship between Iran and the oil company needed readjusting.
However, the oil company officiIs did not show much interest in this
until it was too late.
The occupation of Iran in 1941 helped several political forces appear on the
political scene. The released communist prisoners quickly formed the Tudeh Party.
The communists were assisted by the Soviet forces in the North to the extent that
the Tudeh, a communist party, became one of the main political parties of this
period in an Islamic society. However, several factors helped monarchists overcome
the communists. One such factor was an increasing American involvement in Iran
after Pearl Harbour which functioned as a third power to reduce the dominance
of the others. The Tripartite Treaty of 1942 regularised the presence of American
troops. The Tehran Declaration of 1943 provided for economic aid at the end
of the war. In 1947, the ideological basis for American involvement in Iran was
provided by Truman Doctrine. The final blow to the Tudeh Party was delivered
in 1949. The attempt on the Shah's life gave the monarchists an excuse to outlaw
Contrary to their ideology, Moscow provoked discontented Iranian minorities
rather than encouraging class struggle ! Moscow menaced Iran several times. At
least at two occasions Moscow demanded an oil concession. They also threatened
Iranian integrity and caused a great deal of public anxiety which directed public
attention to Iranain problems. The Azarbaijan crisis of 1945-1946 turned Iranian problem into an international one. Moscow's pressure on Greece and
Turkey threatened Western interests in the Near and Middle East and caused
inter-Allied friction. In 1941, Iran appeared to have become a model for Allied
cooperation. By 1944, however, the first post-war oil crisis seemed to haye turned
Iran into a battleground between foreign powers ; the early stages of the cold war.
On the Iranian side, at least since 1944 there was a demand for oil nationalisation.
The idea developed first into a law forbidding negotiating or granting new
oil concessions to foreign powers until Iran was occupied. Mosaddegh was mainly
responsible for this. Then in 1947, an overwhelming majority of Majles deputies
rejected a Soviet proposal for an oil concession in the North. The Majles instructed
the government to negotiate with the Anglo-Iranian Oil Company for better terms.
This set in motion a chain of events which resulted in a proposal to supplement
the 1933 oil concession which had replaced the D' Arcy concession. In 1949, a small
group of nationalists fiercely fought the proposals. The press criticisms, the Majles
debates and public gatherings helped ordinary people understand the oil issue.
However, despite strong opposition, the monarchists were III favour of the
Supplementary Agreement and attempted to resolve the issue by appointing a
strong military man, General Razmara, as prime minister in June 1950. The idea,
however, backfired as public desire for the removal of foreign influence was now
strong. The Majles opposition, the press and the public appeared to be united.
Nationalist feelings were fuelled by long-term resentment over the oil company's
handling of the oil issue. By early 1951 nationalist sentiment was too strong to be
curtailed. By this time Razmara had become a threat both to the Shah and to the
nationalists and acted like an obstacle on the way to the oil nationalisation. His
assassination, in March 1951, removed this obstacle. By this time the support for the movement, the demand for oil nationalisation
and respect for Mosaddegh covered far-right to the far-left as both clergy and
communists supported the nationalists. The communists were represented by the
banned Tudeh Party. The political activities of the clergy was mainly associated
with Kashani. His role in the movement and relationship with Mosaddegh were
vital to the existence of the movement. However, Mosaddegh and Kashani were on
a collision course. The Western-educated Mosaddegh was secular. Kashani, on the
other hand, was in favour of an Islamic state. The same definition applied to their
supporters. However, although they differed in their outlook, the unifying figure of
Mosaddegh brought them together over the oil issue; a process which was reversed
after 1951. Kashani and some nationalists weakened Mosaddegh and assisted in
Mosaddegh initiated the first petrodiplomacy in Iranian history. He dedicated
his life to fight foreign domination and the nation trusted him. Without him
it would be impossible for the nationalists to acquire a political standing strong
enough to nationalise the oil. Regrettably, his downfall in 1953 brought an end to
his efforts to remove foreign influence from Iran.
Iran has been a centre of major political events for over 2000 years. In recent
history, the development of two superpowers, Russian and British empires, on
either side of Iran changed Iran's geopolitical situation to the extent that they
fought within Iran for the dominance of Asia. As a result Iran's independence was
weakened, its integrity was threatened, domestic feud was encouraged, corruption
and intrigue were promoted, and self-interest and low morality became a feature
of life.Whether a victim of international power politics, or a victim of internal strife.
low political culture, and short-sightedness of Iranian politicians, the super powers
could not tolerate the upset of the oil control in the Middle East. The country-by-country
flare-up effect of such an achievement would be disastrous for the Western
economy. In their view, the nationalist movement of Iran had to be defeated.
Indeed, no other oil-producing country considered oil nationalisation for many
years to come.