Iranian Oil at British Hands

Credit: Maysam Behravesh, PhD Lund University

“The Formative Years of Anglo-Iranian Relations (1907–1953): Colonial Scramble for Iran and Its
Political Legacydome”

Since the discovery of oil in Iran by D’Arcy’s oil exploration company in 1908, and especially after the end of World War I in 1918, until the start of the Mosaddeq premiership in 1951, the bulk of British imperial struggle in the country was driven by “oil politics”—a concerted effort to secure as large a share of the petroleum output as possible through a vast range of conciliatory and coercive mechanisms from extracting concessions and deploying military forces to mounting coups and helping to install puppet/proxy governments (Sadoughi, 2005). The first in a series of attempts by the British government to officially, however secretly, monopolize the exploitation and production of Iranian oil in the south was the establishment in 1909 of the Anglo-Persian Oil Company.[1] As the Iranian government at the time lacked the necessary expertise, capital, and facilities to tap oil fields within the Iranian territory, the concession appeared to some extent natural. However, in later stages, it generated the outrage of Iranian oil nationalists who considered the terms under which the company operated to be at Iran’s substantial economic and political disadvantage.
The foundation of Pahlavi’s reign in Iran in 1925 constituted, in spite of what some Iranian conspiracy theorists have dubbed as the period of “unrivalled English dominance” (Mohammadi, 1998, p. 22), the initiation of a critical and difficult era for the British oil enterprises in the country. The bloodless coup of 1921 that toppled the last Qajar ruler Ahmad Shah and finally put the first Pahlavi monarch Reza Khan on the throne of Iran was orchestrated, among others, by Seyyed Zia al-Din Tabatabai, a pro-British journalist, and encouraged by General Ironside, the commander of British military forces in Iran at the time. Differing accounts of the degree of British involvement in the February 1921 coup that effectively brought Qajar rule to an end have been presented by historians.Sabahi (1990) maintains that H. Norman, the then British Minister in Iran, “and the Legation, as well as the Foreign Office and the War Office were completely in the dark about the planned
coup” (p. 123). Others such as Ghani (1998) and Cronin (1997) have observed that the British served as an encouraging or inspiring force behind the coup.Majd (2001), however, argues, apparently on the basis of relevant historical letters and reports provided by American diplomats,that“[a]t least from the middle of 1920,the British had made preparations for the coup,” and that “it was a completely British undertaking”(p.61).He cites a dispatch from John Lawrence Caldwell,the then-American Minister in Tehran, on February 26, 1921, that directly ascribes the coup to the British:
It is perfectly apparent that the whole movement is of British origin and support, in furtherance of the scheme of forceful control of the country, its people and resources,and is looked upon with horror and deep indignation by the better class of Persians,who see in it but another and perhaps final attempt to compel them by coercion and corruption to accept a policy of undesired advisers operating through native tools. (cited in Majd, 2001, p. 63)
Britain was the first government that recognized Reza Khan as the head of the new Iranian state. Although assuming absolute power with the assistance of the British government,Reza Shah,galvanized by paternalist-nationalist sentiments[2] and determined to implement his modernization plans,strived to lessen foreign interference in Iran’s legal,political,and economic sectors.As a consequence and in the wake of heated political negotiations and controversies, all existing British capitulations were declared null and void in 1928,the D’Arcy concession of 1901 was cancelled in 1932 by the Shah himself,and thus preparations were made for the conclusion of an oil agreement in 1933,economically more in favor of Iran (Marcel & Mitchell,2006). Abdul-Reza H. Mahdavi (1995), a historian of Iranian foreign policy, contends, however,that the main rationale behind British acquiescence to the Shah’s demands was their assurance that a powerful anti-Communist government in Iran could better safeguard their geostrategic interests in the long term and that a conciliatory behavior might help bolster their reputation with the emergent intellectual elite and discontented public opinion.The 1933 oil agreement between Reza Shah and the British government was in fact an extension,however modified,of the D’Arcy concession for another 60 years; that is, until 1993. Mahdavi (1995) suggests three hypotheses why the Shah made such a compromise: (1) the British intimidation of Reza Shah that they could depose him as they had brought him to power; (2) threatening to separate the southern province of Khuzestan from Iran and to take it under their own control directly or by proxy; and (3) bribing the Shah into satisfying their demands and agreeing to the deal.All bilateral concurrence notwithstanding,the oil dispute as well as Reza Shah’s “third power policy”—which aimed first and foremost to counterbalance growing British and Soviet influence in the country—served to sour Iranian– British relations under him with the consequent strained atmosphere continuing until the end of his reign in 1941,when Iran was forcefully occupied by Britain and Russia in the thick of World War II.


Notes & References :
1. For further details on the role played by Sidney Reilly, a member of the British spy agency, and the Scottish businessman Lord Strathcona,in securing “Britain’s major petroleum source”in the Middle East, see Engdahl (2004, pp. 20–22).

2. For a succinct explanation of Reza Khan’s nationalist authoritarianism,see Gheissari (1998,pp.


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