Iranianisation: Claims, Counter Claims and Article 16

From “Oil Nationalisation and Managerial Disclosure: The Case of Anglo-Iranian Oil Company, 1933-1951”

Chapter 3: Employee relations and Iranianisation

Author : Neveen Abdelrehim | The university of york

A general view showing the company housing for Abadan refinery employees at Bahmanshir neighborhood. 01 May, 1945 (Photo by Dmitri Kessel/The LIFE Picture Collection/Getty Images)

With the 1933 agreement, there were new employment rules specified to the recruitment of the artisans, technical and commercial staff from iranian nationals. The AIOC, aware of the expanding needs of the oil industry in iran, called for everincreasing numbers of employees possessing a high degree of proficiency and skill[341]. However, there was slow progress in replacing the british employees with iranian nationals and the progressive reduction of non-iranians never came into practice. The iranian government‟s reports indicated that past performance by the company had fallen short of what it should have been; the plan of annual and progressive reduction of foreigners was too specific to allow of any ambiguity. Implicit in the wording was that the company should include in its plan a programme of housing, training, education, medical and social amenities. Moreover, the reports indicated that the company should bear the capital cost and upkeep of all schools in Khuzistan and improvement of much the infrastructure in such towns as Abadan which existed solely for the oil industry[342]. It is worth noting here that Northcroft, the AIOC‟s chief representative in Tehran (1945-51), was aware of the importance of training to the Iranians so he suggested that a strong effect might be produced (in view of the Iranians‟ allegations made in the majlis against the company‟s training policy) by offering to spend a little more under the heading of training to “be a very useful weapon in our [AIOC] armoury”[343]. In 1948, the AIOC entered into negotiations with the iranian government for a revision of the terms of the 1933 concession and introduced memorandum to increase investments in health, housing, education, and the implementation of iranianisation through the substitution of foreigners, with the aim that all posts in iran except very top management ones should be held by Iranians. To sum up, the iranianisation strategy aimed to underpin the long term engagement of Iranians.

Iranianisation and article 16

The AIOC was clearly engaged to some extent with its social programme under
the terms of the 1933 agreement. After 1945 the company recognised the housing problems in Abadan and embarked upon an emergency accommodation programme. An international labour organisation (ILO) observer commented in 1950 that the company had been able to provide a vast number of modern houses in a short period of time and hospital and healthcare spending attracted similarly favorable comment[344]. Meanwhile, the AIOC made investments in education, such as Tehran university and other schools, and also provided extensive educational and training schemes[345]. Writing in the 1948 company‟s annual report and accounts, Fraser commented that 2038 houses and 79 ancillary buildings such as canteens, schools, medical clinics, shops, clubs were completed during the year at a cost of nearly £6m. He also pointed out that there were now 2000 students on various categories of training schemes, including 84 in britain[346]. Addressing the differential wage issue, Fraser asserted that “iranians received the same pay as british staff in similar posts”[347].

However, there are contrasting claims and considerable evidence that there was little engagement by the AIOC with its social responsibilities under the terms of the 1933 agreement.
The iranian government therefore embarked upon article (16) designed to improve the iranian terms. Article (16) clearly signalled that iranian employees genuinely disliked their confinement to lower levels of the company and the criticism was frequently heard, sometimes in violent terms, that individual Iranians who had worked with british staff have met with discourteous and unjust treatment from them[348]. Article 16 (iii) discusses iranianisation and increasing employment opportunities for Iranians at the expense of foreign employees, with the aim that all posts in iran except very top management ones should be held by Iranians.
The article reads as follows: the parties declare themselves in agreement to study and prepare a general plan of yearly and progressive reduction of the non-persian employees with a view to replacing them in the shortest possible time and progressively by persian nationals[349].
Obviously, the AIOC was aware of the iranian rights and the importance of article (16) to the Iranians because, nearly 15 years since the signing of the concession, the number of non-iranians employed was much greater than it was in 1933 or in 1936 which creates a case for the iranian government to ask for arbitration[350].

The AIOC was aware of their unfairness towards the Iranians and Gass (managing director of the AIOC and AIOC negotiator 1939-1956) made it clear that Iranians had the right to claim better terms for iran by saying: we attached great importance to reaching an early settlement on the general plan as it was a subject on which the government had strong and genuine feelings, and we had no wish to lay ourselves open to a charge of procrastination[351].
The AIOC was aware that arbitration on the plan of 1936 would necessarily entail an exhaustive enquiry into the operations of the company during the period from 1936 to the date of submission to arbitration. It would allow the government every possibility to call for any documents or evidence from any official of the company into the working and structure of the company in iran. The company feared that the arbitration tribunal might find itself sitting in judgment over conditions of work, health, wages and other difficult problems of relations between the company and the government. This would obviously be undesirable because the company would have to refund all payments to iran[352]. To avoid this happening, Northcroft suggested in his correspondence that they should at this crucial point show open support for iranianisation which they knew was of particular importance for the Iranians[353]. In short, the iranian government was well placed to demand better terms for iranian employees whose education and training was not well planned and which required further development by the company.

Notes & References
341. Gidel memorandum.