From “Oil Nationalisation and Managerial Disclosure: The Case of Anglo-Iranian Oil Company, 1933-1951”
Chapter 2: AIOC History, oil and Iranian politics.
AUTHOR: NEVEEN ABDELREHIM | THE UNIVERSITY OF YORK
After the failure of the Stokes mission, British policy made it abundantly clear
that their desire was to get rid of Iran‟s popular, nationalist government under Musaddiq as soon as possible because the cessation of Iranian oil supplies negatively affected British revenue. More seriously, Britain feared the loss of the company‟s position in Iran. Britain therefore accused Musaddiq of violating the company‟s legal rights through the following audacious plan. British strategy was to undermine Musaddiq‟s support base by imposing economic sanctions on Iran and also by carrying out military manoeuvres in the region. They also brought about a production slowdown where tankers were prevented from loading oil at Abadan and this in turn affected their main source of income.
The second line of attack was the imposition of financial restrictions, approved by the British Cabinet (along with additional sanctions). The British government approved the blocking of Iran‟s sterling balances held in London and forced ships carrying commodities such as sugar and steel to change their destination. Furthermore, a boycott on Iranian oil was put in place, which threatened to jeopardize western economic reconstruction because of its dependence on oil sources. In order to police the boycott, a threat of legal action was made against any and all purchasers of Iran crude oil or refined products or against any oil company breaking the boycott, starving the Iranian economy of $200 million of oil revenue annually.
Special financial and trading privileges previously accorded to Iran were also naturally withdrawn. Besides the oil boycott, Shepherd, British Ambassador in Iran, suggested stopping foreign technicians from coming to Iran and arranging the withdrawal of the company‟s British staff, in order to make a strong impact on the Iranians and show them Britain‟s firmness. President Truman was concerned about Britain‟s stubborn attitude and warned them of the dangers of using force. He had tried to mediate through a visit by Harriman to Tehran but it was unsuccessful. Harriman had advised the British ministers that “Dr. Musaddiq is not the man the British have depicted to the World” and also pointed out that economic sanctions were not the best reaction because it would stiffen the Persians‟ resolve. Acheson, too, was sympathetic with Musaddiq because he thought that the AIOC bureaucracy had poisoned the judgment of the British government which was committed to rule or ruin.
In March 1951, there were further developments. Herbert Morrison replaced the British foreign Secretary Ernest Bevin and proposed to post British troops near the Iranian oil fields to intervene when necessary. By 25 May 1951, Britain was ready for direct military intervention, mainly around Abadan‟s oil refinery, with 4,000 British paratroopers carrying full fighting equipment (despite the US‟s opposition to the use of military force). The Defence Minister, Emanuel Shinwell, argued strongly for securing Abadan for the sake of upholding British Prestige in the Middle East and for preventing other countries like Egypt from being tempted to nationalise the Suez Canal. He proclaimed: “we (Britain) must be prepared to show that our tail could not be twisted interminably”. To sum up, the British were in no mood to accept the principle of oil nationalisation and so their immediate aim was to bring about the collapse Musaddiq‟s government.
Notes & References
302. Gasiorowski, The 1953 Coup D’etat in Iran.
303. Elm, Oil, Power, and Principle: Iran’s oil nationalisation and its aftermath, 141.
304. Elm, Oil, Power, and Principle: Iran’s oil nationalisation and its aftermath, 149.
305. Sampson, The Seven Sisters: The Great Oil Companies and the world they made, 121.
306. Elm, Oil, Power, and Principle, : Iran’s oil nationalisation and its aftermath 127.
307. Ibid, 143.
308. Sampson, The Seven Sisters: The Great Oil Companies and the world they made, 122.
309. Mansoor, State-Centered vs. Class-Centered Perspectives on International Politics: The case of U.S. and British Participation in the 1953 coup against premier Mosaddeq in Iran, 14.
310. Cited in Elm, Oil, Power, and Principle: Iran’s oil nationalisation and its aftermath, 157.