Persian Oil (1951)

Editorial from the April 1951 issue of the Socialist Standard

Consternation has been aroused in British financial and government circles by the decision of the Persian Parliament to nationalise the oil properties of the Anglo-Iranian Oil Co., in which the British Government has large holdings and a controlling interest. In addition to the investment aspect British capitalism needs oil for industry and for naval, military and air bases in the Middle East.

The British Government announced that it has “a right and a duty to take all measures to protect legitimate commercial undertakings overseas,” and sent a “firm” note of protest to the Persian Government. In drafting the note the Government was in some slight difficulty. As the Daily Mail (16/3/51) jeeringly asked, how could a Government of nationalisers logically object to nationalisation. But the difficulty was overcome in the following tortuous wording of the note:—

  “It is necessary, first, to draw a clear distinction between the principle of nationalisation and the expropriation of an industry which has been operating in Iran on the security of a regularly negotiated agreement valid until 1993, and, relying on that security, has in all good faith spent enormous sums of money in development.
  “His Majesty’s Government are advised that under the terms of its agreement the company's operations cannot legally be terminated by an Act such as ‘ nationalisation."' (Text of Note. Times 17/3/51.)

Mr. W. N. Ewer, fomer critic of imperialism, was likewise ill-at-ease, and in his article in the Daily Herald (17/3/51) in which he condemned the Persian Communist-led Tudeh Party for their demand, “Throw the robbers into the sea!” was forced to employ the lame argument, “What would happen then to the 60,000 Persians working on the oilfields does not seem to worry Tudeh leaders.”

But other Powers, U.S.A. and Russia are also involved. If Persian capitalism pulls off this major stroke the other countries in the Middle East where American oil interests predominate will copy the example; not to mention the fact that American oil companies operate on the island of Bahrein which, though under British “protection,” is claimed by the Persian Government to be Persian territory.

Already in Iraq a similar threat to nationalise the oil industry has been made, which would affect American interests. American capitalism like British needs Middle East oil for military uses.

The Persian Government’s plan is that the nationalised oil industry would be operated by foreign technicians, since Persia has few of her own, and the contract would be offered to the Anglo-Iranian Oil Co. A Persian Government spokesman who announced this, added the warning note that “if British technicians would not operate the oil fields for Persia the invitation would be extended to the U.S.” (Sunday Dispatch, 18/3/51.)

There is, however, a major reason why the British and American Governments are likely to stand together over this issue for, in the background, stands Russia, whose expansionist aims in Persia, hitherto thwarted by American-British pressure on the Persian Government, may now seem to have the prospect of success. It has been hinted by the same Persian Government spokesman that one of the reasons for nationalisation is to forestall a revival of the Russian demand that they too should have oil concessions in Persia.

The real cream of the controversy is a Daily Worker editorial on 17th March, 1951, headed “Loot from Persia.” Starting off with:—“There has never been a case of more barefaced imperialist robbery than Persian oil,” the Daily Worker goes on to point out that the 1933 agreement between the Anglo-Iranian Oil Co. and the Persian Government “will forever stand out as an agreement signed under duress with British cruisers and torpedo boats standing by in the Persian Gulf to make sure that Persia signed on the dotted line.”

The reason why this Communist indignation is so curious is not that its description of the 1933 agreement is untrue but that the Daily Worker does not even mention the attempt by the Russian Government in 1946 to bludgeon Persia into signing an agreement by identical methods.

In that year, with Russian troops in occupation of Northern Persia, the Persian Government was forced to sign an agreement establishing a Russo-Persian Oil Company giving Russia control of North Persian oil for 50 years. (This would have carried Russian control up to 1996 as against 1993 for the Anglo-Iranian Agreement).

Relevant clauses from the Russo-Persian Agreement, published in Soviet News by the Russian Embassy in London were as follows:—

  “1. In the course of the first 25 years of the activity of the company 49 per cent. of the shares will belong to the Iranian side, and 51 per cent. to the Soviet side. In the course of the second 25 years 50 per cent. of the shares will belong to the Iranian side and 50 per cent. to the Soviet side.
  2. The profits made by the company will be divided in accordance with the ratio of the shares of each side.
  3. The period of the activity of the company is 50 years.
  4. When the period of the activity of the company expires, the Iranian Government will have the right to buy out the shares of the Soviet side or to continue the period of activity of the company.”

(Soviet News, 13th September, 1947.)

Having signed the agreement while Russian troops were in occupation, the Persian Government, backed by America and Britain, complained to United Nations and having got the Russian troops out repudiated the Agreement.

Like the British Government now, the Russian Government sent “firm” notes of protest to Persia.

No secret was made of the part American capitalism played then in ousting Russia from Persia. The Manchester Guardian (3/2/1948), in an editorial rather critical of American policy, said:—

  “In general the United States Government has advised Persia against making any concessions to Russia and in particular has encouraged the Persian Government not to ratify the Russian Oil Agreement.”

On the present dispute the Daily Mail facetiously asked whether the Labour Government would “send a gunboat up the Persian Gulf ” in the event of Persia failing to compensate the Anglo-Iranian Oil Co. It may prove to be more than a jest. If America and Britain put pressure on Persia and the Russian Government claims the right of armed intervention on the ground that its own security is threatened (a right the Russian Government has before claimed under the Russo-Persian Treaty of 1921) the attempt of Persian capitalism to stand up to the rival powers and play one off against the others may end with Persia being occupied by Russian troops in the North and British and American troops in the South, as happened during World War II.