On March 15, the Majlis voted unanimously in favor of nationalization. A few days later the Senate concurred, also by unanimous vote. On April 28, the Majlis, by a margin of 79 to 12, nominated Mossadegh to be Prime Minister of Iran. On May 1, the Shah, cowed by the rapid unfolding of events, signed into law, without demur, the decision of parliament to nationalize AIOC. The National Iranian Oil Company (NIOC) was established to replace it. On May 6, Mossadegh assumed the office of Prime Minister.
To Britain, the nationalization of AIOC was unacceptable, and every pressure was brought to bear on Iran to reverse the decision. After the Majlis and Senate votes on nationalization, and even before Mossadegh's assumption of office, Britain sent warships in the vicinity of Abadan.
Over the following months, as the deadlock persisted, other measures of a more punitive nature were applied, a series of economic sanctions were imposed, the Abadan oil refinery was shut down, and countries like Sweden, Austria, France, Switzerland and Germany were persuaded not to allow their nationals to work as technicians at the refinery.
In Stephen Kinzer's words, the "British managers did all they could to assure that machines didn't work and new managers couldn't find out how the place was run". The objective was to "make it impossible for Iran to continue producing oil", and in the process "cripple its economy".
Iran was at that time "the world's fourth largest oil exporter", and supplied "90% of Europe's petroleum", but had no tankers, and thus could not, on its own, export even a drop. Britain also took the issue to the International Court of Justice and the UN Security Council, but to no avail. Plans were readied for military intervention, but this perhaps was not a serious option. There were differences in the Cabinet on such a course of action, and, even more importantly, President Truman was stoutly opposed.
Truman himself, Secretary of State Acheson and Assistant Secretary of State for Near Eastern, South Asian and African Affairs George McGhee were not unsympathetic to Iran. For quite some time, much before matters had reached crisis proportions, the US had been urging Britain to come to a compromise with Iran, and to work out a more equitable formula of profit sharing. Truman was hopeful that US mediation could break the impasse between the two countries, and lead to a solution that would be acceptable to both.
In July 1951, the eminent public personality, and one of America's most distinguished diplomats, Averell Harriman, was sent to Iran as the personal representative of the US President to defuse the crisis. Harriman had several rounds of discussions with Mossadegh, and also met the Shah and religious leader Ayatollah Kashani.
He then flew to London to persuade the British government to send an emissary to negotiate with Iran. A senior Cabinet Minister, the Lord Privy Seal, Richard Stokes, accordingly, travelled to Iran for talks. Stokes informed Mossadegh that Britain was prepared to accept that the oil belonged to Iran, and that profits should be shared equally.
He insisted, though, that the British side would continue to control "all drilling, refining and export operations". Iran's focus was different. Iran was prepared to negotiate three issues; continued sale of oil to Britain for its domestic needs, retention of the services of British technicians for the oil industry, and the amount of compensation to be paid to AIOC.
Neither side would budge, no headway could be made. Even Harriman's considerable diplomatic skills and wholehearted efforts could not bring about a meeting of minds. He thought that Mossadegh was "completely rigid", and, at the same time, was taken aback by Britain's "completely 19th century colonial attitude toward Iran".
On a tour of Abadan, Harriman was appalled by the slum-like housing conditions of the Iranian employees at the refinery. Truman was disappointed; he thought that British intransigence was largely to blame for the failure of the negotiations.
Britain's hostile reaction to the nationalization of AIOC was not without an element of irony. The Labour Party was in power at the time-and had been from 1945-with Clement Attlee as Prime Minister. Since it was voted to office, the socialist government had implemented an extensive program of nationalization, covering basic industries and public utilities.
The sectors that were nationalized included civil aviation, coal mining, the Bank of England, railways, electricity, gas, transport and steel. As Stephen Kinzer wryly notes, the British cabinet "agreed unanimously that although nationalization might be a wise path at home, it could not be abided abroad". (To be continued…)
The writer is a distinguished former Bangladesh diplomat
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