Final Paper!

At the start of the 20th century, the oil industry in the Middle East was beginning to make a profound impact on the global economy. Powerful Western countries, namely Great Britain and the United States, sought to bring Middle Eastern oil under their control in their pursuit of economic independence and national security. Unsurprisingly, Iran, which has a vast oil supply, became entangled in this conflict. Britain in particular became very dependent on Iranian oil. “The interests of Britain and the Anglo-Persian Oil Company became one and inseparable.”1 As the British drilled more, the Anglo-Iranian Oil Company (formally the Anglo-Persian Oil Company) became richer. This wealth not only benefited Britain, but also her allies, including the United States. American reliance on cheap Iranian oil was so important that when it was threatened in 1953, the United States infamously organized a coup to protect American interests in Iran. Scholars have presented a number of reasons as to why the United States and Britain overthrew Mohammad Mossadeq; however, evidence suggests that heavy reliance on foreign oil was the main reason that the United States and Britain organized the coup.

The long conflict over oil in Iran began in earnest in 1901 when George Reynolds, a British national, travelled to Iran to prospect for oil. Three years later, he succeeded in finding vast oil reserves.2 This discovery marked the beginning of American and British infatuation with Iran and the preservation of their interests there. Several years later, British leaders organized for a group of investors to organize a corporation to continue to search for oil and to develop the oil industry in Iran. This newfound company was called the Anglo-Persian Oil Company. The Anglo-Persian company was very successful in its early years. It grew into a major corporation with filling stations throughout the world. The company sold oil throughout the world and later began construction on what would become the world’s largest oil refinery on the desert island of Abadan in the Persian Gulf. 3 Britain extracted enormous profits from the Anglo-Persian Oil Company. Because of those profits, the Shah of Iran demanded the name of the oil company be changed to the Anglo-Iranian Oil Company in 1932 to reflect his desire that Persia was henceforth known as Iran. The Shah felt that Britain was exploiting Iran’s natural resources and Britain was profiting immensely from that exploitation. Indeed more than half of the profits that Britain made from the oil company in Iran went directly to the British government. The Anglo-Iranian Oil Company also provided oil to the Royal Navy at a fraction of what the oil actually cost.4 The Iranians felt that not only was a valuable resource being stolen, but was fueling British imperialism.

The Iranian labor movement was angered by the British monopolization of Iranian oil. “In 1947 it passed a bold law forbidding the grant of any further concessions to foreign companies and directing the government to renegotiate the one under which Anglo-Iranian was operating.”5 This law foreshadowed a drawn out struggle over who would control and profit from Iranian oil. The Iranian labor movement was seeking to protect the interests of the Iranian people, which they felt that the Shah was not doing. Although most Iranians were displeased with the British control, Reza Shah allowed the British to maintain a significant amount of control over the oil company. Many Iranians were displeased with Reza Shah because they felt that he was aiding the British in exploiting the natural resources of his own country with the belief that the Western powers would work to preserve his rule, particularly given his capitalist leanings in an increasingly bipolar world.

Initially America was immune from the resentment directed at the British, as they were seen as the “friendly balancer.”6 However, as time elapsed, Americans became dependent on British control of the Iranian oil industry and it became clear that America was not protecting the interests of Iranian citizens. The tension between Britain, the United States and Iran led to a rise of nationalism in Iran and more friendly relations with Moscow. As a result, Mohammad Mossadeq was popularly elected.

Mossadeq was a very passionate and charismatic leader. He was an Iranian nationalist who ran on a promise to retake Iranian oil and end imperialist meddling in Iran.7 For precisely this reason, American and British policymakers wanted Mossadeq ousted and the pro-Western Shah restored. In 1951, Mossadeq pledged to “throw the Anglo-Iranian Oil Company out of Iran, reclaim the country’s vast petroleum reserves, and free Iran from subjection to foreign power.”8 He had publicly espoused the view that the British had been exploiting Iran through the Anglo-Iranian Oil company and had exerted political control over Iran since the start of the 20th century. Therefore, he felt that “there could be no compromise with the British.”9 Immediately after his coronation, the British commenced plans to overthrow him. The British wanted Reza Shah put back into power because he had compromised with the British about the Anglo-Iranian Oil Company and had been a stable and predictable puppet for British and American interests.

The United States and Britain undertook Operation Ajax in 1953 with the hope of returning to the status quo, which most importantly meant having control over Iranian oil. Access to oil was viewed not only as being vital to the U.S. economy, but a key national security concern. In a 1952 report the National Security Council argued that the United States should: “continue to assist in every practicable way to effect an early and equitable liquidation of the oil controversy, be prepared to take the necessary measures to help Iran set up her oil industry and to secure markets for her oil so that Iran may benefit from substantial oil revenues.”10 Although the United States publicly claimed to support the interests of the Iranian people, the key reason that the United States wanted relations with Iran was because of access to cheap oil.

Mossadeq posed a serious threat to American reliance on cheap Iranian oil. He rose to office because he wanted to end British imperialism in Iran and he wanted to end the domination of the Anglo-Iranian Oil Company.11 This was a great cause of concern for the United States and Britain. Although the Anglo-Iranian Oil company was a British owned company, the United States had companies which worked with it. “Though Iran would receive 50 percent of the profits, Standard Oil of New Jersey, Standard Oil of California, Texaco, Socony-Mobil, and Gulf Oil acquired a 40 percent share of the oil production.”12 The United States knew that the nationalization of Iranian oil would cause a tremendous decrease in profits.

British leadership agreed with American policymakers about the importance of restoring the Shah: “Although Mossadeq was very popular in Iran, the shah and his foreign advisors wanted him out, as did the AIOC and the new British conservative government under Churchill.”13 Churchill wanted to overthrow Mossadeq because his goal as Prime Minister of Iran was to lead a movement to nationalize the British-controlled oil industry. The United States and Britain felt threatened by this. After months of careful planning, the CIA and British Secret Intelligence Service carried out Operation Ajax, also referred to as Operation TPAJAX, in which they aided Iranian opposition in overthrowing Mossadeq and reinstating the Shah.

In 1951, immediately after taking office as Prime Minister, Mossadeq signed the nationalization bill into law. This law nationalized the Anglo-Iranian Oil Company and took power away from the British and gave the oil company to the Majlis (Iranian Parliament).14 The British knew that they had to act because Mossadeq was unwilling to compromise about the oil company with the British. Mossadeq felt a duty to the Iranian people to end all imperialist control in Iran and to end British exploitation of Iran. The loss in profits for Britain were staggering. In the table below one can see how the British were suffering without control of the oil company.15 None of the exports within the year after nationalization to a few months before the ousting of Mossadeq were to Britain. After Iran nationalized their oil, Britain urged their citizens to stop working for them, further hurting the British economy.

Not only did the nationalization of the Anglo-Iranian Oil Company anger the British, it also angered the United States. The Truman administration felt that the United States had a duty regarding Iran. He felt that he needed to protect the nation from the Soviet Union and the influence of communism, having recently witnessed China revert to Communism while the fate of the volatile Korean peninsula was unclear. He also felt obligated to secure the global oil market.16 Obviously, having the British control the Anglo-Iranian oil company, and not a nationalized Iranian oil company, benefited the United States as it spelled a dependable source of cheap oil from a valuable ally in addition to a bulwark against communism in a region with immense geopolitical significance. However, when Mossadeq became Prime Minister and challenged that, the United States and Britain felt forced to act.

There are several reasons presented in the research as to why the CIA organized a coup which ousted Iran’s Prime Minister, Mohammad Mossadeq in August 1953. Indeed, Mossadeq’s closeness to Moscow should not be completely disregarded as a factor. However, evidence suggests that reliance on Iranian oil seemed to be the prime motivation for the coup. Ever since the early 20th century, the Anglo-Iranian Oil Company provided cheap oil to Britain and her allies, namely the United States. In 1951, when Mossadeq was elected as Prime Minister, he vowed to end the imperialist control by the British and to end the profits the British made off the Anglo-Iranian Oil Company and to nationalize the oil company. This upset the British, and they started planning his ouster from the moment he was elected. The United States and Britain used the CIA and the MI5, respectively, to orchestrate a coup to have Mossadeq ousted. Operation AJAX was a strategic success in that Mossadeq was ousted, and the Reza Shah restored. In the long run,however, the operation was disastrous as anti-Western sentiment led to the Iranian Revolution in 1979. Unsurprisingly, Operation Ajax is often mentioned as a case of “blowback”—American interventionism ultimately working against its own interests.

Exports of Iranian Oil by NIOC after Nationalization (to May 1, 1953)

 

Country of Destination Name of Company Name of Tanker Date of Shipping Weight in Tons
Italy EPIM Rose Mary 05/20/52 Crude 786
Italy Supor Miriella 01/20/53 Crude 4,600
Italy Supor Miriella 03/15/53 Crude 4,900
Italy Supor Alba 03/15/53 Crude 11,500
Italy EPIM Pax 04/01/53 Crude 4,500
Japan Idemitsu Nissho Maru 04/15/53 Ref 18,000
Italy Supor Alba 05/01/53 Crude 11,500
Italy Supor Bertza 05/01/53 Crude 11,500

 

NIOC: National Iranian Oil Company.

 

 

1 Stephen Kinzer, All the Shah’s Men: An American Coup and the Roots of Middle East Terror (Hoboken, New Jersey: John Wiley & Sons, Inc., 2003), 49.

2 Kinzer, All the Shah’s Men, 47-48. For more information on the background of the oil business in Iran see Stephen Kinzer, All the Shah’s Men: An American Coup and the Roots of Middle East Terror (Hoboken, New Jersey: John Wiley & Sons, Inc., 2003), 47-52.

3 Kinzer, All the Shah’s Men, 49.

4 Kinzer, All the Shah’s Men, 68.

5 Kinzer, All the Shah’s Men, 52.

6 John D. Stempel, Inside the Iranian Revolution (Bloomington, Indiana: Indiana University Press, 1981), 60.

7 Malcom Byrne and Mark J. Gasiorowski, eds, Mohammad Mossadeq and the 1953 Coup in Iran (Syracuse, New York: Syracuse University Press, 2004), 33-34.

8 Kinzer, All The Shah’s Men, 2.

9 Byrne and Gasiorowski, eds, Mohammad Mossadeq, 130.

10 Executive Secretary, “United States Policy Regarding the Present Situation in Iran,” A Report to the National Security Council. Washington, November 20, 1952. Accessed 13 September, 2011.

11 Byrne and Gasiorowski, eds, Mohammad Mossadeq, 127.

12 Stempel, Inside the Iranian Revolution, 65.

13 Nikki R. Keddie, Roots of Revolution: An Interpretive History of Modern Iran (New Haven and London: Yale University Press, 1981), 136.

14 Mark J. Gasiorowski, “The 1953 Coup D’Etat in Iran,” International Journal of Middle East Studies, Vol. 19, No. 3, August 1987. 262.

15 Byrne and Gasiorowski, eds, Mohammad Mossadeq, 196.

16 Gasiorowski, “The 1953 Coup,” 267.

One Response to “Final Paper!”

  1. Micah Millard says:

    Good paper.
    However, I must contest your overall thesis of the role that oil played in Mossadegh’s overthrow. Although the united states did in fact gain control of iran’s oil following the coup, my research has shown that it was not a main rationale behind its orchestration. The primary rationale was to circumvent the spread of communism, not to gain more oil. In fact, American oil companies during this time were already exporting so much oil from saudi arabia and Kuwait that if they started exporting from iran it would increase the supply and drive down the price. The major U.S. oil companies were so uninterested in Iran at this time that in order to gain their participation, president Truman had to offer to scale back a large anti-trust case then being brought against them. Thus, not only did U.S. majors not want to participate in Iran at this time, it took a major effort by U.S. policy- makers to persuade them to become involved.