THE COMING OF THE BRITISH CONSERVATIVE PARTY TO OFFICE IN 1951 AND THE NATIONALISATION OF THE ANGLO-IRANIAN OIL COMPANY’S CRISIS.
The Iranian Government insisted to the mission that it would be impossible to re-engage any technicians who had previously served in Iran, in view of the circumstances of their departure. The mission argued that in view of the prevailing shortage of experts, it would be out of the question to find, except in the Anglo-Iranian Oil Company, the thousand or so technicians required to operate the industry. In reply the Iranian Government produced evidence to indicate that the industry could be run at least one-third of its capacity without any foreign technicians at all. On the question of price, the Iranian Government not only dismissed any suggestion of profit sharing, but was extremely reluctant to grant any discount to particular buyers, or even to accept a price fixed by the international cartel. The fundamental points of difference were, the position and powers of the International Bank in regard to the operation of the industry. The Iranian Government insisted on Iranian control of the industry. The other points were, the re-employment of British technicians, and the sale price of the oil produced.
The International Bank, by 16th February, made their offers. It was suggested that the International Bank’s operations were to continue for two years only. Additionally, the oil was to be sold at the Gulf of Mexico price of $1.70, less the following discounts: 25% for compensation, a general discount of between 32 and 35%, and 25% for the Bank’s operating expenses. The Managing Director was to be non-British, and the other personnel non-British as far as possible. Finally, Iran would get only 15-18%.
The Iranian Prime Minister was not happy at the new initiative of the International Bank. Musaddiq was on the point of breaking off the talks. However, due to the intervention of the Iranian Senate the Bank delegation decided to delay their departure. Consequently, an Iranian sub-committee put forward to the International Bank’s mission new proposals. The mission left on 20th January 1952 for London, to discuss the Iranian proposals with the British officials.
Hector Prudhomme, director of the International Bank’s loan department, returned to Teheran, while the Vice-President of the Bank, Robert Garner, returned to Washington. Hector Prudhomme not only took a rejection of the Iranian proposals from London, but he also carried with him a rewording of the Bank’s old proposals. The price of $1.75 was now accepted, but there was to be 33% general discount, amounting to 58 cents, as well as 30 cents for expenses and 37 cents compensation to the Anglo-Iranian Oil Company, leaving a balance of 53 cents, or about 30% for the Iranian Government. The Iranians did not have any objection to the last two discounts, but did not agree to more than 20% general discount. Though extensive discussions between the Iranian officials and the International Bank’s officials subsequently took place in Teheran, no progress was made. On 16th March 1952, the Iranian Government and the International Bank indicated that no agreement could be reached on several important points. The Iranian Government and the International Bank confirmed that the important issues were, firstly, management; secondly, British technicians; and thirdly, oil prices. In a telegram the Iranian Prime Minister, Dr. Musaddiq, indicated that two conditions would meet Iranian requirements. One, the operating staff should come from neutral countries, and two, the International Bank should be acting on behalf of the Iranian Government and in accordance with the nationalisation laws, in any period of managing the industry. The Iranian Government was specially emphatic that this should apply in the case of the engagement and dismissal of staff.
The underpinning reason for disagreeing with the International Bank was a deep Iranian understanding of the true nature of the International Bank’s intervention and motives. The Iranian considered themselves a small nation that had so long been exploited by stronger nations from the west, and no international scheme with such sponsoring could be altruistic.
Anthony Eden was unhappy about the latest developments in the discussions concerning the future of the Iranian oil industry. In Cabinet he remarked that
He was not unduly disappointed by the breakdown in the negotiations by the International Bank. This might well weaken the political position of the Persian Prime Minister.43
- PRO, London, CAB 128/24 CC (51), 18th Conclusions, Minute 4, p. 160.
