Tehran – Shortly after the discovery of oil in Iran in 1908, as the region’s first country, colonial times, especially Britain and the United States, put the wealth of Iranian people under their control, robbing the poor nation of its income.
In the absence of a strong Iranian government between both Kajal and its successor, Pallavi dynasty, British colonial powers used their power to abuse the weakness of the Iranian state and forced concessions to allow foreign companies to control the extraction and sales of oil. The nationalisation of the oil industry was a response to such colonialism. Various weak Iranian monarchs made concessions to the power of the colony.
d’Arcy Concession
In 1901, British investor William Knox Darcy, supported by the British government, reached a 60-year agreement with Iranian Mozzafa al-Din Shah to capitalize on Iran’s potential oil resources. Six years later, in 1907, his exploration efforts paid off, and oil was discovered for the first time in Western Asia and the Persian Gulf region in Masjed Soliman, southwestern Quezestan. Within two years, an Anglo-Persian oil company was established to produce and bring Iranian oil into the global market.
After the first King Pahravi, Reza Shah took power with full support from the British Empire. He helped stabilize the country in line with his colonial goals, but he began to revert what Kajal’s predecessor had done. One of Reza Shah’s actions was to cancel the 1932 D’Arcy Concession. However, his 1933 oil concession was not in favor of Iran.
Iran’s 1933 oil concession
Iranians at the time of Reza Shah were opposed to Darcy’s concessions as they sought their inviolable rights and increased Iran’s oil revenues. In contrast, the UK aimed to maximize their profits and to gain full control of natural Iranian resources. The British were also intended to obtain a stronger consensus. This had to be ratified by the Iranian parliament to avoid having the weaknesses of previous concessions.
The new 1933 agreement extended a further 60 years of concession and sparked anger among Iranians who eventually moved to nationalisation in 1951.
After ratification of the agreement in 1933, sterling of pounds was deposited in the account of Lloyd’s Bank of London, but a small amount of money as Iran’s share in the contract was spent by Reza Shah and his inner circle.
In the meantime, the British were engaged in rivalry with the Russians who ruled the wealth of Iranians.
Formation of nationalization of Iran’s oil industry movement
The move to nationalize the oil industry was a response to the concessions by Iranians that both Kajal and Pahlavi Shah had given away to foreign forces. The movement was born in Parliament.
The movement was led by MP Mohammad Mosadegu and later became prime minister.
The British and Soviet troops invaded Iran in 1941, defeated Reza Shah and occupied the country. The British removed Reza Shah and sent him to exiles, but Iran remained under Allied occupation until 1946. In the meantime, senior clergyman Ayatollah Abolu Gashem Kashani led a powerful non-Congress popular movement against the country’s foreign interference.
Anyway, the weakness of Mohammad Reza Shah’s regime benefited the movement during the post-World War II period. Various political groups emerged, and the oil movement became more and more powerful.
Over time, the US joined the UK and the Soviet Union, controlling Iran’s oil industry. The religious movement led by Ayatollah Kashani and the National Front, led by Mosadodeg, a member of the 16th Congressional Tehran constituency, were strong supporters of nationalizing the parliament’s oil industry. The Ayatollah Kashani home had already been the centre of a popular gathering, becoming opposed to the Shah-appointed governments Abdul Hossain Hazhir (1948), Ali Mansoor (1950), and Haji Ali Razmara (1951).
After Prime Minister Razmara was assassinated by members of the religious movement Fadayan et Islam, the 16th Congress led the process of approving the law to nationalize the oil industry and the Anglo-Iranian Petroleum Company (AIOC). Finally, on March 15, 1951, the law was approved and verified two days later by Congress on March 17.
Mohammad Reza Shah reverses course on nationalisation of the oil industry
The following month in April, after the laws nationalising the oil industry were passed, Mosaddegh was introduced as prime minister by Shah Pahlavi under enormous pressure from the parliament. As a result, he served as the 35th Prime Minister of Iran from 1951 to 1953.
The young Shah, along with the UK and the US, was unable to withstand the nationalization of the oil industry and democratically elected Mossaddegu. To that end, they overthrew his government in a 1953 coup. This was coordinated by the UK (MI6) and US (CIA) intelligence agency.
In the aftermath of the coup, Mohammad Reza Pahlavi was able to reassert his dictatorial rule and negotiate a 1954 consortium agreement with the UK.