Iran Celebrates 65th Anniversary of Oil Nationalization

Friday, March 18, 2016

Compiled By: Firouzeh Mirrazavi
Deputy Editor of Iran Review

To many Iranians March 20 is the reminder of an event that changed the course of history for their country; it was in such a day back in 1951 when Iran’s then parliament voted unanimously in favor of the nationalization of oil in Iran. The idea was introduced in a bill to the parliament by Iran’s democratically elected Prime Minister Mohammad Mosaddeq with the support of his nationalist party and religious groups led by Ayatollah Kashani.

The legislation put an end to four decades of British control on Iran’s oil that was conducted by the Anglo Persian Oil Company. Prior to the act APOC exploited Iran’s crude and gave only a fraction of its revenues to Iran. The price Iran had to pay for this was a three year oil embargo by the west, the overthrow of Prime Minister Mossadeq and easing the way for US and British companies to once again dominate Iran’s oil market with the assistance of the newly appointed Prime minister General Fazlollah Zahedi.

64 years after Iran gained sovereignty over its most important natural resource; crude oil is still the most strategic commodity for the country.

On 28 April 1951, the Majlis (Parliament of Iran) named Mosaddegh as new prime minister by a vote of 79–12. Aware of Mosaddegh's rising popularity and political power, the young Shah appointed Mosaddegh to the Premiership.

The new administration introduced a wide range of social reforms: Unemployment compensation was introduced, factory owners were ordered to pay benefits to sick and injured workers, and peasants were freed from forced labor in their landlords' estates.

The confrontation between Iran and Britain escalated as Mosaddegh's government refused to allow the British any involvement in Iran's oil industry, and Britain made sure Iran could sell no oil. In July, Mosaddegh broke off negotiations with AIOC after it threatened "to pull out its employees", and told owners of oil tanker ships that "receipts from the Iranian government would not be accepted on the world market. Two months later the AIOC evacuated its technicians and closed down the oil installations. Under nationalized management many refineries lacked the trained technicians that were needed to continue production. The British government announced a de facto blockade, reinforced its naval force in the Persian Gulf and lodged complaints against Iran before the United Nations Security Council.

The British government also threatened legal action against purchasers of oil produced in the formerly British-controlled refineries and obtained an agreement with its sister international oil companies not to fill in where the AIOC was boycotting Iran. The entire Iranian oil industry came to a virtual standstill, oil production dropping from 241,400,000 barrels (38,380,000 m3) in 1950 to 10,600,000 barrels (1,690,000 m3) in 1952.

The Abadan Crisis reduced Iran's oil income to almost nil, putting a severe strain on the implementation of Mosaddegh's promised domestic reforms. At the same time BP and Aramco doubled their production in Saudi Arabia, Kuwait and Iraq, to make up for lost production in Iran so that no hardship was felt in Britain.

Still enormously popular in late 1951, Mosaddegh called elections. Tension soon began to escalate in the Majlis. Conservative opponents refused to grant Mosaddegh special powers to deal with the economic crisis caused by the sharp drop in revenue and voiced regional grievances against the capital Tehran, while the National Front waged a propaganda war against the landed upper class.

On 16 July 1952, during the royal approval of his new cabinet, Mosaddegh insisted on the constitutional prerogative of the prime minister to name a Minister of War and the Chief of Staff, something the Shah had done hitherto. The Shah refused, and Mosaddegh announced his resignation appealing directly to the public for support, pronouncing that in the present situation, the struggle started by the Iranian people cannot be brought to a victorious conclusion.

Ahmad Qavam (also known as Ghavam os-Saltaneh) was appointed as Iran's new prime minister. On the day of his appointment, he announced his intention to resume negotiations with the British to end the oil dispute, a reversal of Mosaddegh's policy. The National Front — along with various Nationalist, Islamist, and socialist parties and groups — including Tudeh — responded by calling for protests, strikes and mass demonstrations in favor of Mosaddegh. Major strikes broke out in all of Iran's major towns, with the Bazaar closing down in Tehran. Over 250 demonstrators in Tehran, Hamadan, Ahvaz, Isfahan, and Kermanshah were killed or suffered serious injuries.

After five days of mass demonstrations on Siyeh-i Tir (the 30th of Tir on the Iranian calendar), military commanders ordered their troops back to barracks, fearful of overstraining the enlisted men's loyalty and left Tehran in the hands of the protesters. Frightened by the unrest, Shah dismissed Qavam and re-appointed Mosaddegh, granting him the full control of the military he had previously demanded.

More popular than ever, a greatly strengthened Mosaddegh convinced parliament to grant him emergency powers for six months to decree any law he felt necessary for obtaining not only financial solvency, but also electoral, judicial, and educational reforms. Mosaddegh appointed Ayatollah Abol-Ghasem Kashani as house speaker. Kashani's Islamic scholars, as well as the Tudeh Party, proved to be two of Mosaddegh's key political allies, although relations with both were often strained.

The British government had grown increasingly distressed over Mosaddegh's policies and were especially bitter over the loss of their control of the Iranian oil industry. Repeated attempts to reach a settlement had failed and in October 1952, Mosaddegh declared Britain an enemy, and cut all diplomatic relations.

Engulfed in a whole range of problems following World War II, Britain was unable to resolve the issue single-handedly and looked towards the United States to settle the issue. Initially America had opposed British policies. After U.S. mediation had failed several times to bring about a settlement, American Secretary of State Dean Acheson concluded that the British policies were destructive, and determined on a rule-or-ruin policy in Iran.

The American position shifted in late 1952, when Dwight D. Eisenhower had been elected U.S. President. In November and December, British intelligence officials suggested to American intelligence that the prime minister should be ousted. British prime minister Winston Churchill suggested to the incoming Eisenhower administration that Mossadegh, despite his open disgust with socialism, was, or would become, dependent on the pro-Soviet Tudeh Party,  resulting in Iran increasingly turning towards communism and towards the Soviet sphere at a time of high Cold War fears.

After the Eisenhower administration had entered office in early 1953, the United States and the United Kingdom agreed to work together toward Mosaddegh's removal and began to publicly denounce Mosaddegh's policies for Iran as harmful to the country. In the meantime the already precarious alliance between Mosaddegh and Kashani was severed in January 1953, when Kashani opposed Mosaddegh's demand that his increased powers be extended for a period of one year.

In March 1953, Secretary of State John Foster Dulles directed the Central Intelligence Agency (CIA), which was headed by his younger brother Allen Dulles, to draft plans to overthrow Mosaddegh. On 4 April 1953, Allen Dulles approved US$1 million to be used "in any way that would bring about the fall of Mosaddegh". Soon the CIA's Tehran station started to launch a propaganda campaign against Mosaddegh. Finally, in early June, American and British intelligence officials met again, this time in Beirut, and put the finishing touches on the strategy. Soon afterward, according to his later published accounts, the chief of the CIA's Near East and Africa division, Kermit Roosevelt, Jr. the grandson of U.S. President Theodore Roosevelt, arrived in Tehran to direct it.

The plot, known as Operation Ajax, centered on convincing Iran's monarch to issue a decree to dismiss Mosaddegh from office, as he had attempted some months earlier. But the Shah was terrified to attempt such a dangerously unpopular and legally questionable move, and it would take much persuasion and many U.S. funded meetings, which included bribing his sister Ashraf with a mink coat and money, to successfully change his mind.

In August 1953, the Shah finally agreed to Mossadegh's overthrow, after Roosevelt said that the U.S. would proceed with or without him and formally dismissed the prime minister in a written decree, an act that had been made part of the constitution during the Constitution Assembly of 1949, convened under martial law, at which time the power of the monarchy was increased in various ways by the Shah himself. As a precautionary measure, he flew to Baghdad and from there hid safely in Rome.

He actually signed two decrees, one dismissing Mosaddegh and the other nominating the CIA's choice, General Fazlollah Zahedi, as Prime Minister. These decrees, called Farmāns, were specifically written as dictated by Donald Wilber, the CIA architect of the plan, and were designed as a major part of Wilber's strategy to give the impression of legitimacy to the secret coup, as can be read in the declassified plan itself, which bears his name. Wilber was later given a letter of commendation by Alan Dulles, CIA head, for his work.

Tehran strongman Shaban Jafari played a major role in Mossadegh's overthrow.

Soon, massive protests, engineered by Roosevelt's team, took place across the city and elsewhere with tribesmen paid to be at the ready to assist the coup. Anti- and pro-monarchy protesters, both paid by Roosevelt, violently clashed in the streets, looting and burning mosques and newspapers, leaving almost 300 dead. The pro-monarchy leadership, chosen, hidden and finally unleashed at the right moment by the CIA team, led by retired army General and former Minister of Interior in Mosaddegh's cabinet, Fazlollah Zahedi joined with underground figures such as the Rashidian brothers and local strongman Shaban Jafari, to gain the upper hand on 19 August 1953 (28 Mordad).

The military joined on cue: pro-Shah tank regiments stormed the capital and bombarded the prime minister's official residence, on Roosevelt's cue, according to his book. Mosaddegh managed to flee from the mob that set in to ransack his house, and, the following day, surrendered to General Zahedi, who was meanwhile set up by the CIA with makeshift headquarters at the Officers' Club. Mosaddegh was arrested at the Officers' Club and transferred to a military jail shortly after. On 22 August, the Shah returned from Rome.

Zahedi's new government soon reached an agreement with foreign oil companies to form a consortium and "restore the flow of Iranian oil to world markets in substantial quantities", giving the U.S. and Great Britain the lion's share of Iran's oil. In return, the U.S. massively funded the Shah's resulting government, including his army and secret police force, SAVAK, until the Shah's overthrow in 1979.

As soon as the coup succeeded, many of Mosaddegh's former associates and supporters were tried, imprisoned, and tortured. Some were sentenced to death and executed. The minister of Foreign Affairs and the closest associate of Mosaddegh, Hossein Fatemi, was executed by order of the Shah's military court. The order was carried out by firing squad on October 29, 1953.

Shortly after the Shah's return, Mosaddegh was tried for treason by the Shah's military court. On 19 December 1953, defending himself against the treason charge, he said:

“ Yes, my sin — my greater sin and even my greatest sin is that I nationalized Iran's oil industry and discarded the system of political and economic exploitation by the world's greatest empire. This at the cost to myself, my family; and at the risk of losing my life, my honor and my property. With God's blessing and the will of the people, I fought this savage and dreadful system of international espionage and colonialism .... I am well aware that my fate must serve as an example in the future throughout the Middle East in breaking the chains of slavery and servitude to colonial interests.”

On 21 December 1953, he was sentenced to death but his sentence was later commuted to three years' solitary confinement in a military prison. He was kept under house arrest at his Ahmadabad residence, until his death, on 5 March 1967.

Links For Further Reading:

*Iran's 1953 Coup d'Etat: 61 Years Later:

*Mosaddegh's Speech at The Hague (June 1951):

*One for Us, Six for Britons!: William Knox D'Arcy in History of Iran:

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