OH, Pow er, a n d Principle Contemporary Issues in the Middle East M ostafa Elm Oil, Power, and Principle Iran’s Oil Nationalization and Its Aftermath Syracuse University Press Copyright © 1992 by Syracuse University Press Syracuse, New York 13244-5160 All Rights Reserved First Edition 1992 . 93 94 95 96 97 98 99 92 6 5 4 3 2 1 The paper used in this publication meets the minimum requirements of American National Standard for Information Sciences—Permanence of Paper for Printed Library Materials, a n si 239.48-1984.(^0)" LIBRARY OF CONGRESS CATALOGING-IN-PUBLICATION DATA Elm, Mostafa. Oil, power, and principle : Iran’s oil nationalization and its aftermath / Mostafa Elm. — ist ed. p. cm. — (Contemporary issues in the Middle East) Includes bibliographical references (p. ) and index. 0-8156-2551-0 (alk. paper) ISBN i. Petroleum industry and trade—Government ownership— Iran. 2. Anglo-Iranian Oil Dispute, 1951-1954. 3. Mosaddeq, Mohammad, 1880—1967. 4. Iran—Politics and government—1941—1979. 1. Title. 11. Series. HD9576.162E46 1992 338.2'7282'o 955— d c20 91-12390 Manufactured in the United States of America . . . could thou and I with Fate conspire To grasp this sorry Scheme of Things entire, Would not we shatter it to bits—and then Re-mould it nearer to the Heart’s Desire! OMAR KHAYYAM To the memory of Mossadeq With the hope that Iran may yet weather the storms O let me see our land retain her soul Her pride, her freedom, and not freedom’s shade J O H N KEATS Contents Tables ix Abbreviations xi Preface xiii Note on Translitération xvii 1. The Age of Autocracy and Concessions i 2. Reza Shah and the 1933 Concession 23 3. Iran Defies Russia and Britain 44 4. The General’s Mission 65 5. The Oil Nationalization Act 81 6. Forces at Work in Iran, Britain, 94 and the United States 7. Iran Takes Over the Company 107 8. The Harriman and Stokes Missions 124 9. The Oil Cartel’s Stranglehold 144 10. British Plans for the Occupation of Abadan 155 11. The Oil Dispute Taken to the United Nations 169 12. Mossadeq’s Discussions in the United States 183 13. Britain Manipulates the World Bank 194 14. Judgment at the World Court 208 15. British Attempts to Overthrow Mossadeq 215 16. Qavam’s Prime Ministership and the 234 Communist Threat vm• • • Contents 17. Churchill’s Games with Truman 248 18. Iran’s Oil-less Economy 267 19. Eden’s Games with Eisenhower 276 20. The Coup 292 21. An Oil Consortium Takes Over 310 22. The Coup’s Aftermath 332 Notes 347 Bibliography 387 Index 397 Tables 1. Iran’s Oil Production, APOC Profits, and Royalty 18 Payments to Iran, 1912—31 2. Iran’s Oil Production, AIOC Net Profits, British Taxes, 3 8 and Payments to Iran, 1932—50 3. Middle East Oil Holdings in 1950 109 4. Balance of Payments of Iran, 1949—54 273