From “Oil Nationalisation and Managerial Disclosure: The Case of Anglo-Iranian Oil Company, 1933-1951”
Chapter 2: AIOC History, oil and Iranian politics.
AUTHOR: NEVEEN ABDELREHIM | THE UNIVERSITY OF YORK
Britain was concerned that Iran might use its oil as a political weapon in order to claim a share in the company‟s worldwide profits under the terms of the 1933 concession. Britain feared Iran would also demand compensation for the loss of future profits. Therefore, Britain employed the strategy of reaching a settlement via a series of legal manoeuvres. Firstly, the International Court of Justice proposed the idea that the AIOC would market Iran‟s oil on a fifty-fifty profit sharing basis (although it was too late to avert Musaddiq‟s nationalisation).
Next, Richard Stokes led a mission that was slightly different from that of the International Court of Justice, proposing to give Iran half of its shareholdings in the company and putting Iranian Government directors on the AIOC Board. Stokes‟s proposal was, however, opposed by Musaddiq so the former was completely aware that his proposals would be rejected. The American press also was critical of the Stokes mission and the Washington Post dismissed this British negotiating strategy. It published the following: Does the Stokes plan actually recognise nationalisation or is it just a masquerade for the old system? If it does recognize nationalisation, how does it explain the repeated insistence that company control must extend to the wells and pipelines covering the area one-sixth of the total size of Iran?….Does not maintenance of such control constitute an explicit denial of nationalisation and an invitation to the political interference that the Iranians insist on shaking off?.. If the present tactic is to force the Iranians to their knees, might they not bow to the Communists instead of to the company? Stokes had discussions with the Iranian delegation and explained the difficulties that would face Iran in running its oil industry without the help of British technicians. In response, the Iranians handed Stokes a Memorandum which was composed of the following points. First, British proposals did not attest to their acceptance of the nationalisation issue, but merely revitalised the AIOC in a new form, in full control of oil operations. Second, Iran did not plan to sell oil to Britain at a 50 percent discount as had been claimed. The third point made was that the Iranian government was willing to compensate the company but only after negotiating the claims of both parties.
In fact, Musaddiq offered to compensate the AIOC and had always been prepared
to negotiate within the limits of legal principles for the settlement and solution of the oil problem. Regardless of Musaddiq‟s offer to compensate the AIOC shareholders, Britain rejected the idea of nationalisation and “the failure to achieve any result up to this time has been due to the fact that the British government have desired to retain the influence of the former company under other titles in the same shape and form as before, in violation of the laws and of the rights and desires of the Iranian nation”. The failure of Richard Stokes‟s mission dashed hopes of a negotiated settlement. Consequently, Britain found it impossible to make a deal with Musaddiq and “all efforts to reach a friendly settlement having proved abortive”. From the British point of view, there seemed no immediate prospect of reaching agreement with the Iranian government for the assessment and payment of compensation to the company.
Notes & References
294. Elm, Oil, Power, and Principle: Iran’s oil nationalisation and its aftermath, 134.
296. Cited in Elm, Oil, Power, and Principle: Iran’s oil nationalisation and its aftermath, 141.
298. Ibid, 136.
299. Ibid, 139.
300. The Times Friday, September 26, 1952; pg. 4; Issue 52427; Col C.
301. AIOC annual report 1950, 16.