Rethinking “Oil Nationalism”: The Case of Anglo Iranian Oil Company (AIOC)

Rethinking “Oil Nationalism”: The Case of Anglo Iranian Oil Company (AIOC)

Neveen Abdelrehim (University of York, Heslington, UK & Faculty of Commerce, Port Said University, Port Said, Egypt)
Copyright: © 2015 |Pages: 17
DOI: 10.4018/IJSSS.2015070103
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Abstract

In the early twentieth century, Great Britain began a new wave of imperialism, focusing on areas in the Middle East strategic to enhance their trade. Iran was one of the countries in which Britain gained enormous power and influence. This power was derived from its control of Iranian oil resources, through the Anglo Iranian Oil Company (AIOC). After many years of AIOC producing oil in Iran with Iranian Government support, a wave of economic nationalism led to the nationalization of AIOC in 1951 by the Iranian Prime Minister Musaddiq. The nationalization of the AIOC angered the British and seemed part of a growing pattern of pressure on their interests culminating in wresting Musaddiq from the control of the oil industry. As a result, in considering the above effects, by using AIOC as a case study, a textual analysis of the Chairman's Statement to Shareholders is conducted and the validity of the Statements is reappraised with reference to historical evidence.
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Introduction

Oil was important to the global economy because it had advantages over coal which became apparent in the 1950s. Oil had the advantages of being pumped rather than manhandled and when burnt properly it enabled a complete absence of smoke, an attribute that was of particular importance to the British Admiralty and the British Government1. Crude oil was one of the major commodities in the world trade arena, transferred between a range of international firms2. Oil was important for both producing and consuming nations because it generated major revenue (taxation and royalties) and satisfied a whole range of consumer requirements3. In a wider sense, oil had come to be synonymous with maintaining imperial integrity4. As oil became more important, British willingness to maintain control became more necessary5.

For Iran, oil played an important role in facilitating its ability to engage in global markets and giving it the opportunity to become more involved in oil production for exports6. In the post war years, the development of the Iranian oil industry was considered to be an important event that had occurred during the previous fifty years7. Iran’s participation in the world economy has been greatly emphasised by its strategic location and by its prized oil resources8. Indeed, Iran’s oil reserves have accounted for the greater part of the total assets of the petroleum industry of the Middle East and the country has become a major supplier of oil to Britain following the initial oil exploration by AIOC.

Since oil was important for Britain in order to satisfy the whole range of consumer requirements and to generate a considerable source of government revenue, the Anglo Iranian Oil Company (AIOC)9 was considered a suitable company upon which Britain could rely because it had significant political, strategic and economic power in Iran in the 20th century. In 1914, British interests influenced the Iranian deposits according to its own requirements, where the British government controlled oil for its navy and acquired a majority shareholding (51%) stake in the AIOC (Chandler, 1990; Millward, 2007). The AIOC was Iran’s main source of income because it had in Iran the world’s largest refinery, the second largest exporter of crude petroleum, and the third largest oil reserves which were mainly managed by the British government and British private citizens (Abrahamian, 2001) Moreover, AIOC ‘was so dominant within the Iranian economy that it was effectively a state within a state and regarded to all intents and purposes as an arm of the British Admiralty and the British Strategic policy (Cited in Marsh, 2003).

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