All the Shah’s Men

by Stephen Kinzer

  That evening McGhee called on the Shah. Their meeting was most disconcerting, as McGhee wrote afterward:

  I had been with the Shah about a year and a half earlier during his much-publicized official visit to Washington. He had then been a proud, erect young man, insistent that his requests be taken seriously. As I saw him in the darkened audience chamber in which he received me, lounging on a sofa, he was a dejected, almost broken man. I sensed that he feared he too might be assassinated…. Did he think with our support he could avert nationalization?

  The Shah said he couldn’t do it. He pleaded that we not ask him to do it. He couldn’t even form a government. Everyone was afraid. There were unseen enemies everywhere…. He looked lost, as if he thought the whole affair hopeless. I left him alone in his darkened room. I will always remember his sad, brooding face…. The specter of death and impending chaos hung gloomily over Tehran like a dark cloud. I was sad when I said goodbye.

  On his way home, McGhee stopped in London and met there with Sir William Fraser, the Anglo-Iranian chairman, and Foreign Secretary Morrison. The meetings were so stormy that Morrison decided to send a delegation to Washington to present Britain’s case. He named Sir Oliver Franks, the British ambassador in Washington, who had been McGhee’s tutor in morals at Oxford, as its chairman.

  The meetings stretched over nine days. British emissaries argued that allowing Iran to nationalize the oil company “would be widely regarded as a victory for the Russians” and would also “cause a loss of one hundred million pounds per annum in the United Kingdom’s balance of payments, thus seriously affecting our rearmament program and our cost of living.” Franks insisted that Iran had “no solid grievances” against either Britain or the oil company, whereas Britain was vitally concerned about losing “a prime strategic necessity.” He described Anglo-Iranian as a crucial asset to the West “not only because of its magnitude as an element of our balance of payments … but also because of the power it gave us to control the movement of raw materials.” Iranian oil was vital “to our common defense,” and losing it would cripple “our ability to rearm.”

  McGhee listened for several days in quiet frustration. When he finally spoke, it was to warn once again that the British must compromise with Iran or face disaster. He urged them to start splitting their profits with Iran on a fifty-fifty basis, “which had an aura of fairness understandable to the ordinary man.” The British would not be persuaded. “In the end,” he wrote later, “I was, with great regret, forced to advise Franks in our final meeting on April 18 that their proposals did not, in the case of accommodation to nationalization, meet the requirements we saw for success.”

  Soon after the talks in Washington ended, Iran set out on its brave new course. On May 1, 1951, Mohammad Reza Shah signed the momentous law revoking Anglo-Iranian’s concession and establishing the National Iranian Oil Company to take its place. The next day Britain demanded that the law be suspended. On May 6 Mohammad Mossadegh submitted his cabinet to the Majlis. It was immediately approved, and on that same day Mossadegh took office as prime minister.

  Historic as Mossadegh’s rise to power was for Iranians, it was at least as stunning for the British. They were used to manipulating Iranian prime ministers like chess pieces, and now, suddenly, they faced one who seemed to hate them. “All of Iran’s misery, wretchedness, lawlessness and corruption during the last fifty years,” the state-controlled Radio Tehran declared in a broadcast soon after Mossadegh took office, “has been caused by oil and the extortions of the oil company.”

  For a brief moment, Prime Minister Attlee seemed disposed to compromise. Attlee was a socialist who had helped draft the plans under which Britain had nationalized some of its own basic industries. At one cabinet meeting he suggested that Britain might make a public statement accepting nationalization of Anglo-Iranian, thereby giving Mossadegh “an opportunity of saving face,” and then arrange some sort of complicated deal under which the company would retain most of its privileges. Herbert Morrison vigorously objected. He warned Attlee that any concessions to Iran would set an intolerable precedent and encourage nationalists everywhere. Attlee allowed himself to be persuaded and signed off on a cable to Ambassador Franks in Washington. It directed him to tell Acheson that “Persian oil is of vital importance to our economy, and that we regard it as essential to do everything possible to prevent the Persians from getting away with a breach of their contractual obligations.”

  Acheson, however, believed that Mossadegh represented “a very deep revolution, nationalist in character, which was sweeping not only Iran but the whole Middle East.” He and others in the Truman administration never stopped urging their British counterparts to turn away from their policy of confrontation and to offer Mossadegh a legitimate compromise. They did this despite realizing that Mossadegh would not be easy to deal with, as a profile in the New York Times made clear:

  The tidal wave of nationalistic fervor that engulfed the Anglo-Iranian Oil Company in the space of a few weeks has now unexpectedly cast one of Iran’s most redoubtable demagogues, the aged Mohammad Mossadegh, upon the pinnacle of power. In the popular view, the new Premier represents a figure of retributive justice who galvanized the impressionable Parliament and led it to victory over the dragon, Anglo-Iranian, which, in the eyes of many, had for years been feeding upon the vitals of the country….

  A foreign diplomat, admitted recently to the new Premier’s presence, asked Dr. Mossadegh to explain exactly how he intended to proceed with the expropriation of Anglo-Iranian. For half an hour Dr. Mossadegh described the misdeeds of British imperialism over the past 100 years. When he had finished, the diplomat repeated the question. Again the Premier denounced British imperialism. The interview ended there.

  What will Dr. Mossadegh do next? The question remains open and the answer is anybody’s guess.

  Messages that flew between Washington and London during mid-1951 did nothing to narrow differences between the two allies over how to deal with Mossadegh. On May 18 the State Department issued a public statement declaring that Americans “fully recognize the sovereign rights of Iran and sympathize with Iran’s desire that increased benefits accrue to that country from the development of its petroleum.” Morrison read it with dismay and in a cable to Ambassador Franks that afternoon said that he was “really rather annoyed at the American attitude of relative indifference to a situation which may be most grave to us all.”

  Soon afterward, Morrison sent a message to Acheson in which he sought to lay out the British position in the clearest possible terms. The issue Britain faced in Iran, he wrote, “concerns the major asset which we hold in the field of raw materials. Control of that asset is of supreme importance…. Parliamentary and public feeling in England would not readily accept a position where we surrender effective control of an asset of such magnitude.”

  The Americans were unmoved. On May 31 Truman sent a note to Attlee urging that negotiations “be entered into at once” to prevent a worsening of the “explosive situation” in Iran. Attlee replied that allowing Iran to get away with nationalization would have “the most serious repercussions in the whole free world.” He realized, however, that given Truman’s insistence, the British would have to make at least a show of engaging Mossadegh.

  At Attlee’s suggestion, Anglo-Iranian sent a delegation of officials led by the company’s deputy chairman, Basil Jackson, to Tehran for negotiations. Mossadegh welcomed them by arranging for Iranian gendarmes to take over the Anglo-Iranian office at the western town of Kermanshah on the day they arrived. As if that were not enough to set the tone, Ambassador Grady restated the American position in an interview with the Wall Street Journal.

  “Since nationalization is an accomplished fact, it would be wise for Britain to adopt a conciliatory attitude,” Grady asserted. “Mossadegh’s National Front party is the closest thing to a moderate and stable political element in the national parliament.”

  Iranians at the negotiating table said that they were willi
ng to talk, but only after the visitors from London accepted nationalization of the “former company” as a fait accompli. Jackson refused, insisting that Iran was bound by the 1933 accord and could not renounce it until its sixty-year term expired. He had a counteroffer. Anglo-Iranian would pay Iran £10 million and another £3 million monthly while negotiations proceeded; it was also willing to transfer its assets to the newly created National Iranian Oil Company, but only if it could establish a new company that would have “exclusive use of those assets.” This was a not-so-subtle declaration that Britain still did not accept the fact of nationalization. It reflected the Foreign Office’s unaltered position, which was that the British “can be flexible in profits, administration or partnership, but not in the issue of control.” To no one’s surprise, Iranian negotiators rejected the offer.

  On June 20 Mossadegh named a French-educated engineer, Mehdi Bazargan, as the managing director of the National Iranian Oil Company. Bazargan flew immediately to Abadan, where British administrators were still running the refinery, and declared himself their new boss. His first order was that captains of British tankers must henceforth provide him with receipts before they sailed, listing the amount of oil they were carrying so he could keep track of how much was being exported.

  The British considered this intolerable. They believed, as their United Nations ambassador asserted, that the oil was “clearly the legal property of the Anglo-Iranian Oil Company.” When tanker captains refused to provide receipts, Bazargan threatened to have Anglo-Iranian’s general manager, Eric Drake, arrested for sabotage. As that crime would carry the death penalty under a bill pending in the Majlis (it was later withdrawn), Ambassador Shepherd advised Drake to leave Iran. He did so and began running the company from an office in Basra, across the Shatt-al-Arab in Iraq. From there, he continued to refuse the demand for receipts. When the Iranians insisted, Sir William Fraser issued an order of his own from London. Tanker captains were to pump back all the oil in their holds and leave Abadan empty.

  Iran had until that moment been the world’s fourth largest oil exporter, supplying 90 percent of Europe’s petroleum. Now, since it owned not a single tanker, it could not export a drop. That was fine with Fraser, who still believed he could bend the Iranians to his will. “When they need money,” he predicted, “they will come crawling to us on their bellies.”

  For Fraser and his colleagues at Anglo-Iranian, as well as for officials of the British government, the very idea that Iran would nationalize its oil industry seemed absurd and impossible, even as it was happening. They had trouble taking it seriously. In their view the entire campaign was most likely a monumental bluff, a ploy to squeeze more money out of London, or, if not that, then simply a petulant outburst that would end when the consequences became clear.

  “At no time before a year or two before 1951 did anyone contemplate that we would not stay there forever,” Eric Drake recalled afterward. “We were there by an international agreement between the government of Iran and the Anglo-Iranian Oil Company, so there was no reason it should ever come to an end as far as we could see.”

  Britain’s press enthusiastically jumped aboard the anti-Mossadegh bandwagon. The London Times blamed “irresponsible Persian politicians” for stirring up the country’s uneducated masses. The Economist declared that Anglo-Iranian had become a “monumental scapegoat” and asserted: “No Persian with any common sense really believes that the Anglo-Iranian Oil Company is responsible for the horrifying poverty of the masses.” The Observer described Mossadegh as a “Robespierre fanatic” and a “tragic Frankenstein” who was “obsessed with one xenophobic idea.”

  Across the Atlantic, the tone was quite different. The Washington Post asserted that most Iranians saw the oil company as “a thriving state within a stricken state—as a symbol of their poverty.” The New York Times said that many Middle East specialists considered Mossadegh a liberator comparable to Thomas Jefferson or Thomas Paine. The Chicago Daily News reported that even many Britons were disturbed by the way their government was handling the issue. “British critics do not think that McGhee was really responsible for the Iranian crisis,” its London correspondent wrote. “They agreed that the whole affair was badly handled by the Anglo-Iranian Oil Company with the connivance, by default, of the Foreign Office.”

  There was indeed dissent in Britain. Anglo-Iranian’s own labor adviser, Sir Frederick Leggett, wrote to a friend in the Foreign Office that the company was in its “deplorable position” because it had “failed to make a gesture of recognition of Persian national aspirations.” Minister of State Kenneth Younger complained in a memo to Morrison about “the short-sightedness and the lack of political awareness shown by the Anglo-Iranian Oil Company” and asserted that it “never even seriously tried” to make a “proper estimate” of the situation. Earl Mountbatten told his superiors at the Admiralty that instead of listening to the “notoriously bellicose” Herbert Morrison’s advice on how to “cow these insolent natives,” Britain should realize that “economic and military threats could only make things worse.”

  Even some British diplomats were sending contrary reports to the Foreign Office. The labor attaché in Tehran filed a cable describing conditions at Abadan as deplorable, saying that workers there lived in “cottages made of mud bricks, with no electricity, without outside water supply and sanitary arrangements … in other words, in veritable slums.” And from Tel Aviv, the British minister forwarded a Jerusalem Post report that he said convinced him that Anglo-Iranian “deserved what happened.” It was written by an Israeli who had spent several years working at Abadan alongside Iranians he described as “the poorest creatures on earth.”

  They lived during the seven hot months of the year under the trees…. In winter times these masses moved into big halls, built by the company, housing up to 3,000–4,000 people without walls of partition between them. Each family occupied the space of a blanket. There were no lavatories…. In debates with British colleagues we often tried to show them the mistake they were making in treating the Persians the way they did. The answer was usually: “We English have had hundreds of years of experience on how to treat the Natives. Socialism is all right back home, but out here you have to be the master.”

  On June 28 Mossadegh issued an appeal to British technicians and managers at Abadan. He told them that Iran was “anxious to benefit” from their expertise and promised that if they stayed at their jobs, “our country will welcome you warmly.” Fraser, determined that Iran not be able to run the refinery by itself, responded by ordering most of the company’s British employees to leave Iran.

  With Iranians already in control of the Anglo-Iranian office in Kermanshah, the next step was for them to take over the Abadan and Tehran offices. They did so during the last days of June. The head of the Abadan office had wisely moved his sensitive papers to the local British consulate, which Iranians could not enter. Richard Seddon, head of the Tehran office, was not as quick. When a delegation of Iranians arrived to search his home, they found many files still there, including some burning in the fireplace. An official of Iran’s foreign ministry who was present that night summarized what they found:

  Although compromising documents had allegedly been removed, enough papers were left behind to make it easy for Mossadegh to prove that AIOC had interfered in all aspects of Iranian political life. The documents revealed that the company had influenced senators, Majlis deputies and former cabinet ministers, and that those who had opposed it had been subtly forced out of office. Newspapers had been paid to publish articles alleging that many of the National Front’s leaders were actually paid stooges of AIOC….

  Among the documents was evidence that former Prime Minister Ali Mansur had begged AIOC to allow him to remain in office, promising in return to appoint a new finance minister more agreeable to the company. Another set of letters revealed that AIOC had helped Bahram Sharogh to become director of Iran’s Radio and Propaganda Department, and that on a trip to London he had been rec
ruited to serve the company. There were also directives and reports on influencing guilds, through the Mayor of Tehran, to rise against those in the bazaar who supported the National Front.

  The government quickly made these documents public, and many Iranians took them as further proof of the oil company’s perfidy. Mossadegh said they proved that Anglo-Iranian had engaged in a “sinister and inadmissible” campaign to subvert Iranian democracy. Majlis deputies were driven to new levels of anticolonial outrage. So were news commentators, one of whom wrote in a Tehran paper: “Now that the curtain is lifted and the real identity of traitors posing as newspaper men, Majlis deputies, governors and even prime ministers is laid bare, these men should be riddled with bullets and their carcasses thrown to the dogs.”

  President Truman, still hoping to find a solution to the crisis, called a meeting of his National Security Council at the end of June. The facts laid before him were alarming. George McGhee’s attempts to sway the Foreign Office and the Anglo-Iranian Oil Company had failed utterly. Anglo-Iranian had begun evacuating its employees from Abadan, and a complete shutdown of the refinery there was a real possibility. British warships were patrolling ominously offshore. Middle East experts on the National Security Council staff warned in a report that if the oil conflict could not be resolved, “the loss of Iran to the free world is a distinct possibility.” Their report asserted that the British were seriously considering invading Iran and warned that such an invasion “might split the free world, would produce a chaotic situation in Iran, and might cause the Iranian Government to turn to the Soviet Union for help.”