Burmah Oil Company and Neo-colonialism in Iran

From Iran and the West: Why 1953 Still Matters

Before Mossadegh’s election in 1951, Iran had been exploited by the British. The oil discovered in Iran in 1908 was owned by the Glasgow-based Burmah Oil Company (BOC) through a contract with Shah Mozzafar al-Din Shah Qajar. To oversee oil production, the BOC formed a subsidiary, the Anglo-Persian Oil Company (APOC). When it took APOC public in May 1914, the British government purchased a majority interest, changing the company name to Anglo-Iranian Oil Company (AIOC) in 1935.

The AIOC’s practices exemplified classic colonialism. The British employees of the company lived in well built homes with access to tennis courts and swimming pools, while the nearly 10,000 Iranian workers lived in slums without basic amenities or healthcare. In short, the profits belonged to Britain, but the exploited resources were Iranian. Prime Minister Mossadegh addressing the United Nations “To give you an idea of Iran’s profits from this enormous industry, I may say that in 1948, according to accounts of the former Anglo-Iranian Oil Company, its net revenue amounted sixty-one million pounds; but from those profits Iran received only nine million pounds, although twenty-eight million pounds went into the United Kingdom treasury in income tax alone…” Stephen Kinzer, All the Shah’s Men: An American Coup and the Roots of Middle Eastern Terror, pg. 123. As a result, when Mohammed Mossadegh was elected he began a crusade to free Iran from the British. He nationalized the oil industry, rejecting all of Britain’s ownership claims. The AIOC became the National Iranian Oil Company (NIOC). Mossadegh championed Iranian sovereignty, toured the United States, spoke eloquently at the United Nations, and was named Time Magazine’s Man of the Year for 1951.

In retaliation for the AIOC, the British enacted an embargo on Iranian oil in August 1951 and encouraged the U.S., with whom it had recently founded the North Atlantic Treaty Organization (NATO), to participate. In October 1952, Mossadegh broke off diplomatic ties with Great Britain, closed the British Embassy and expelled British diplomats. Seeing no hope for negotiation, and not wanting to threaten the stability of NATO, the U.S. agreed to aid the British in overthrowing Mossadegh and re-installing Western-ally Mohammed Reza Shah (the former leader of Iran, who the British had installed in power in 1941). The project against Mossadegh was dubbed Operation Ajax and was led by the CIA on the ground, with help from British intelligence. Though the initial effort failed, the second attempt was successful. On August 19, 1953, Mohammed Mossadegh was overthrown.

See History of Burmah Oil.