The United States suffered least damage among the nations involved in the World War I and World War II. It escaped unscathed even from devastating post-war crises, and even upgraded its political, economic, military and cultural power on a daily basis. In the 1950s, nobody heard any more about Italian Fascism and German Nazism, as Europe was divided between Capitalists and Communists. As the world came closer to mid-1860s, it became further polarized: one pole led by the US and the other led by the Soviet Union.
The Non-Aligned Movement (NAM) was standing against the polarized world; however, technical, military, economic and ideological power had polarized the world. Such bipolar world gave rise to the Cold War.
Under such circumstances, the US had to remain strong, leave behind economic crises and upgrade its industrial and military strength. The key requirement for all of this was summarized in energy.
Without access to energy, the US would see all its dreams shattered. The US’s footsteps were seen everywhere: from the Middle East to Far East and from Central America to South America. In this regard, Iran was not spared. The US stepped into Iran’s energy sector following the 1953 coup against the government of Prime Minister Mohammad Mossadeq.
US Coup Fallout
The 1953 coup opened a new chapter in the history of Iran. Later on it came out that the Central Intelligence Agency (CIA) had engineered the coup against the Mossadeq administration.
In Iran’s modern history, we read: The 19 August1953 coup should be seen as a US-Britain joint action aimed at preserving the international oil cartel. The coup was executed on August 19. When hooligans were out in the streets, Gen. Zahedi led 32 Sherman tanks to central Tehran to lay a siege to key spots. Following three hours of clashes with three tanks stationed to protect Mossadeq’s residence and radio station, Fazlollah Zahedi was announced the Shah-appointed legitimate prime minister.
The Americans were coup leaders and they demanded a share in post-Mossadeq Iran’s oil. The Mossadeq administration and the objections he lifted were based on Iran’s main source of income, i.e. oil. Now Mossadeq had been sidelined and Iranian oil barrels were ready to be delivered to superpowers like the US. Fazlollah Zahedi had failed to attract Britain.
Mahmoud Tolouei says: The Zahedi government was the August coup inheritor, but the British did not show any sign of financial support for him. However, the Americans stepped in and offered $45 million in cash. Even the then US ambassador to Tehran had suggested that financial aid to the Zahedi government increase. That was the starting point for the Americans to strengthen their position in future oil consortia to the dismay of Britain despite its cooperation in the August coup. Eisenhower, then US president, had said Iran’s oil and the Suez Canal were his priorities. Bermuda Island hosted a meeting between President Eisenhower and British and French prime ministers to discuss Iran’s oil issues. An agreement was soon finalized about the formation of the Iran oil consortium. Upon a US proposal, in addition to Britain, the Netherlands and France were invited to the Iran oil table. On 16 December 1953, the most important outcome of the Bermuda conference, the first meeting was held between the Anglo-Iranian Oil Company (AIOC) and five American firms – Standard Oil New Jersey, Texaco, Socony-Vacuum, Standard Oil California and Golf Oil – as well as Royal Dutch Shell and France’s oil company to make arrangements for the formation of the Iran Oil Consortium in London.
Every arrangement had been made so that Britain would no longer hold a monopoly on Iran’s oil. The Allies had emerged winner in the Second World War and the Axis powers had been crushed. However, Britain was overwhelmed by fighting Germany’s Nazism. The Americans, more prepared than ever, were plotting to take Iran’s oil and energy. The US needed Iran’s energy to keep fighting the Soviet Union amid the Cold War.
Britain on the Decline
There is no unanimity on why Britain’s role was overshadowed in Iran’s oil. However, the most significant analyses in this regard are mentioned in the following two books: Iran’s Pahlavi-Era Foreign Policy by Abdorreza Houshang Mahdavi and Iran’s Foreign Relations by Alireza Azghandi.
Iranians’ Hatred for British Colony: One of the most important reasons for oil companies to come to Iran under the aegis of the consortium agreement was the Iranians’ hatred of Britain as the symbol of colonization. That is also why talks about the issue of oil lasted three years. The Iranians would never welcome back AIOC. Even throughout negotiations and when Britain was demanding a bigger share of the consortium (44%), the Americans opposed and told them they could not seek any higher share because AIOC was a symbol of foreign domination and largely detested in Iran. Had AIOC been granted a higher share than others, more protests would have followed in Iran.
Britain’s economic and political weakness: The British government is apparently among the winners of WWII. But in fact it had been weakened to the point that it would no longer preserve the giant empire created three centuries before across the globe. Nationalist movements were emerging in Britain’s colonies. India’s independence came afterwards. This nationalist fervor had transpired Iran too and Iranians viewed AIOC as the symbol of Britain’s colonial policy. The British empire was crumbling under heavy debts following WWII, while the US was in a position of force and ready to flex muscles.
US influence in Iran: Another reason for AIOC’s failure in Iran was the US abandoning isolation. The US took advantage of the British empire’s economic and financial weakness to gain new interests. Therefore, the oil consortium in Iran was the product of rivalry between Western industrialized nations and the US’s increased power.
Therefore, alongside Iran’s domestic conditions, the international atmosphere should be also taken into account. The oil consortium was a clear example of Iran’s foreign policy, known as positive nationalism. The consortium was established in the interest of the US as a major player in the international system.