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Last week Hussein Makki, the Prime Minister's right-hand man, took foreign correspondents in Teheran on a tour of the "Pit," a slum of caves and crumbling hovels—all caused, he said, by British exploitation of Iran's natural resources. Oil nationalization was served up to both Iranians and foreigners as a magic cureall.
Such an approach was pure demagoguery. Iran's poverty was more the fault of an inefficient government and an oppressive landlord system than of any foreign influence. The British could be blamed, however, for having failed to do something about inefficiency and oppression. For its workers in the Khuzistan fields, Anglo-Iranian has built model dispensaries, schools and recreation grounds, but it has made no effort to integrate itself in the life of the country. In 1951, swimming pools and flush toilets for the oil workers make a poor substitute for a long-term policy.
In 1933, the British drew up a new 60-year oil agreement which gave Iran a royalty of four shillings to the ton. By the standards of the day, that was no more than a hard bargain by the empire, but by 1951 standards, it was exploitation. Under the agreement—still in effect—the British government got more revenue from the Anglo-Iranian Oil Co. in taxes alone than the Iranian government received from all its sources of income.
The U.S. Lesson. Britain might have avoided a lot of trouble if it had caught the lesson the U.S. learned in Mexico, where the Cardenas government in 1938 expropriated British and American oil properties after years of bickering. Standard Oil Co. (New Jersey), noting the disastrous Mexican experiment, resolved not to make the same mistake elsewhere. Its subsidiary in Venezuela, the Creole Petroleum Corp., issued orders to its executives there to become a part of the country instead of remaining representatives of an aloof "foreign interest." All company personnel was obliged to learn Spanish. Executives made it a point to get to know Venezuelan leaders socially. In 1943, Creole offered Venezuela a concession agreement guaranteeing the government 50% of each year's profits. Arabian-American Oil Co. followed the same policy in Saudi Arabia.
By 1949, when the British offered the Iranians a similar 50-50 deal, it was too late. The Iranian Parliament refused the offer.
The Prospects. For the moment, Mossadeq holds power in his frail, nervous hands. The only other Iranian politician of stature is Ahmad Qavam, who is ill in Switzerland. The young Shah, who is known to favor a go-slow policy on oil nationalization, could dissolve Parliament, dismiss Mossadeq and rule the country with his still loyal army, but all signs indicate that he does not dare try. Even the Communists have for the moment been stopped by Mossadeq's popularity. They have called off street demonstrations and other political action, evidently waiting to strike if & when Mossadeq makes a mess of things. If, for instance, large-scale unemployment should result from mismanagement of the oilfields (Anglo-Iranian employs 80,000 people), no one doubts that the Communists would make the most of the situation and attempt to seize power.