Wednesday, December 13, 2006


How Did Our Oil Get Under Their Sands?

Recounting sixty years of Western economic policies that have led to the rise of Islamic Fundamentalism in Iran.


At a time when yet another conflict has just finished emblazing the Middle East which involved the Jewish State of Israel on one side and Hezbollah, the paramilitary militia founded, trained and financed by the Islamic Republic of Iran on the other side, and also at a time where a civil war in Lebanon seems to be in the making once again directly involving Hezbollah and Syria and Iran indirectly, it is worth to take a look at the initiatives, economic and military, launched and underwritten by the West in Iran throughout the years. The importance of looking back at history is to be found in the fact that, far from being a tug of war between the Israelis and Hezbollah, this relatively localized conflict threatens to expand well beyond the borders of Lebanon, and to involve players much bigger than the ones who are presently fighting. Particularly when one can find calls already on the part of some decidedly extremist Bloggers and columnists, that the time has come to drop a couple of bunker-buster bombs on Iran's uranium-purifying facilities. It is also all the more important to know the plight of the people and be aware of the circumstances that have given rise to the ascent of Islamic Fundamentalism in Iran, a country which is placing itself - now more than ever - in a collision course with the West.

It is difficult for Westerners to fully grasp the sheer force of nationalistic feelings in Iran, and how much these feelings centre on oil. With virtually no other natural resources and a history of being under foreign domination, the people of Iran have come to see oil as their economic lifeline, upon which the foundations of any vision of national identity and pride must necessarily be built. And, ironically, these very nationalistic feelings have inevitably brought them in the past to clash with the powerful economic concerns of the West, who saw the region's oil as their own legitimately-claimed property.

By the early 1950's international oil companies had managed to effectively gain control over Iranian oil, and a desire to take that control back became a potent force throughout the country. It was a drama that was played out most vividly - and tragically - in 1951, when the charismatic Mohammed Mossadegh became a towering nationalist figure. With his inspiring visions and powerful oratorical skills, Mossadegh attracted a huge number of followers. Because of this a parallelism has been drawn by many historians between Mohammed Mossadegh and Martin Luther King, Jr. in terms of political and social effectiveness on the masses. Mossadegh was a democrat with a deep commitment to the rule of law. He was also at the head of a movement that pioneered democracy in Iran with great success.

One of the most volatile issues in Iranian politics was the enormously favourable deal that had been granted to a British oil concern, the Anglo-Iranian Oil Company. This name was, in fact, a misnomer since there was nothing remotely Iranian about it. It was entirely British owned, and it had been given a sixty-year concession for all of Iran's oil. As a result, massive revenues from Iranian oil flowed into the British treasury, while Iran merely received a small token share of the revenues and had no voice whatsoever in the company's management - not even the right to audit the company's books.

It was within this context that the then Shah of Iran - Mohammed Reza Pahlavi - backed politically and financially by the British, in 1949 tempered with the national elections in order to secure a legislative body favourable to Britain and to the status quo. Mossadegh instead favoured the revocation of all oil rights and called upon all those who wanted fair elections - which numbered in the tens of thousand - to hold a vigil in front of the Royal Palace in Tehran. After a vigil of three days and three nights, and so as to avoid the start of what was promising to be a civil war, the Shah agreed and granted new elections.

Mossadegh was elected triumphantly, and immediately began the political push for more democracy and for more national control over oil. By the end of 1951, with enormous popular support, Mossadegh recommended that the Anglo-Iranian Oil Company be entirely nationalized. This move passed fully in the Iranian legislative body and in the Senate, even though both were controlled by the Shah's appointed deputies. The British were flabbergasted as the Iranians, under the leadership of Mossadegh, proceeded swiftly with the nationalization of the Anglo-Iranian Oil Company and all of its assets.

Britain viewed the takeover by Iran as nothing short of a coup d'etat. In fact, even more than that, as a slap in the face and an affront to Britain's honour. Declared Sir Anthony Eden, the British Foreign Secretary:" Our authority throughout the Middle East has been violently shaken by the insolent defiance of decency, legality and reason of a group of wild men in Iran". A sentiment, this, echoed by Dan Acheson - the then US Secretary of State.

The international oil companies quickly swung into action, collectively coming to the defence of one of their own. An attack on Anglo-Iranian Oil was seen as the precursor to an attack on the international oil establishment and on the sanctity of oil companies to the region's oil reserves - especially by the Americans. The major international oil companies, therefore, spearheaded by Exxon cooperated in imposing a worldwide boycott on nationalized Iranian oil. The British and US governments backed the embargo, and Washington pressured the American oil industry to respect the boycott and to refuse to enter into any contract for the exploration and development of Iranian oil resources. The boycott succeeded in cutting off Iranian oil from world markets, devastating that country's economy. So effective was the embargo, that Iranian oil exports dropped from USD 400 million in 1950 to less than USD 2 million in 1952!

Even so, the boycott failed to bring Mossadegh's government down to its knees. In fact, if for nothing else, it served to increase Mossadegh's popularity among the Iranians as well as throughout the Middle East, in that he quickly became a symbol of defiance of British power and Western capitalism. In the face of such popularity Prime Minister Winston Churchill, a strong supporter of British imperial power, became convinced that Mossadegh had to be stopped at all costs, and requested Washington's help to this effect. He found the perfect timing in the transition from the Democratic Administration of Harry Truman to that of Republican Dwight Eisenhower, who was inclined to see Iran as a potential battleground between the United States and the Soviet Union. Eisenhower gave the green light to the CIA, which then dispatched Kermit Roosevelt - the grandson of President Theodore Roosevelt - to Tehran. Roosevelt spent a week meeting secretly with the Shah to win his support for the coup d'etat. Reza Phalavi was initially against a coup for fears that it would fail, but in light of the many concessions made by Roosevelt - including US military support for his regime - the Shah finally agreed.

The coup succeeded. The enormously popular Mossadegh was arrested, tried by a military tribunal, found guilty of treason and incarcerated in a military prison for three years. Upon his release, the Shah ordered Mossadegh to be placed under house arrest until his death, which occurred in 1967.

The US-led coup d'etat became a defining moment in the history of Iran, if not of the entire Middle East. To some extent it served as a lesson and a reminder to those who longed for greater national control over their countries' oil industries. But at the same time, by exposing what many thought of as the imperialistic aims of Western powers, the coup in Iran became a rallying point for anti-Western nationalism in the region for years to come. At the forefront of this anti-Western sentiment were two men - an Egyptian and an Iranian - whose names were to become very well known in the West: Gamal Abdel Nasser (1918 - 1970) and Ruhollah Musavi Khomeini (1900 - 1989).

Nasser's appeal lay in his willingness to defy Western powers, most notably the US, and in his fierce advocacy of Arab sovereignty and unity. In 1956 Nasser claimed Egyptian control of the Suez Canal, the vital conduit for moving oil from Iran to Europe and proceeded to its nationalization, thus precipitating the Suez Canal Crisis. In early October, the United Nations Security Council met on the matter of the Suez Canal and adopted a resolution recognizing Egypt's right to control the canal as long as it continued to allow passage of foreign ships. On October 29, 1956, however, Israeli forces moved into the Sinai Peninsula and on October 31, 1956 a joint force from Britain and France entered the Canal Zone. On November 5, 1956, the Soviet Union issued an ultimatum demanding the withdrawal of all foreign forces from Egypt, and in this the Soviets found an unlikely ally in Washington. Britain, France, and Israel reluctantly complied and gradually removed their forces, thus ending the Suez Canal Crisis.

Less visible but even more effective in shaping the Middle East was the life of Ruhollah Khomeini. After graduating from the Islamic seminary of the holy city of Qom, the future Ayatollah taught the Shariah, the Islamic Law, for many years and wrote numerous books on philosophy and mysticism. In 1963, he publicly denounced the government of Shah Mohammad Reza Pahlavi and was thereby imprisoned for 8 months. Khomeini, already a recognized figure in Iranian politics, had originally been sentenced to death, but the Shah felt that his execution would anger the common people of Iran. Upon his release from prison, the Shah ordered him to leave the country.

Khomeini initially went to Turkey but was later allowed to move to Iraq, where he stayed until he was forced to leave in 1978 by the then Vice-President Saddam Hussein. Khomeini moved to France, where he became one of the most influential opponents to the rule of the Shah, and where he further became to be perceived as the spiritual leader of all those fighting Reza Pahlavi. During his exile, Khomeini wrote a book entitled Guardianship of the Islamic Jurists, where he laid out his three fundamental beliefs: 1) that all laws in an Islamic society should be based on the laws of God (Shariah); 2) that all laws and activities of the state should be monitored by clerical authorities on Islamic Law (the Mullahs, or guardians); and 3) that Islamic countries should become republics and not monarchies. Khomeini believed that the leader of an Islamic Republic should be a faqih (an Islamic jurist, who is also a member of the clergy), who should be selected by a group of clerics. The Supreme Leader, as the post is officially called, would have absolute secular and religious authority, and could only be removed from power by that very same group of clerics.

The book, furthermore, provides an insight on the eventual political background of the Islamic Republic of Iran. In short, after the success of the revolution, Khomeini replaced the monarchist government of the Shah with a theocratic system dominated by the clergy, with the approval of 98 percent of the voters sixteen years of age and older, who were called in a referendum to determine the question of accepting an Islamic Republic as the new form of government and constitution.

The history of Iran is tied to and intertwines with Western economic policies in the Middle East, especially those of the United States. Nearly three decades have passed since the leaders of Iran and those of the US have communicated openly, and with the war in Lebanon going on the prospects of talks between the two countries seem more remote than ever. This is so because opening talks with Iran at this time would confer legitimacy on Iranian leaders who, aside from their suspected desire to obtain nuclear weapons, deny Israel's right to exist and support Hezbollah, a terrorist organization.

Additionally, many experts believe that no matter what incentives the US or the world offer, Iran is determined to become a nuclear power. This fact alone raises the specter that the US - or even Israel if aided by the US - might take military action to destroy Iran's nuclear facilities. As much as this scenario causes shudders among European and Arab states allied with America, it is indeed not that incredible or farfetched, and the odds of a military intervention in Iran increase exponentially with every passing day that the conflict in Lebanon continues, and with each and every inflammatory statement and the rhetoric of confrontation that President Mahmoud Ahmadinejad seems to be so fond of dispensing.

The Hezbollah flags that we are increasingly beginning to see in demonstrations organized by Muslim communities in London, Paris and Rome, furthermore, are yet another reminder - especially to European nations - that the confrontation in the Middle East may not be limited to the arid plains of Lebanon.

Luigi Frascati

Real Estate Chronicle


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