We’ll see what happens in Iran, once the dust settles from the current uprising. Meanwhile, some economic and historical information may give us a better understanding of how we arrived at a place of widespread and violent protests.
All About Oil
Iran ranks fourth in the world in terms of proven oil reserves—157.5 billion barrels—after Venezuela (300 billion), Saudi Arabia (266.6 billion), and Canada (170.9 billion). The United States is in 11th place, with 35.2 billion barrels.
U.S. foreign policy towards other nations depends largely upon whether they let us have access to the oil, which we use mostly for transportation, but also for heating, producing electricity, and manufacturing products such as plastics. In 2021 we consumed 18.78 million barrels of petroleum per day (total less 1 million of biofuels), or 6.85 billion barrels per year. We rank first in the world in oil consumption, about 20.3% of the total, with 4.25% of the world population. If we can’t import oil from other countries, our wells will run dry in five years and we might have to consider trading in the Ford Mustangs for real horses and buggies.
Moreover, we want that oil to be cheap.
Oil was discovered in Iran in 1908. By the 1920s, that country was among the top five oil producers in the world, accounting for 5-6% of world supplies. However, a British firm, the Anglo-Iranian Oil Company (AIOC), owned the entire Iranian oil industry. 82.5% of the revenues were shared between the British government and the oil company, with Iran supposedly getting 17.5%. In reality, Iran received less than that and sometimes nothing at all, since the AIOC engaged in various forms of fictitious bookkeeping.
In 1928, according to economist Cyrus Bina, the AIOC (then known as APOC) “joined with two remaining major oil companies, namely Standard Oil of New Jersey (Exxon) and Royal Dutch Shell, to form a worldwide cartel. This was the beginning of an International Petroleum Cartel (IPC) that controlled the exploration, development, refining, transportation, marketing and retailing of oil worldwide.”
Conditions for oil workers and their families were horrific. Manucher Farmanfarmaian, director of the Iranian petroleum institute described them in his memoir:
Wages were 50 cents a day. There was no vacation pay, no sick leave, no disability compensation. The workers lived in a shanty town called Kaghazabad, or Paper City, without running water or electricity… The [summer] heat was torrid …while the wind and sandstorms shipped off the desert hot as a blower. The dwellings of Kaghazabad, cobbled from rusted oil drums hammered flat, turned into sweltering ovens. … In every crevice hung the foul, sulfurous stench of burning oil…. in Kaghazabad there was nothing—not a tea shop, not a bath, not a single tree. The tiled reflecting pool and shaded central square that were part of every Iranian town… were missing here.
In 1951 Mohammad Mossadegh was elected prime minister. His administration introduced unemployment compensation and social security, ordered factory owners to pay benefits to sick and injured workers, and freed peasants from forced labor in their landlords’ estates. Most significantly, the new government nationalized the oil industry, offering 25% of net profits as compensation to the AIOC.
The British government responded with a blockade, and reinforced its naval force in the Persian Gulf. The Iranian oil industry came to a standstill. Income from that industry was reduced to almost nothing, which meant that Mosaddegh’s promised domestic reforms could not be implemented.
In 1953 the CIA engineered a coup, with the collaboration of the Shah. “As soon as the coup succeeded, many of Mosaddegh’s former associates and supporters were tried, imprisoned, and tortured. Some were sentenced to death and executed…Mossadegh was [tried and] sentenced to three years’ solitary confinement in a military prison…[and] kept under house arrest until his death.”
As a result of the coup, the oil industry was denationalized. It became the property of a consortium. The owners were the AIOC (which had changed its name to British Petroleum) with 40 % of shares, Royal Dutch Shell with 14 %, Jersey, Texas, SoCal, Gulf, and Socony with 7 % each, the French CFP with 6 %, and the remaining 5 % distributed among several US oil independents.
Given U.S. and British history with Iran, I am not surprised that relations between our country and Venezuela deteriorated after the Chavez government nationalized the oil industry. And that under Maduro, his successor, the United States imposed economic sanctions for human rights violations, curtailing press freedoms, persecuting political opponents, and supporting terrorism. Our government has not found it necessary to sanction Saudi Arabia, whose sterling record on human rights and terrorism is known to the world.
Women’s Rights and Human Rights under the Monarchy
Iranian women had participated in the constitutional revolution of 1906, when a parliament was established. But afterward, they were sent back into their homes. Haleh Esfandiari, a former director at the Woodrow Wilson Institute, says that “…not everybody went. A number of women from educated backgrounds remained in the society and began to set up schools for girls, for example, and publish women’s journals…” and developed a women’s movement. In the early 1960s, when Shah Mohammad Reza Pahlavi felt it was important to present a progressive image to the world, women obtained the right to vote and to be elected to parliament, and in the subsequent election, four women were voted into parliament (out of a total of 270 members) and two to the senate (out of 60).
Under the Shah, women were forbidden to wear the hijab. Some were pleased. Others, according to Esfandiari, felt exposed and humiliated by having to appear without a head covering in public. At any rate, they weren’t given a choice.
While women made some token gains, human rights in general declined. The Shah established SAVAK, his secret police, with the help of the CIA and Mossad, the Israeli intelligence agency. According to historian Ervand Abrahamian, SAVAK had the power to “censor the media, screen applicants for government jobs…and use all means necessary, including torture, to hunt down dissidents.” During the Shah’s reign it tortured and murdered thousands, both on the left and the right.
In Part 3, I’ll recount the events that led to the Shahs’ overthrow, how the Islamic Revolution came about, and the response of the United States.