All Persians Now?

On 28 May 1901, an exclusive concession to prospect for oil in Persia was granted to William Knox D’Arcy. This concession, facilitated by Antoine Kitabgi’s extensive lobbying and bribery at the Qajar court, gave D’Arcy’s team a sixty-year, tax-free monopoly on the extraction and sales of oil in Persia, alongside other significant advantages. In return, the Qajar government was to be paid an advance of £20,000, £20,000 in stock, and 16% of the Exploration’s annual profits to the Qajar government.[1] According to the seventh article of the concession agreement APOC was allowed to import construction materials free of duty.[2]

In the period between the award of the concession and APOC’s oil strike at Masjed Soleiman in May 1908, D’Arcy’s corporate interests became intertwined with Britain’s imperial interests, as D’Arcy turned his lobbying efforts from Tehran to London, drawing attention to the naval and geopolitical implications and opportunities of his concession. To little avail. D’Arcy exhausted a personal fortune made in Australian mining ventures, while his syndicate sank over half a million pounds in the venture. By 1908, with no sign of a return on this investment, the venture stood on the brink of collapse, forcing a decision to abandon operations and withdraw from Persia.[3]

WILLIAM KNOX D’ARCY

In the early years of the concession the D’Arcy Syndicate sought to improve their relationship with the Bakhtiari khans, local powerbrokers of southwest Persia, where APOC’s operations were focused. An agreement was signed in November 1905 and D’Arcy was given drilling rights in Bakhtiari territories in return for a three percent share in any company formed in their territory. Until 1920, this three percent share was deducted from the royalties promised to the Persian government. After the oil strike at Masjed Soleiman, APOC was formed in 1909, and relations between the Bakhtiari and APOC intensified. These relations were heavily opposed by the Persian government, as they believed this to be an infringement on Persian national sovereignty.[4] Through its relationship with the Bakhtiari, APOC weakened local sovereignty in Iran. By extending significant loans, APOC indebted the Bakhtiari to them, gaining considerable leverage which helped gain favourable terms in negotiations over local resources.[5]

In 1914 Britain’s and APOC’s interests became even more intertwined, as His Majesty’s Government acquired a majority stake in the company, which allowed the government full control over the exploration, exploitation and export of APOC’s reserves.[6] Mere months before this acquisition, the Royal Navy, under the guidance of First Lord of the Admiralty Winston Churchill, had decided to begin converting its fleet from coal to oil power, tying military and Admiralty interests to APOC as well.[7] APOC contributed little to the British war effort due to logistical troubles at the Abadan Refinery, and to the tendency for Persian oil to become viscous or semi-solid in cold conditions, limiting its value to the Royal Navy.

As the Great War raged on, however, the Central Powers, especially Germany, sought to disrupt APOC’s operations in order to weaken the British military. After an attack by local, German-backed groups on APOC’s Abadan refinery, the British recognized the importance of defending APOC’s operations and established the South Persia Rifles, a military unit composed of locally-raised troops tasked with defending APOC’s activities. The Persian government understandably felt that this stripped them of ‘any remaining nominal vestige of its territorial sovereignty’.[8]

In 1919, the Anglo-Persian Agreement was proposed, which essentially sought to turn Persia into a British protectorate, similar to those found elsewhere in the Persian Gulf and across the Indian subcontinent. The success of such an agreement would have accomplished Britain’s desire of a continued monopoly over Persia’s oil reserves, and entrenched APOC’s position as a bastion of British commercial and imperial interests in Iran.[9] The agreement also recognized the need to develop Persia’s infrastructure.[10]

APOC increasingly occupied itself with housing their workers, constructing railways, and general infrastructure such as roads. Even in regard to health, APOC’s medical apparatus framed itself as a civilizing force: reshaping environments and enforcing quarantine, and using public health to monitor and control bodies, spaces, and social practices both within and beyond its sphere of influence.[11] APOC thus took up tasks that, within most nation-states, belong to local and national governments, undermining traditional relations between locals and their respective governments. With these activities, APOC drew even more importance to their position in Persia, essentially acting as a ‘state within a state’.[12]

The agreement was highly controversial, and did not secure ratification by the Persian majlis (parliament). Yet APOC lost practically none of its influence in the late 1910s and early 1920s.[13] Hitherto, APOC had dealt with relatively weak governments, which were profoundly affected by the effects of the Constitutional Revolution (1906-1911) and the Great War.[14] The rise to power of Reza Khan, an army officer in the Persian Cossack Brigade who led a coup d’état in 1921 and became Reza Shah Pahlavi in 1925, brought forth a serious political challenger to APOC’s position, as he sought to centralize and modernize Iran. In his efforts to counter APOC’s privileged position and reclaim sovereignty over Iran’s national resources, he pressured the Bakhtiari khans into transferring their oil shares to the central government, breaking the relationship between APOC and the Bakhtiari.[15]

This assertive stance was intended to pressure APOC into renegotiating or even cancelling the D’Arcy concession. Yet Reza Shah’s demands to reclaim Iranian sovereignty over its own natural resources were not met. Although he succeeded in bringing APOC to the negotiating table in 1933, the resulting agreement offered relatively modest gains for Iran. In return for a 4 percent increase in royalties, the Shah agreed to extend the concession to 1993, prolonging the imbalance in power between the Iranian government and APOC.[16]

Looking more closely at the power struggle between APOC and the Persian governments might tell us more about our own situation. Are we all Persians now?

We can draw parallels between the relationship between APOC and the Persian governments and the current relationship between companies such as Amazon, Google and Meta and national governments. Attempts by governments to levy taxes or, more broadly speaking, to rein in these companies, are failing, whilst these companies continue to expand their power. The harm they cause to young people and democracy is universally acknowledged, yet they refuse to be regulated. They are even so bold as to portray themselves as moral and unifying forces in the world. Looking more closely at the power struggle between APOC and the Persian governments might tell us more about our own situation. It is like holding up a mirror that encourages us to ask ourselves: are we all Persians now?

Notes

[1] Leonardo Davoudi, Persian Petroleum: Oil, Empire and Revolution in Late Qajar Iran (Cambridge: Cambridge University Press, 2024), 15-22 , Abbas Amanat, Iran: A Modern History (New Haven: Yale University Press, 2017), 391.

[2] Davoudi, Persian Petroleum, 154.

[3] Stephen Kinzer, All the Shah’s Men: An American Coup and the Roots of Middle East Terror (Hoboken, NJ: John Wiley & Sons, 2003) 47-50.

[4] Stephanie Cronin, ‘The Politics of Debt: The Anglo-Persian Oil Company and the Bakhtiyari Khans,’ Middle Eastern Studies 40, no. 4 (2004): 1–31,4-5.

[5] Ibidem, 3.

[6] Amanat, Iran: A Modern History, 392.

[7] Ibidem, 392.

[8] Touraj Atabaki, “Oil and Labour: The Pivotal Position of Persian Oil in the First World War and the Question of Transnational Labour Dependency,” in The First World War and Its Aftermath: The Shaping of the Middle East, ed. T. G. Fraser (London: Gingko Library, 2015), 261-289, 271 , Kaveh Ehsani, ‘Oil, State and Society in Iran in the Aftermath of the First World War,’ in The First World War and Its Aftermath: The Shaping of the Middle East, ed. T. G. Fraser (London: Gingko, 2015), 191–212, 198-199.

[9] Ehsani, ‘Oil, State and Society in Iran,’ 209.

[10] Amanat, Iran: A Modern History, 405.

[11] Arman Azimi Petroleum, Health, and Power: The Anglo-Persian Oil Company and the Colonial Dimensions of Company Medicine in Iran, 1902–1931, PhD diss., CUNY Graduate Center, 2022.

[12] Ehsani, ‘Oil, State and Society in Iran,’ 193.

[13] Philip Henning Grobien, ‘The Origins and Intentions of the Anglo-Persian Agreement 1919: A Reassessment,’ Iran 62, no. 2 (2022): 278–93, 290-293.

[14] Amanat, Iran: A Modern History, 317.

[15] Abrahamian, A History of Modern Iran, 124. , Cronin, ‘Politics of Debt,’ 27.

[16] Abrahamian, A History of Modern Iran, 161 , Daniel Yergin, The Prize: The Epic Quest for Oil, Money & Power (New York: Free Press, 2008), 269-271.

Blogposts are published by TLP for the purpose of encouraging informed debate on the legacies of the events surrounding the Lausanne Conference. The views expressed by participants do not necessarily represent the views or opinions of TLP, its partners, convenors or members.