September 2008, Nos. 48&49

Special Report: Iranian Oil Industry Turns 100

Dr. Mohammad Ali Movahed

Just in the same way that oil has been woven into our political and economic history, the name of Mohammad Ali Movahed is woven into history of the Iranian oil industry. If it were not for his efforts, the story of the black gold would have been buried in the minds of researchers. He managed to shed some light on hidden aspects of oil 100 years after it was discovered by writing his book, Agitated Oil Dream. The preface of his book reads, “Oil is a sign of agitations and conflicts. Woe betides those who dream oil.”

Movahed has thus far published three volume of the “Agitated Oil Dream”. The first volume focuses on the oil nationalization movement under the late Dr. Mohammad Mosaddeq and the second book is continuation of the same story under General Zahedi as prime minister. The first volume covers Iran’s history before the coup d’état of August 19, 1953 while the second book covers developments following the coup up to the fall of Zahedi. The third volume is entitled “From August 19 Coup d’état to Fall of Zahedi” and gives complete explanations about a 20-month period from the coup up to the fall of General Zahedi. This is for the first time that classified information and details of consortium contract are made public. The first volume has been published three times and the third volume has been hailed by researchers on the Iranian history. It has been published concurrent with the second editions of the first and second volumes. Belated publication of the third volume indicates the importance that has been attached to details by the author.

The sole social movement which took place in the name of oil was the oil nationalization movement in the second half of the 20th century.

Explaining about how information was collected for compilation of the books, Dr. Movahed says, “I did not have access to exclusive documents and mostly relied on documents available at the British Foreign Office and documents of US State Department. Of course, I have availed of some oral memories like those retold by the late Kazem Hasibi, an oil expert under the Mosaddeq government. I always wondered why the oil nationalization movement failed.”

Undoubtedly, superiority of “Agitated Oil Dream” is a result of scholarly spirit of its author. When discussing Mosaddeq, he writes, “It would have been better for Mosaddeq to accept the last proposal of Churchill and Eisenhower. It was not totally in line with the nationalization of the oil industry, but it would have been much better than what happened some years later.” In a pamphlet which Movahed wrote after compiling the book, he has noted that a glance at contemporary history of Iran would show what opportunities have been lost. The oil nationalization movement was one of them. The coup d’état of August 19, 1953 dispelled all hopes overnight. The author accepts that the coup d’état greatly damaged democratization process in Iran, but was Mosaddeq able to predict that? Mohammad Ali Movahed maintains that a major lesson to be learnt from history is that politicians should avail of opportunities. Otherwise, the situation may get out of control. Nothing is eternal. Therefore, there is no reason why we should insist on the same thing forever.

Movahed has announced that another volume of his book will be published on the occasion of 100^th anniversary of the Iranian oil industry saying, “The new volume will cover history of the first 50 years of the Iranian oil industry.”

The sole social movement which took place in the name of oil was the oil nationalization movement in the second half of the 20^th century. A more accurate approach will reveal that all important events of the past 100 years in political, social, economic, industrial, and even cultural fields have been directly or indirectly affected by oil. In short, the Iranian history has smacked of oil since that industry was launched and democratization as well as development process of the country has been influenced by oil policy and fluctuations in oil revenues.

What bitter experiences you are talking about. What countries you are referring to? The United States was the world’s biggest oil producer until 1970s and when there was an oil shortage crisis in world markets, it compensated for the shortage by raising its oil output. This is also true about Britain and Norway and they have never had any bitter experiences. Economic rents resulting from oil can be prevented and controlled by adopting a rational approach just in the same way that other countries have done so. Under present circumstances in Iran, an oil-free economy is nothing but a delusion. Iran earns about 80 billion dollars per year through oil sales and an Iran without oil would be delusional. It cannot be realized in the real world. So, why we are wasting our time on it?

It is obvious that oil contracts that are signed under imbalanced conditions will damage independence and sovereignty of the country on which that contract has been imposed. Such contracts are usually signed under conditions of political deadlock and when the oil-rich country needs money under unfavorable global market conditions. A desirable development which was in line with the spirit of oil nationalization movement occurred years after demise of Dr. Mohammad Mosaddeq according to the law which was approved in 1973 and subsequent contracts. That development was owed to fundamental changes in relations between oil exporting countries and international oil companies.

I don’t know what do you mean by crisis? If you mean Iran, the most important crisis our country faced was during the oil nationalization movement when our oil installations remained idle for three years and Iran was experiencing difficult economic conditions, was boycotted by oil giants and their respective governments, and was also grappling with various plots aimed at overthrowing the government of Mosaddeq. The most important international crisis was the oil shock in late 1973 whose details have been explained in the book, “Our Oil and its Legal Issues”.

This is not a clear-cut relationship. There may be oil revenues in the absence of justice and freedom and instances of this can be seen here and there. On the other hand, justice and freedom may not be necessarily accompaniments of oil revenues. Also, oil revenues, freedom, and justice may coexist in a single country.

Oil has tied our fate to that of the industrial world. We cannot get along without oil revenues just in the same way that the industrialized world cannot fare without oil. Our isolation was a spin-off of engagement in struggles resulting from globalization.

Unfortunately, this question is ambiguous to me. You can never compare threats to opportunities. Every opportunity may potentially turn into a threat it is not taken advantage of in a proper manner. On the opposite, good management may turn threats into opportunities. May God protect us against dangers resulting from the loss of opportunities and ignorance of threats!