Dundee Discussion Papers in Economics 166: The Anglo-Iranian Oil Company 1945-54: government business relationships in conflict?

‘for the purposes of the case, [the company is] indistinguishable from the government of Great Britain.’1 The oil industry has been accused of structuring markets nationally and internationally to exploit consumers in the advanced world. Thus ‘transnational firms view individual states as resources to provide conditions amenable to business’.2 Alternatively the oil majors are presented as a mechanism through which the first world exploits the wealth and resources of the third world. They have been dubbed western governments’ willing ‘vehicle of the national interest’ on the understanding that, in international commercial oil matters, a policy of economic liberalism, i.e. no direct government involvement, would be pursued in return for the companies’ active participation in the promotion of their government’s international interests.3 This paper examines the relationship between the Anglo-Iranian Oil Company, later to become British Petroleum, during the period when these tensions were at their greatest. The period from the end of World War II to the retrieving of AIOC’s major oil source, the Iranian oil fields in 1954 provide a clear demonstration of the co-operation and conflict, agreement and tensions between the British Government and the company. This paper examines the degree to which the oil company was successful in controlling its environment. In particular the paper asks whether the British government was simply a malleable institution captured by transnational capital, or, was the Anglo-Iranian Oil Company, AIOC, merely an expendable firm whose disappearance would not have had severe repercussions for the rest of the oil industry? The business government relationship will be shown to have involved both co-operation and conflict, agreement and hostility. Nevertheless it remained strategic for both parties based upon mutuality of interests.1 Explanation given by Judge Kirkland of the U.S. Federal District Court for quashing the subpoena issued against the Anglo Iranian Oil Co., by the U.S. Justice Department during anti-trust investigations. Times, 16 December 1952. 2 G.P. Nowell, Mercantile States and the World Oil Cartel 1900-39, (New York 1994), p.286. 3 D.S. Painter, Private Power and Public Policy, (1986), p.208.