Mandarins, Paladins, and Pahlavis: the International Energy System, the United States, and the Dual Integration of Oil in Iran, 1925-1964
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MANDARINS, PALADINS, AND PAHLAVIS: THE INTERNATIONAL ENERGY SYSTEM, THE UNITED STATES, AND THE DUAL INTEGRATION OF OIL IN IRAN, 1925-1964 A Dissertation Submitted to the Faculty of the Graduate School of Arts and Sciences of Georgetown University in partial fulfillment of the requirements of the degree of Doctor of Philosophy in History By Gregory Brew, M.A. Washington D.C. May 10, 2018 Copyright 2018 by Gregory Brew All Rights Reserved ii MANDARINS, PALADINS, AND PAHLAVIS: THE INTERNATIONAL ENERGY SYSTEM, THE UNITED STATES, AND THE DUAL INTEGRATION OF OIL IN IRAN, 1925-1964 Gregory Brew, M.A. Thesis Advisor: David S. Painter, Ph.D. ABSTRACT This dissertation examines the integration of Iranian oil into a global oil system and the simultaneous use of oil revenues to fund internal economic development under the Pahlavi dynasty (1925-1979). It unites the local and global narratives of oil into a single synthesis through the interpretive tool of dual integration, which illustrates the evolution of Iran into a “petro-state” through an examination of the myriad relationships tying Iran’s government to the international energy system, the global development movement, and the Cold War policies of the United States. From 1925 to 1964, an oligopoly of oil companies sought to balance Iranian output with the rest of the world, managing price and production in order to avoid destructive competition and maximize profitability. To ensure the cooperation of the Pahlavi regime, the companies attempted to negotiate agreements based on “equitability,” satisfying the government’s ambitions through oil revenues. The Pahlavi shahs could translate this money into “oil power,” fund modernization projects, and expand the power of the central state. After World War II, the United States government became concerned that Iran’s political instability was a threat to national security. American policy-makers identified Iran’s socio-economic “backwardness” as the cause for this instability, and encouraged economic development through the use of non-government organizations (NGOs) working with the oil-based Plan Organization (Sāzmān-i Barnāmeh). The nationalization movement led by Mohammed Moṣaddeq threatened both the “local” integration of oil through U.S.-assisted development and the “global” integration engineered by the companies. Re-integrating Iranian oil by removing Moṣaddeq from power was iii a key reason for the Anglo-American coup d’etat of August 1953. Between 1954 and 1964, a central planning effort assisted by U.S. NGOs was eventually replaced by the shah’s White Revolution, while the shah worked with the oligopoly to mitigate the danger posed by the Organization of the Petroleum Exporting Countries (OPEC) to the oil status quo. Iran’s oil was integrated locally and globally, but on terms that kept the Pahlavi shah firmly in power and encouraged his regime to become more dependent on the oligopoly’s oil sales, even as it failed to achieve lasting legitimacy or real socio-economic equality. iv For Megan “What you seek is seeking you” v ACKNOWLEDGEMENTS Through the process of researching, writing and revising this doctoral dissertation, I have accumulated substantial personal and professional debts. This project would not have been possible without institutional support. Georgetown University, my academic home, provided me with not one but two research grants: the Edwin J. Beinecke, Jr. Scholarship in International Affairs and the Evan Armstrong North Graduate Research Award. Additional funds were provided by the Cosmos Club Foundation, the Rockefeller Archive Center and the Franklin D. Roosevelt Presidential Library. While visiting archives throughout the United States and Great Britain, I received excellent assistance from archival staff. I would particularly like to thank Peter Housego of the BP Archive and Patricia Rosenfield of the Rockefeller Archive Center. One imagines the work of a doctoral student to be solitary, and in many ways it is, but no dissertation is completed without help and those hours spent hunched over the archive reading room table, in the library or the coffee shop mulling syntax over espressos would have been wasted were it not for the assistance, encouragement and companionship provided by the people listed here. My first, most substantial debt is to my academic advisor and friend David S. Painter, whose cheerful encouragement and astute advice guided me through seven years of graduate school. It was David who first introduced me to the world of oil, a realm from which I have yet to escape, and it is thanks to his guidance that this project was possible. I was aided in my work by an excellent dissertation committee of Profs. Aviel Roshwald, Joseph Sassoon and Nathan J. Citino. The faculty of the history department of Georgetown University created a collegial environment in which to work. I was fortunate enough to present my work at the conference for the Society of Historians of American Foreign Relations (SHAFR) and the Association of Iranian Studies (AIS), where I vi received helpful comments and suggestions. Chats with Christopher Dietrich shaped my understanding of global oil, while Roham Alvandi offered advice on Iranian political history. Two chapters from this dissertation were published in the journals Iranian Studies and International History Review, and in both instances were immeasurably improved by peer review comments and editorial assistance. My friends in Washington D.C. offered companionship, support and the occasional beer. Chad Frazier, Alex Finn Macartney, Ben Feldman and Abby Holekamp kept me sane amidst the ups and down of academic life. During my travels, my path regularly crossed Mattin Biglari, whose willingness to chat about oil, Iran and catalytic crackers always made life on the road more enjoyable. My most important support came from my family. My parents were a constant source of love and encouragement. My siblings were always quick to pick up the phone, from as far away as Seoul, South Korea. Finally, everything I am and everything I have done or will do, I owe entirely to Megan, my best friend and shining star. vii TABLE OF CONTENTS INTRODUCTION ..........................................................................................................................1 CHAPTER ONE: THE SEARCH FOR A ‘PERSIAN PARTNERSHIP,’ 1925-1941 ................ 37 1.1 Revolution and the Rise of Rezā Shah........................................................................... 39 1.2 “Rationalization” and Sir John Cadman ........................................................................ 49 1.3 The “Partnership Principle” and the New Royalty, 1927-1929 ..................................... 61 1.4 Coping with Crisis ......................................................................................................... 72 1.5 Cancellation and a New Concession: Equitability Achieved? ....................................... 80 CHAPTER TWO: ‘WE HAVE DONE NOTHING:’ THE UNITED STATES, THE ANGLO- IRANIAN OIL COMPANY, AND THE FAILURE OF DUAL INTEGRATION, 1941-1950...99 2.1 Open Doors and Bidding Wars: the U.S. Arrives in Iran ............................................101 2.2 The Invention of Price and the Rise of Development .................................................116 2.3 Ebtehaj, Barnameh Rizi, and the U.S. Attitude in Iran ...............................................127 2.4 The Anglo-Iranian Oil Company and Iran: The Fight for Fifty-Fifty .........................143 2.5 Too Little, Too Late ....................................................................................................160 CHAPTER THREE: ‘NATIONALIZATION’ AND THE DE-INTEGRATION OF IRANIAN OIL 1951-1952.............................................................................................................................168 3.1 Mosaddeq and the National Front ..............................................................................169 3.2 Defining “Nationalization” ........................................................................................180 3.3 Isolating Iran: The Embargo ......................................................................................207 3.4 Oil Responds: the Petroleum Administration for Defense ........................................220 CHAPTER FOUR: ‘OIL-LESS; ECONOMICS, THE MORDAD COUP, AND THE RE- INTEGRATION OF IRANIAN OIL, 1952-1954 .......................................................................231 4.1 The July Uprising and Iqtisad-i Bidun-i Naft ...........................................................235 viii 4.2 Progress Without Petroleum? Point Four in Iran .......................................................249 4.3 Judging Collapse: the American View of the Oil-Less Economy and the National Front .................................................................................................................................257 4.4 The Final Attempt: November 1952-March 1953 .....................................................268 4.5 Considering a Coup....................................................................................................277 4.6 The Consortium Approach and the Façade of Nationalization ..................................287 CHAPTER FIVE: PETROLEUM, PROGRESS, AND THE SECOND PLAN: U.S.-LED DEVELOPMENT IN IRAN, 1954-1964 .....................................................................................301 5.1 Plan Redux: the Pahlavi Return to Oil-Based Development ....................................303 5.2 “What