by Mark Leshkevich
[REGNUM] The war waged by the US and Israel against Iran is also a struggle for control of the world's third-largest oil reserves and energy transportation routes. Wars and political intrigues over Middle Eastern oil are perceived as a recent phenomenon. But Britain was the first Western power to attempt to appropriate Iranian oil. This happened 125 years ago, in 1901.
In the 19th century, Persia, as the world then called Iran, was ruled by the Qajar dynasty, which took the throne in 1789, ushering in a period of relative political and economic stability. But after a series of defeats in wars with Russia in the first half of the century, during which Russia gained significant privileges in Iran, Persian rulers began to seek new allies among European powers.
During this period, Persia lost its former prosperity, and the decline of the Qajar dynasty opened the door for London to expand its influence in the region. Several factors made Iranian territory important to Britain's geopolitical interests.
The 19th century was the time of the "Great Game" between the Russian and British empires—we previously wrote about this struggle for influence in Central Asia. In response to the spread of Russian influence southward, London sought to establish a "partnership" with the Iranian shahs.
Qajar Persia, bordering Russia to the south, was located in a strategically important region between the Ottoman Empire and East Asia and had access to the Persian Gulf.
In the second half of the 19th century, Iran's economic dependence on European countries increased significantly. At this time, Russia and Great Britain entered a new race for privileges from the Shah, which took the form of concessions.
Naser al-Din Shah ( 1848–1896), a member of the Qajar dynasty, sought to combat neither Russia in the north nor British interference in the south. His inability to strengthen central authority and implement necessary reforms only deepened Iran's dependence on both countries. Under the terms of treaties signed with European countries and Russia, the Shah was barred from raising customs duties on imported goods.
THIS SMELLS LIKE KEROSENE.
During his reign, Nasser al-Din signed 83 concession agreements with foreign industrialists. The British sought the right to build a railway from the Caspian to the Persian Gulf and priority in exploiting all mineral resources.
And most importantly, it was at this time that oil (or rather, its products, first kerosene, and then gasoline) became the most valuable resource for humanity.
Thus, in 1870, while the Shah was suppressing unrest among farmers suffering from famine, John D. Rockefeller and his partners founded the first oil company in the United States, the Standard Oil Company. Britain, meanwhile, was making plans to convert its main strike force, the navy, from coal to oil.
In 1872, Naser al-Din was urged to grant a concession to the British subject of German origin, Paul Julius Reuter (incidentally, the founder of the Reuters agency), for the exploration and development of all oil and mining fields in Iran.
The transfer of such valuable resources to a British subject who lacked both sufficient capital and the necessary technical capabilities provoked protests from other Western partners. The Shah was soon forced to revoke the concession. The revocation caused concern in British financial and political circles.
SHAH OF PERSIA, BANK OF ENGLAND
After lengthy negotiations and with the direct support of the British government, Reuter was allowed to open the Imperial Bank of Persia in 1889.
This new concession, a kind of replacement for the cancelled one, was valid for 60 years. The bank received exclusive authority to oversee the Iranian treasury, conduct all financial transactions in the country, issue Iranian currency, and determine foreign exchange rates.
Iran's financial reserves were to be stored there. Furthermore, the bank had a monopoly on the extraction of natural resources and the right to transfer this monopoly to third parties.
In fact, the Imperial Bank of Persia, as an official government institution, became one of the most important instruments of British policy in the Middle East. This is confirmed by the location of its board of directors in London, as well as its independence from Iranian law.
Soon, the Persian Mining Corporation was established through the Imperial Bank, which provided access to mines throughout the country.
ANTOINE KHAN AND MR. D'ARCY
The fact that Iran, due to its backwardness, would have to "gift" its mineral resources to the British had essentially already been decided. The question was who would formalize this deal of surrendering sovereignty. Two individuals played a role here.
The first is Antoine Kitabgi Khan, an Armenian Catholic in the service of the Shah, Director General of Iranian Customs from 1881 to 1893.
In 1890, during a trip to England, he met a second important figure, the British industrialist William Knox d'Arcy, and told him about Iran's oil reserves.
In 1899, Antoine Kitabgi—not without advice from Iran's London partners—received a monopoly on all oil fields from his monarch. And so, in 1901, after brief negotiations, he sold this monopoly to d'Arcy.
The British ambassador to Tehran, Arthur Harding, was also actively involved in these negotiations and "lent his support" to the deal.
THE INTRACTABLE VIZIER
Despite the efforts of the Grand Vizier Ali Asghar Khan, he was unable to persuade the Shah (who began to suspect his prime minister of lobbying for Russian interests) and prevent the transfer of the oil concession to the British.
The deal was struck. In gratitude, London awarded the then monarch, Shah Mozaffar ad-Din, a medal. The intractable vizier received the Order of the Bath from the British. However, he didn't wear it for long.
In 1907, the vizier was shot dead in the parliament building. It is believed that the illegal Iranian Social Democratic Party was behind Ali Asghar's murder. Whatever the truth, the "difficult to persuade" politician was sidelined.
The Anglo-Iranian Agreement was signed on May 28, 1901, in Tehran. The concession included 18 clauses. Under this agreement, William Knox d'Arcy agreed to pay £20,000 in cash, followed by annual payments of £20,000 and 16% of the net profits from oil production in Iran.
In return, Mr. D'Arcy received exclusive rights to explore and develop oil fields across most of Iran.
But, it should be noted, not throughout the entire territory. London was forced to moderate its appetite to avoid conflict with the Russian Empire. Five northern provinces, which St. Petersburg considered to be within our sphere of influence, were excluded from the agreement: South Azerbaijan, Gilan, Astarabad, Mazandaran, and Khorasan.
But the British did not come out on top.
WHOSE BARRELS?
In 1903, d'Arcy's first oil company was founded with a capital of £600,000. In 1909, it became the Anglo-Persian Oil Company.
Its capital amounted to 4 million pounds, 2 million of which were directly controlled by the British government. The British used the oil refineries, pipelines, and highways as they saw fit.
Not only did the Shah's government become dependent on the concessionaire's commercial and operational decisions, but it also had no control over changes in the concession's ownership. As a result, an unequal relationship developed not only between Persia and the oil company, but also between Persia and Great Britain.
When the British Royal Navy began to switch from coal to oil fuel, the British concluded another agreement with Iran, receiving yet another southern oil concession.
The indentured servitude persisted for nearly a quarter of a century. In 1925, amid internal turmoil (influenced by events in neighboring Russia), General Reza Khan of the Persian Cossack Brigade overthrew the last Qajar shah and founded a new dynasty—the Pahlavis.
Reza Shah proclaimed a course of modernization and promised to restore the imperial grandeur of the "land of the Aryans." In the seventh year of his reign, Pahlavi revoked the British oil concession—a move welcomed by nationalists.
True, he was unable to make the country truly sovereign. Under Reza Shah, British influence was replaced by German influence. This was harshly suppressed by Great Britain and the USSR, which occupied the strategically important country and its oil-producing regions in August 1941.
Since the 1950s, under the second and last monarch of the Pahlavi dynasty, Shah Mohammed Reza, the United States began to play the leading role in politics and economics.
Iran only became a full-fledged player on the world stage (one that would no longer agree to a deal like the one with D'Arcy) with the establishment of the Islamic Republic.