Notes on Yergins writings

I figured it wouldn't hurt to put my notes on our assigned Yergin readings, and some of the Professors personal works we're reading, that go along with our research on MENA; I'd very much like to hear anything you've picked up from his works as we read them too if you've got time to articulate your thoughts. I always love hearing what other people take away from the same things I'm reading; just to see if there's anything I've completely overlooked or was wrong in my thought of what a particular section was about etc. I'll continually try to make some time to comment throughout my readings. I want to read some of these other chapters and put some notes on here too, this book is an excellent resource, I love it.

And I'm sure we can come back at the end and use these notes in our research paper.



"Part of the hatred of Anglo-Iranian [Oil Company] was fueled by the battle over oil rents. Between 1945 and 1950, Anglo-Iranian registered a €250 million profit, compared to Iran's €90 million royalties.The British government received more in taxes from Anglo-Iranian than Iran did in royalties." (Yergin, 2009 pg. 433)

Yergin explores the deep-seeded hatred most Iranians had for foreigners in-particularly the British, in the first few pages of his chapter ''Old Mossy' and the Struggle for Iran." explaining it was a culmination of; the chaos between Ayatollah Seyed Kashani's Islamic fundamentalists and the incumbent Shah Mohammed Reza Pahlavi, widespread corruption, international immediate and underlying threats, assassinations and attempted ones, and the need for a scapegoat: the British. A scene that would only continuously deteriorate during WWII and after, until increasingly worry about the instability of Iran and the security of the Persian Gulf probed the United States, the British, and the Soviet Union to clash heads. And especially the British and the company of which they owned 51% of, the privatized oil giants Anglo-Iranian Oil Co. And eventually between the Iranian people and the Anglo Iranian Oil Co.

"...[In] the summer of 1949, Anglo-Iranian was forced to negotiate with the Iranians a Supplemental Agreement-- supplemental to the revised 1933 concession. The new proposal provided for a large hike in royalties, as well as a big lump-sum payment." (Yergin 2009, pg. 435) Things quickly went sour and the Persian Parliament denounced the agreement and demanding nationalization of the oil giant company. A prominent pro-British politician was assassinated, and the Prime Minister resigned .
"The Shah nominated General Ali Razmara, the Army's Chief of Staff, as the new Prime Minister... Razmara sought to distance himself from the Shah and to develop authority of his own." (Yergin, ibid.) Fearing that the USSR was increasingly close to establishing their hegemony, the United States and British saw Razmara as the "last chance" at maintaining their own hegemony and attempting to keep a resilient grasp on the Persian Gulf. And if things couldn't get anymore agitated, in the same month North Korea invaded South Korea.

After the deal George McGhee, the Assistant Secretary of State for Near African Affairs, brokered with Aramco to split the profits 50/50 between Aramco and Saudi Arabia, Iran quickly started to increase it's verbal attacks on Anglo Iranian and calling for nationalizing of the industry. Razmara spoke out against it, and days later was murdered shortly after the Minister of Education was murdered as well. "...[O]n April 28th, 1951, the Majlis chose Mohammed Mossadegh, who was by now the number-one foe of Anglo-Iranian, as the new Prime Minister, with the specific and wildly popular mandate to execute the nationalization law." (Yergin 2009, pg. 437)


This eventually led to economic warfare against Iran as Yergin points out: "The British managed to mount an embargo by threatening tanker owners with legal action if they picked up 'stolen oil'.In addition, Britain embargoed goods to Iran, and the Bank of England suspended financial and trade facilities that had been available to Iran."(Yergin 2009, pg. 444)

Thus the British started to weigh their options: "The inland oil fields were too remote to be easily secured, the Cabinent concluded, but the island of Abadan, site of the world's largest refinery, was quite another thing; it made a much more reasonable target.... Perhaps a quick, strong show of force would be enough to restore a sufficient measure of respect and transform the situation." While the US was afraid this would give the USSR a reason to pull Iran under the grasp of the Iron Curtain. (Yergin 2009, pg. 440) There was room to believe that if Iran could get away with it, the other ME countries will assume they can and "The next thing might be an attempt to nationalize the Suez Canal." (Yergin, ibid.)

While the US and Britian were trying to negotiate a new deal: "What mattered to Mossadegh, far more than the oil market or international politics, was how the whole affair would play in domestic politics and how his various rivals on both right and left, as well as the Shah's supporters, would respond. He particularly feared the Moslem extremists, who opposed any truck with the foreign world. After all it was only a few months since General Razmara had been assassinated by a Moslem fundamentalist." (Yergin 2009, pg. 443) In the end those negotiations failed, for that simple fact.

In the end after the failed attempts at talks, Britain heavily weighed the option of using force to obtain Abadan Island, they decided against it. "In retrospect, some would see the public threat to use force in the first months of the crises, and then not doing so, as the real beginning of the end of Britain's credibility and position in the Middle East." (Yergin 2009, pg. 445)

The British on the island were then subsequently exiled to Iraq. "The first of the great Middle Eastern oil concessions was also the first to be summarily canceled." (Yergin 2009, pg. 446)

"The Shah felt powerless in the face of Mossadegh's popularity. 'What can I do?' he said to [an] American ambassador. 'I am helpless.'" (Yergin 2009, pg. 448)


It became increasingly apparent that Mossadegh was not going to work with Britain or the US and was growing closer to the Soviet Union amidst the economic destruction of Iran. In fear that there would be a domino affect of Communism in the ME a coup or "counter-coup" was planned. "General Fazlollah Zahedi, loyal to the Shah, would take the lead in challenging Mossadegh. The two Western countries believed they were not supporting a coup -- that was what Mossadegh was carrying out -- but rather a counter-coup by the Shah and Zahedi." It initially failed after Mossadegh was informed of the plan; but support for the Shah grew and riots broke out with the support of defecting military units after the General held a conference exclaiming the Shah's wishes. "By the end of August 1953 the Shah was back on his throne, his new Prime Minister was in power, and Mossadegh was under arrest. And the statues of the Shah's father toppled by the Mossadegh supporters were being re-erected." (Yergin 2009, pg. 451)

So then naturally the problem arose how to go about reintroducing Iranian oil back into the global market without reviving the Anglo Iranian Oil Co. which would be political suicide and start the vicious cycle over again. "The solution that Hoover [Jr.] would pursue had become the common American prescription and one the British government had considered: a consortium in which Anglo-Iranian was camouflaged in the midst of a number of companies, several of them American." Although American oil companies were weary of the dangers associated with operations in Iran; "The four Aramco partners had more than enough petroleum in Sadi Arabia to meet their requirements for the foreseeable future; they were making large capital investments there. Why invest in Iran for oil they did not need? Moreover, who needed the aggravation of dealing with the Iranians and their unstable domestic political situation?" (Yergin 2009, pg. 452)

The Russian "pressure" on Iran mixed with the religious extremist and nationalist posed a very serious risk for oil companies, but with such a vast amount of resources and a failing economy someone had to start operations regardless in the eyes of many. "...If Iranian oil did not move, the country would collapse economically, and it would fall, one way or another, into the Soviet camp. That would, in turn, threaten the rest of the Middle East -- specifically, Saudi Arabia, Kuwait, and Iraq -- and the concessions therein." (Yergin 2009, pg. 453)


In the midst of trying to get these oil companies to work together in Iran; the U.S. "...government was bringing a giant antitrust case against the major oil companies-- the very same companies that it was seeking to push into the new consortium to bolster Iran." Targeting companies involved in the "international petroleum cartel" which was "...exactly the sort of business relationships that the State Department was now promoting for Iran." France, the British, the Dutch, the oil companies and others attacked the hypocrisy; claiming it will help nothing, if anything it will further the Russians grasp on the oil industry."Washington would champion the companies and their expansion in order to promote America's political and economic interest, protect its strategic objectives, and enhance the nation's well being.... these same companies were subjected to populist assaults against 'big oil' for their allegedly greedy, monopolistic ways and indeed for being arrogant and secretive. Never before, however, had those two policies come together in such sharp and potentially paralyzing collision, with an outcome that could have momentous economic and political consequences."The FTC Federal Trade Commission eventually obtained company documents detailing the international relationships among these oil companies.

Their report infuriated the Department of Defense, the CIA, the State Department, the oil companies, France, the Dutch, the British and so on, of whom these governments would urge the companies not to pay any attention to these investigations. Whilst they are trying to get them to invest in Iran's oil production. If prosecutions were made, there wouldn't be any hopes of having American corporations in Iran; but in the end President Truman authorized the investigation in June 1952. And then called it off on January 12th, 1953 with less than two weeks left in his Administration, to be replaced with a "civil action" filed by the Eisenhower Administration. But the companies were obviously not going to proceed to Iran until they were in the clear. The National Security Council issued a directive to the Attorney General saying "the enforcement of the Antitrust laws of the United States against the Western oil companies operating in the Near East may be deemed secondary to the national security interest." Eventually in January 1954 they both gave the oil companies the green light to proceed. (Yergin 2009, 453-457)


Members of the new consortium: Anglo-Iranian, the four Aramco partners: Jersey, Socony, Texaco, and the Standard of California, Shell, Gulf, CFP a French company and the American and British governments. (Yergin ibid.) Already the major oil producers in the Middle East, it seemed fitting for them to be in the coalition. "During the years that Iran had been out of the world oil market, production in neighboring countries had increased dramatically, and it was evident to all concerned that the surging output in the region would have been reined in to make room for a resumption of Iranian exports." (Yergin ibid.) Fearing another uprising the Shah was increasingly resilient in his negotiations, which proved to be of further difficulties to the coalition.
Eventually the Shah signed an agreement on October 2, 1954 between the National Iranian Oil Company, and the consortium of oil companies. "Under this new deal, Iran's National Iranian Oil Company would own the country's oil resources and facilities. But, in practice, it could not tell the consortium what to do." (Yergin 2009, pg. 458) Eventually "...each of the American companies surrendered 1 percent to a new entity called Iricon... composed of nine independant American oil companies, among them Phillips, Richfield, Standard of Ohio, and Ashland."


"With the establishment of the Iranian consortium, the United States was now the major player in the oil, and the volatile politics, of the Middle East." (Yergin 2009, pg. 459)

Since then a lot of these companies have seized to exist but that was quite a lot of typing and I am spent. :)

Yergin, D. 2009. "The Prize: The Epic Conquest for Oil, Money, and Power." Free Press. New York, NY.