The crazies are at it again: neocons, useful idiots, and the fearful of anything. Not that it will make a difference, but the real history of Iran’s screwing-over for more than a century is worth reflecting on.
William Knox D’Arcy (1849-1917), born at Devon, England and educated at Westminster School, London, came to Australia in 1866 with his family.
They settled in Rockhampton, Queensland where William qualified as a solicitor in 1872. He followed his father in the law and indeed initially worked with him before setting up his own practice. A decade later, three brothers who’d located a potential gold mining claim at Ironstone Mountain came to William D’Arcy for both legal advice and as a potential investor.
A syndicate was formed and mine production commenced, though not fast enough for the Morgan brothers, who sold their piece of the action to the syndicate for £100,000. The mine continued profitable, though claim-jumpers a became a problem that required D’Arcy’s skill at litigation.
D’Arcy had other mining and land interests, one of which had led to his marriage in 1872 to Elena, only daughter of Samuel Birkbeck, mining engineer.
By 1886, the syndicate became the Mount Morgan Gold Mining Co. with a share issue of one million at £1. Those shares, of which D’Arcy owned or controlled over one-third, peaked at £17/1s/- and made him a millionaire. He closed his law practice and moved back to England in 1887, intending to use his newfound wealth to establish his social ambitions.
D’Arcy bought several properties, including a London town house, where he lived well, entertaining with such extravagance that he fell into financial difficulty. The family lost considerable money in the suspension of the Queensland National Bank in 1893. False reports of the bank’s stability circulated in London and heavy English withdrawals led to the closure.
D’Arcy’s wife, Elena, died in 1897 and two years later, he found a trophy wife in Nina Boucicault (stage name), a 32 year old actress. Living the good life didn’t lessen and by 1900, D’Arcy needed a new source of wealth. Funding oil exploration in Iran seemed to be the Main Chance.
In 1901, negotiations including a £20,000 offer secured a 60-year contract to explore for oil in an area of 480,000 square miles (most of the country.) The Iranian government would receive 16% of eventual oil profits. George B. Reynolds led an exploration team to search for oil. By 1903, D’Arcy had spent £150,000 with nothing to show for it. He mortgaged his Mount Morgan shares and used the £225,000 over the next two years, and was tapped out.
D’Arcy approached the French branch of the Rothschild family hoping to effect the sale of the Iranian concession. British owned Burmah Oil Co., however, made him an offer he could not refuse: in return for the concession rights, he would receive 170,000 Burmah Oil shares, as well as a payment covering his expenses to date.
In 1908, success! The biggest oil field found to that point in history and a year later, Burmah formed a new company, Anglo-Persian Oil, of which D’Arcy, who had nearly become bankrupt in the quest, now was a board member. APOC morphed into Anglo-Iranian Oil and finally British Petroleum (BP!) To secure the controlling interest in the enterprise, the British government paid £2.2 million. The restructure removed D’Arcy from the board but he still remained a shareholder.
The Iranians should have been so lucky. Who could know better?
“Fortune brought us a prize from fairyland beyond our wildest dreams,” Winston Churchill, who became First Lord of the Admiralty in 1911, wrote later.
“Mastery itself was the prize of the venture.”
In 1901, the rivalry between Britain and Czarist Russia had at that time turned Persia into a major factor in Great Power diplomacy. Lord Curzon (q.v.), Viceroy of India, described Persia as one of “the pieces on a chessboard upon which is being played out a game for the domination of the world.
By 1912, the new refinery had its first test – and broke down. What product was processed was further of poor quality.
June, 1913: Winston Churchill presented the Cabinet with “Oil Fuel Supply for His Majesty’s Navy.” Churchill introduced the APOC shareholder measure in the House of Commons. Included details were two directors on the company’s board who would look after Admiralty interest, as well and policy and political factors. A separate but secret twenty-year contract was implemented to assure the Royal Navy got a rebate from APOC profits. Such a deal!
1914 – neutral Persia experienced invasion by British, Russian, and Turkish troops. Chaos followed with tribal uprisings and rebellions. By 1921, Reza Khan proclaimed “carpe diem” and led a military coup. Five years later, he was crowned Reza Shah Pahlavi.
A dozen years of British Navy rebates and other creative accounting had eaten well and truly into the vague 16% Iranian share.
Reza Shah had pushed modernization onto the country over the years and by 1928, forced new negotiations on APOC. This muddled through until 1932 and the worldwide depression was felt severely in Persia. Although APOC’s profits were down by 36%, the domestic decline was allegedly 76%
A provisional agreement for 1933 had been negotiated by Sayyed Hasah Taqi-zãda. When Reza Shah joined the Council of Ministers session, rage at Sayyed was followed by a demand for the negotiations file, which he threw in the fire. A day later, 27 November 1932, the official unilateral cancellation of the concession was published.
A month later, the British government passed the dispute to the League of Nations.
April, 1933. Sir John Cadman, APOC chairman, and Reza Shah came to a general agreement with details to be finalized by his ministers and APOC representatives. This was completed and passed by the Parliament on 28 May 1933 and the Shah approved it a day later. The concession area was reduced significantly, but the duration extended to 1993. As well, APOC would make a one million pound settlement of past claims – and profits would be figured on physical volume.
Persia became Iran in 1935 and AIOC began to operate. And there were thorns in the new agreement, for one, the fixed royalty which took no account of the rise of oil prices and AIOC had the say in what distribution of dividends would be. And as APOC continued to operate, the British government took ever increasing tax from the company than Iran received for its share of the oil resource.
Every silver lining has a cloud, though. Enter World War Two – and in August 11941, Great Britain and the Soviet Union invaded with a massive air, land, and naval assault. Iranian forces folded; some faded away to their homes, the less fortunate were detained by the invaders.
The British, though, were generous to Reza Shah:
Would His Highness kindly abdicate in favour of his son, the heir to the throne? We have a high opinion of him and will ensure his position. But His Highness should not think there is any other solution.
That was the Shah’s lesson for declaring neutrality. He’d refused to deport the thousand or so Germans who lived there, too.
A new breed of nationalists had gained power during the war years. Nonetheless, Reza Khan had created much improvement in the country. By 1947, the nationalists wanted a new deal on oil. Things were complicated by an expected Irano-Soviet Oil Company which the Parliament would not accept. And by now, other countries had adopted 50/50 profit sharing; add in more British accounting practices – and taxations.
Agreements were further hampered by an attempted assassination of Mohammad Reza Palavi in 1949.
Factionalism continued to unstabilize Iran and oil politics gained nationalization of the oil undustry and resources, and more. Including Dr. Moḥammad Moṣaddeq, the new prime minster.
Moṣaddeq and Shah Palavi had initially agreed about nationalization. Anglo-American influence turned the Shah, who dismissed Dr. Moṣaddeq, or tried to. Instead, the Shah left the country, an uprising in support of the Shah ended with the coup overthrow of Moṣaddeq, (TP-AJAX) the return of the Shah, and a whole new Iranian oil agreement brokered by the U.S. State Department.
And the Iranian oil story from then to today is equally gnarly.
http://adb.anu.edu.au/biography/darcy-william-knox-5882
http://en.wikipedia.org/wiki/William_Knox_D%27Arcy
http://www.iranicaonline.org/articles/oil-agreements-in-iran
http://trove.nla.gov.au/ndp/del/article/44121541
http://warisacrime.org/node/53645
