Expropriation

Abstract

Abstract Until 1951, Iran’s oil industry was dominated by the Anglo-Iranian Oil Company, the forerunner of today’s BP. That year, amid growing resentment of the British presence in the oil industry, Iran’s government passed a law nationalizing Anglo-Iranian’s concession. The company’s management failed to recognize signals that political change would soon force an adjustment in the company’s relationship with Iran until it was far too late. This expropriation was driven not only by the Iranian government’s demand for a greater share of the country’s oil revenue but also by a growing wave of wounded national pride inspired in part by the exploitation of Iran’s natural resources by foreigners. Anglo-Iranian’s management, led by Sir William Fraser, initially resisted Iranian demands for a greater share of its profits, despite pleas for compromise from the U.S. and British governments, the latter of which owned 51% of the company. By the time Anglo-Iranian was ready to make a deal, nationalist politicians, led by Mohammed Mossadeq, had shifted their demands. No longer content with a larger piece of the pie, Mossadeq called for the company to be nationalized. Mounting political violence and pressure forced the shah to sign a nationalization law in April 1951, officially voiding Anglo-Iranian’s concession.