The 1926 Turning Point: Oil Encounter in Abadan


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Author: Kaveh Ehsani, Leiden University 
[ From “The social history of labor in the Iranian oil industry : the built environment and the making of the industrial working class (1908-1941)” ]


The short decade after WWI witnessed the consolidation of the oil industry in Iran. The interlude was a revolutionary turning point on many scales during which all the main social actors in the making of the oil complex were transformed through abrasive encounters with each other, as well as with the larger transnational forces that have been discussed in previous chapters. Although the consolidation of the oil complex was an ongoing process, I have taken the year 1926 as a symbolic but significant turning point when the new trends in the oil complex took a turn toward being institutionalized in significant ways. By this date a number of the important general outlines of the oil complex in Khuzestan had emerged with some clarity, even though frictions and re-adjustments continued and the oil industry kept changing in response to the forces of politics, the immense technical challenges bedeviling the industry, the vagaries of the markets, shifting geopolitics, persistent labor issues, and an ever growing range of practical difficulties and obstacles. The year 1926 was the coronation of Reza Shah, and the juncture when the Iranian central government began to move more confidently to impose its direct sovereignty over Khuzestan. With the increasing retreat of the British government from direct interference in southern Iran APOC had to rethink its positions. Throughout the preceding months the Company concluded a major policy review of its operations in Iran, aware that it was entering a new phase and an unexplored territory where it had little options but to reconfigure its relations with the Iranian government, its employees, and the local society in Khuzestan. The population of Abadan, a growing multitude of bewildering diversity, some local indigenous, others migrants from the northern borders of the Persian Gulf and the Zagros highlands, or from more distant places like India, the Caucasus, or inland cities of Iran, had to find ways of accommodating with each other, as well as the increasingly intrusive bureaucracy and the hardnosed Oil Company. They had to devise individual and collective strategies of negotiating with the enormous material and social challenges they faced in an unfamiliar and hostile new place, with its alien rules and increasingly impersonal and money-based relationships. Some had come to work for wages in the oil facilities; others had been pushed there following the demise of their former social and communal modes of life due to warfare, famine, or the dislocations wrought by oil capitalism. Oil was the direct or indirect reason why all of these social actors had converged on Abadan, but it was the city itself that was the stage for their encounter. The frictions between these social actors shaped the urban space of Abadan; and in return it was this built urban environment that reflected and molded the social life that oil was materializing there.
Contrary to the conventional historiographies of the oil industry, the institutionalization of the oil complex in mid 1920s’ was not accomplished by the sovereign actions of any single actor, regardless of how powerful they were, but was the outcome of the difficult, unequal, and conflict-ridden relations between them all, set within a transitional global conjuncture. Understood in this way, we may avoid the usual pitfall of seeing the social history of oil as one more instance when ‘the global’ determines the local; or producing a reverse determinism that believes the local is ultimately what matters most. Rather, the challenge is to unearth how ‘the local’ was integral to shaping the macro processes that were revolutionizing the world after WWI (chapter 1).
In previous chapters I have attempted to demonstrate that the major actors in the drama of oil in Iran did not appear on the scene ‘ready-made’; their historical development and the course of their actions were neither predictable nor predetermined; and none of them were the sovereign authors of their own history. Rather, these social actors and institutions were made through relations that were contextual and situated historically and geographically. In this chapter I will continue to investigate this history at a local level, by further exploring how the main social actors in Iran’s oil complex were made and remade through their frictions and interactions with each other, in specific places like Abadan, as well as with larger processes at work in the larger world. This was equally true in the case of the colonial superpower the British Government and its Iran policies, as it was for the upstart Iranian state, the emerging corporate oil giant APOC, the heterogeneous population of oil areas like Abadan, and the local magnates in southern Iran such as the Bakhtiyari Khans and Sheikh Khaz’al who witnessed their local autonomy and social base rise and then fall during this pivotal era. The fortunes and misfortunes of
these social actors were shaped in constant relation with each other, through what Amitav Ghosh has aptly called ‘the oil encounter’ (see chapter 1). The oil encounter in Abadan during the first quarter of the 20th century saw the river island go with breakneck speed from an arid agrarian stretch of land in a river delta to an oil boomtown at the center of the emerging global economy. It went from the hinterland of a peripheral province to a strategic border town between two nation states, one of which was a new proto-colonial invention, Iraq[1]. By mid-1920s Abadan was crisscrossed with pipelines, shipping docks, and refinery facilities; but also with teaming slums populated by thousands living in horrifying conditions. The elimination of the local magnates and the undermining of the social and political orders they represented had created a vacuum in managing the rising social problems that urgently needed to be addressed. At the same time, the new central government and APOC were now confronting each other directly, for the fist time, in the same location. Both had to deal with the pressing and completely novel material challenges and social expectations of a heterogeneous population, in an unfamiliar territory, and through untried ways. For APOC and the Iranian state this new urban population was a resource as well as a burden… and even a potential political threat. It was a population that needed to be managed, socialized, and assimilated. From the perspective of the Oil Company the growing population of Abadan was the potential raw material for the production of surplus value in oil. It was the necessary reserve army of the unemployed, desperately in need of being hired for money, while their numbers kept a downward pressure on wages. However, the industrial requirements for time discipline, coordinated work habits, and familiarity with technical skills were sorely missing among most of the urban migrants who had recently left pastoral and agrarian rural lives on the shores of the Persian Gulf or the Zagros highlands. At the same time, the horrid living conditions in the boomtown were a barrier to the attraction of the required better-qualified workers from abroad, as well as from elsewhere in Iran. Deadly epidemics were a constant threat, there was no public social life to speak of, and poverty and destitution created fertile ground for political discontent and subversive resistance, not to mention devastating epidemics.

Having created the oil boomtown, the Company was also aware of the repercussions of the negative public image that the horrid material conditions were projecting both inside Iran, as well as internationally[2].
APOC’s response and its justification for its lucrative oil concession, one that it repeated regularly, was to eulogize its part in creating a global industry that was bringing tremendous wealth to Iranians. However, neither its financial dealings with the Iranian government, nor its labor hiring practices, or the living conditions of actual Iranians living in the areas under its control provided convincing evidence that this was the case. By the middle of the decade, APOC, a nominally private corporation that was majority owned by the British Government, and which always claimed that shareholder dividends and market performance were its priorities, had to shift reluctantly toward accepting responsibilities and commitments to a range of ‘social’ issues that nominally had little to do directly with the business of oil capitalism, such as public education, housing, public health, retail provisions, social entertainment, public relations, leisure activities, urban amenities, municipal infrastructure, and urban management.
I refer to this shift toward the adoption of a range of social policies by APOC, as well as by the government bureaucracy, as ‘reluctant paternalism’, because of their top down authoritarian approach to urban and social improvement that were eventually adopted with hesitation, plenty of haggling, and a desire to press the burden onto someone else. These social policies were explicitly programs of social engineering, intended to undermine the dangers of political discontent and subversion, but to also create contended and loyal employees, as well as patriotic and docile citizens. As we saw in the previous chapter this engagement with the social reproduction of labor power was not exceptional to Abadan but was integral to the wider global transition to Fordism and to the adoption of social welfare measures by states, professional classes, labor activists, and capitalist corporations in the interwar era. In the same vein, the emergence of reluctant paternalism in post war Abadan was both an extension of this wider trend toward accommodating labor and managing social conflicts, but also a response to geopolitical shifts in the region, and the specific challenges emerging in the oil geography of southern Iran. The social question in Abadan became an equally pressing issue for the Iranian state. While Reza Shah’s modern army was devouring the meager annual budget and putting down regional resistances, eliminating provincial magnates, undermining local autonomies, and enforcing its authoritarian modernization, it was also discovering the need of a nominally “constitutional state” to acknowledge certain novel public expectations that had been irrelevant to the absolutist Qajar state. The centralized nation state that was being erected under Reza Shah intended to mould and shape the heterogeneous populations as its modern and homogeneous Iranian citizen-subjects. Toward that end it began its work by establishing new institutions of education, with Persian as the obligatory national language. It moved to formulate a new territorial imaginary of the nation-state based on he historical reconstructions of pre Islamic Imperial Persian grandeur, aided by recent discoveries in the new discipline of archeology. It erected modern governmental institutions of census taking, public health, tax collection, standardized bureaucratic record keeping, policing, municipal management, the registration of individual vital data as well as properties and commercial transactions, etc[3]. It imposed uniform dress codes for men and women to force them out of traditional garbs and into modern European style attires, fabricated in national textile factories. It began to force pastoral nomads to settle, and attempted to eliminate the autonomous political and military power of tribes and landlords by declaring communal land as exclusive state properties[4]. The coercive intrusions of the bureaucracy into everyday life, and the militarized integration of populations in the border regions were justified in the nationalist language of belonging to a common motherland.

The paradoxical reverse side of the coin was the unavoidability of ignoring certain public demands made in the name of patriotism, citizenship, and national belonging against purported abuse by foreign outsiders. As a result, when the population of a city like Abadan would call upon the state to protect them from destitution or injustice caused by the foreign owned Oil Company, to ensure that employment in oil would go to Iranians and not to foreigners, or to intercede on their behalf for improvements in their dire living conditions, the state had little choice other than to respond, even though it was itself partly responsible for the dislocations that had forced people to move to Abadan in the first place. The flurry of social activities in Abadan caused friction between the Oil Company and the central government and its local administrators and representatives, who felt that the company was indeed responsible for assisting in improving social conditions. Their rational was that Abadan had been erected as an urban place to serve the Oil Company, and therefore it had to take responsibility to improve the town’s state of affairs. At the same time, and paradoxically, state officials felt that the decision-making power and the management of urban affairs ought to fall within the purview of the central government: What would be the point of establishing municipal bureaucracies if the Company continued to remain in charge? In Khuzestan, in particular, with its long history of British intrusion and domination in southern Iran through its local allies, the issue of who ought to be responsible for and in charge of social matters had great political sensitivity, especially for the central government who remained always suspicious of separatist plots on its borders, and particularly so in Khuzestan. This ongoing struggle over the boundaries of sovereignty between the bureaucracy and the Oil Company played a defining role in shaping the oil encounter in Khuzestan; and to this day characterizes the dynamics of the oil industry in Iran. 

For the new central government, the oil operations in Khuzestan represented a major source of financial revenue and a strategic asset, but also potentially an existential threat. Reza Shah’s rule, as was discussed in Chapter 2, was consolidated within the complex historical dynamics of Anglo-Iranian relations and the strategic balance of power between Iran and its neighbors. From Tehran’s perspective Khuzestan was always one step away from British-instigated separatism, similar to Kuwait or to Bahrain, an Island that Iran dubiously claimed as its own territory; or to Iraq, a newly patched together nation state that Britain had created on its western border. Iran refused to recognize Iraq well into 1920s over continued border disputes, especially regarding the Shatt al-Arab river and the ownership of water resources and oil deposits in the border areas. Other major bones of contention included the status of Iranians who had been long residents of Mesopotamia, the fate of Shi’a holy places, the citizenship of Arab tribes straddling the now rigid national borders[5], and the legitimacy of Faisal as an imported monarch. The bloody repression of Shi’a rebellions in southern Iraq after the war, the emergence of ‘the Kurdish question’, and the significant continued British military presence in Iraq kept relations tense and Tehran highly concerned with the situation in its southern provinces and border regions[6].
Under these circumstances, all APOC activities in Khuzestan were treated as highly suspicious, while at the same time the state was keenly aware of its own limits in funding social works or mustering the manpower and expertise to manage it. Furthermore, as the analysis in this chapter will reveal, there was gradually a growing awareness among all parties involved that social improvements were in fact acts of social engineering; or to paraphrase Foucault, they represented a symbiosis between the management of territory, populations, and security, with successful governance and improving productivity[7]. Taking charge of these social projects was tantamount to educating and molding the loyalty of the population and insuring their usefulness and docility. Social projects were costly and required professional expertise and long-term institutional commitment, but they were also invaluable for the development of the desired human resources. As a result the social and urban arena in the oil complex became a political battleground between the Company, the government, and the local population. This tug of war shaped the particular geography of Abadan.


Notes :
1. The 1920 Treaty of Sèvres and the League of Nations put Mesopotamia under a British Mandate, thereafter three Ottoman provinces of Basra, Mosul, and Baqdad were collated into a unified nation state, under a monarchy established in 1921 and nominally headed by Faisal who was installed by Britain at the time as Syria and Lebanon had been placed under the French Mandate. See Charles Tripp, A History of Iraq (Cambridge: Cambridge University Press, 2007), 30–62.

2. See “Arabestan va jonoub-e Iran; haqiqat-e owza’e gozashteh va tashrih-e pishamad-e hazer” [Khuzestan and southern Iran; the reality of previous conditions and explaining the present] Part 1, 14 May 1915, and Part 2, 20 May 1915; with a “Reply” by Seyyed Amanollah Behbahani, a Majles Member published on 3 June 1915, in Asr-e Jadid.

3. On the establishment of various institutions of modernization see Hossein Mahboubi Ardakani,
Tarikh-e Moassesat-e Tamadoni-e Jadid dar Iran, 3 vols. (Tehran: University of Tehran Press, 1975).

4. Hoochang Chehabi, “Staging the Emperor’s New Cloths: Dress Codes and Nation Building under Reza Shah,” Iranian Studies 26, no. 3–4 (1993): 209–34; Patricia Baker, “Politics of Dress: The Dress Reform Laws of 1920s and 1930s Iran,” in Languages of Dress in the Middle East, ed. Nancy Lindisfarne Tapper and Bruce Ingham (Richmond: Curzon, 1997), 178–92; Rudi Matthee, “Transforming Dangerous Nomads into Useful Artisans, Technicians, Agriculturalists: Education in the Reza Shah Period,” in The Making of Modern Iran, ed. Stephanie Cronin (London: Routledge, 2003), 123–45; Kaveh Bayat, “Riza Shah and the Tribes,” in The Making of Modern Iran, ed. Stephanie Cronin (London: Routledge, 2003), 213–19; Stephanie Cronin, Tribal Politics in Iran: Rural Conflict and the New State 1921-41 (London: Routledge, 2007); Amin Banani, The Modernization of Iran, 1921-1941. (Stanford: Stanford University Press, 1961); Ervand Abrahamian, Iran Between Two Revolutions (Princeton: Princeton University Press, 1982).

5. See Persia, Annual Reports, 1925 and 1926, in R. M. Burrell, ed., Iran Political Diaries 1881-1965 (London: Archive Editions Ltd, 1997), Vol.7, 367–373, 550–554. See also Keith McLachlan, ed., The Boundaries of Modern Iran (New York: St. Martin’s Press, 1994); Reidar Visser, Basra, the Failed Gulf State : Separatism and Nationalism in Southern Iraq (Berlin: LIT Verlag, 2005); Tripp, A History of Iraq; Firoozeh Kashani-Sabet, Frontier Fictions (Princeton: Princeton University Press, 2000).

6. Asqar Ja’fari Valadayi, “Tarhha-ye Tajziyeh-ye Khouzestan (Plots to Separate Khouzestan),”
Ettela’at-e Siasi-Eqtesadi, no. 211/212 (2): 32–41; Visser, “The Gibraltar That Never Was”; Reidar Visser, Basra Crude The Great Game of Iraq’s “Southern” Oil, Working Papers (Oslo: Norwegian Institute of International Affairs, 2007); Visser and Stansfield, An Iraq of Its Regions.

7. Michel Foucault, Security, Territory, Population :Lectures at the Collège de France, 1977-78 (New York: Palgrave Macmillan, 2007).


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