Review of empirical evidence

From “Oil Nationalisation and Managerial Disclosure: The Case of Anglo-Iranian Oil Company, 1933-1951”

Chapter 3: Employee relations and Iranianisation

Author : Neveen Abdelrehim | The university of york

William Fraser, 1st Baron Strathalmond, MBE (3 November 1888 – 1 April 1970), was a Scottish businessman and a leading expert on the oil industry. He served as chairman of the Anglo-Iranian Oil Company (known as BP from 1954) from 1941 to 1956.

The above discussion has re-considered the claims and counter claims of the AIOC and Iranian representatives in the light of Fraser‟s public and private correspondence. Historical evidence has tended to reflect the bi-polar aspects of the negotiations and the differences in historical interpretation. Such evidence has therefore been used selectively, with the purpose of reviewing the neglected documents, including the secret political correspondence between Fraser and other diplomats. There are interesting contrasts between Fraser‟s private views and his public pronouncements, and it was the former that informed the company‟s negotiating position and contributed to the failure of the talks and subsequent nationalisation. Undertones of colonial attitudes in these public documents demonstrate all the more strongly the underlying resistance to Iranian involvement in the management of the company revealed by Fraser‟s private correspondence. Within the above context, it is quite clear that Fraser‟s public pronouncements were part of a wider propaganda battle. It is clear to observe that Fraser used his public statements as a tool to communicate an assumed attitude towards the Iranians, in order to maintain their confidence. However, his mindset and personal attitude, as illustrated in the archival evidence, revealed his individual beliefs which underpinned the fact that the Iranians were not treated as genuine stakeholders. To the reader of the Chairman‟s statement of 19th November 1951, the behaviour of the company was nothing more than a reasonable response to difficult circumstances. However, the moral tone of Fraser‟s arguments only reinforced the colonial attitudes that angered many Iranians. Fraser was willing to be seen as a key visible figure in the AIOC, making public statements and speeches which would bring him credibility and respect. It was in his own interests, therefore, not to reveal his conflicting private opinions to the public. To the public, he played a major role in portraying the company as “fair” and in attempted to show the AIOC‟s employment policies in a positive light. On this point, nevertheless, the Iranian nationalists saw things quite differently, to the extent that their principal justification for nationalisation was the charge of discrimination by the AIOC against its Iranian employees. Even though the delayed 1951 report was a carefully worded document, it is clear from further analysis that Iranian and British staff were regarded as different. The evidence shows that the AIOC was discriminatory towards Iranians, reflecting a negative attitude towards their technical potential as well as traditional colonial stereotyping. The segregation of housing and social facilities created relations of unequal power, thus, reinforcing hierarchies resulting in subordination and exclusion for Iranians. For instance, Fraser created racial hierarchies within the company according to his imperial beliefs which in turn isolated and deprived the indigenous people from becoming competent in their own country. He was clearly disdainful of their knowledge of the oil industry[484]. Evidently, the AIOC resisted Iranianisation because the redistribution of employment in favour of Iranians, including at senior level, threatened to compromise the control of the business. This point was therefore the most strenuously resisted by the AIOC negotiators and was the reason why the company was less willing to compromise. The AIOC concessions were insufficient to forestall the ensuing nationalisation crisis, which after all, was all about the crucial question of control of the oil fields. Therefore, Fraser‟s insistence on full control of the company and its operations by incumbent British staff was the greatest obstacle to the solution of the problem. Fraser had a negative attitude towards Iranian staff, and CSR policy and his comments on the issues raised by Article 16 were elusive. There was no concept of partnership and cultural incorporation with the Iranians and this left them living in an environment of injustice and social and economic domination. Obviously, this proved to be the point on which no compromise could be countenanced because the AIOC paid only lip service to the Iranianisation process. Documentary evidence shows that changes in staffing ratios, including reductions of British staff had no chance of being achieved from Fraser‟s perspective and thus these associated obstacles prevented more Iranians from being employed in the AIOC. Meanwhile, social responsibility disclosures, on subjects such as health and housing, were easy to make but where imprecisely quantified especially in the published AIOC Annual Reports and Accounts. To sum up, the public image of the company was seen as a crucial ingredient of the nationalisation crisis, not least because a key objective of the AIOC management was to maintain the confidence of its own stakeholders in the face of a major threat and the backing of the British government in the face of that threat. However, it might also be supposed that if the AIOC could defend itself from the claims made by the Iranian government regarding discrimination against Iranians, it would also absolve itself of any blame for the international crisis.

The notion of the British Empire and its political formation played a crucial role
in defining the AIOC‟s operations and in transmitting British attitudes of racial discrimination that resulted in disparity between the company and the Iranians. The AIOC‟s economic hegemony in the 1950s was attributed to the prosperity of the company and high standards of living of the British staff. The AIOC‟s social and economic domination entailed inequality and violation of Iranian sovereignty because the company always regarded Iranians as low-grade and not on an equal
footing with their British colleagues. Abadan was run as a company town, where “natives” were kept out of company stores and clubs. Although the efforts of British staff had resulted in growth and benefits to the company but it is estimated that the drawbacks of their performance was reflected in their treatment of the Iranian workers. Iranians believed that hiring expatriates and largely excluding the local population created problems in the running of the company and also certainly diminished the rights of Iranians. One of the more salient points in the AIOC‟s working environment was that the Iranian workers felt that they lacked a wellarticulated set of career paths because of cultural biases. This was coupled with the sense of anti Iranian discrimination from the British towards them. Iranians criticised the British staff for being inflexible, unfair, disrespectful and insensitive to them. From an adjustment perspective, the greater the economic and cultural distance, the more difficulty the Iranians have in accepting the new environment of the AIOC. Iranians always felt that they were inferior beings because their life was lived away from the British and because the company‟s attitude towards them seemed to require an acknowledgement of gratitude for the success of the company. It worth noting that there was instability in Iran at that time, as well as a general deterioration in housing, schools and hospitals during the AIOC‟s era. The Iranian government was justified in asking for better terms for Iranian employees whose education and training was not well planned and required further development by the company. However, the AIOC had never committed itself either to develop its training programmes or to recruit more local workers. It did not even commit to increasing the construction of houses or providing other benefits for Iranian employees. It was not surprising that the unfair treatment and injustice against the Iranian employees were the precursor to the bill approving the nationalisation of the company‟s holdings, in May 1951 [485] Musaddiq was committed to nationalisation because expatriates from the foreign company‟s home country provided most of the managerial and technical skills, whereas locals constituted most of the labour force. It was clear that the Iranians were eager for their country to benefit from an important agreement, fairly honoured and properly implemented by the AIOC To conclude, the AIOC was seen as a typical colonial power and an arm of the
imperial British government and the accusations against the AIOC of discrimination against Iranians can be upheld on the basis of the evidence reviewed here.

Notes & References
484. White, The Business and the politics of decolonization: the British experience in the Twentieth century, 549.

485. Mansoor, State-Centered vs. Class-Centered Perspectives.



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