Introduction

INTRODUCTION

This publication reproduces in full Rohan Butler’s 1962 report on British Policy in the Relinquishment of Abadan in 1951. 1 Butler, a Fellow of All Souls College Oxford, joined the Foreign Office in 1945 as an editor of the official documentary history of British foreign policy, Documents on British Foreign Policy 1919-1939. He compiled the Abadan report in response to a suggestion made in 1957 by the Cabinet Secretary that Whitehall departments should commission internal histories of significant episodes of policy or administration that would enable the administrator ‘to see current problems in perspective’. Submitted in March 1962, the report documents the loss of the Anglo-Iranian Oil Company’s key refinery at Abadan, Britain’s biggest single overseas investment, following the nationalisation of Iran’s oil industry. The episode was a humiliating blow to British prestige and influence in the Middle East brought about by a range of factors: a weakened Labour government, unimaginative and complacent thinking in official circles, an inability to project military power following the loss of India, and a lack of support, as well as adverse interference, from the United States. Butler’s critical study of the crisis not only provided a comprehensive narrative of events but also drew out political and administrative conclusions for the future administration of foreign policy. Despite the length of the report, there was general agreement that it was a valuable document not only in substance but for the lessons it drew and it was circulated internally, to certain heads of mission and to other government departments.

The report is published along with several related documents. The first is a commentary by Lord Strang, the Permanent Under-Secretary of the Foreign Office at the time of Abadan. He candidly assessed his own performance, along with that of Ministers, diplomats and the Foreign Office during the crisis, making his commentary an important and interesting addendum to the report itself. Strang concluded by picking up on Butler’s call for a ‘resolute reappraisal’ of British foreign policy as the basis for ‘a more compact and positive policy,’ and asked whether British diplomacy needed ‘a new look’ in the post-imperial age, one based more on national self-interest, like that of the French. Sir Harold Caccia, Permanent Under-Secretary when Butler’s report was submitted, posed this question in a letter to heads of mission in February 1963. Coming just after the rejection of Britain’s first application to join the EEC, the letter prompted plenty of response. Butler was asked to analyse and synthesise the replies, which he submitted in May 1963 as ‘A New Perspective for British Diplomacy’—the second additional document. In it Butler made several recommendations: increased public relations at home in mobilising support for British foreign policy, matched by ‘sharper thinking and plainer speaking’ in its execution; the strengthening and modernisation of representation abroad; and a high-level ‘Positive Planning Committee’ to review possibilities for imparting ‘extra thrust’ into diplomatic effort. This latter recommendation was to lead to the formation of the Foreign Office Planning Staff (today called the Strategy Unit). The final additional document is a despatch from the British Ambassador in Tehran from December 1956, reflecting on the state of

1 FO 370/2964, The National Archives (hereafter TNA).

Anglo-American-Iranian relations following the final settlement of the Abadan crisis in 1954. It is a remarkably sanguine ‘all’s well that ends well’ assessment, especially in relation to the actions of the Americans. It illustrates, perhaps, the collective amnesia that had begun to settle over such a painful episode before the publication of Butler’s report.

Gill Bennett and Professor Ali Ansari, from St Andrew’s University, came up with the idea to publish the report while the latter was working as a Knowledge Exchange Fellow at the Foreign, Commonwealth and Development Office. Both contribute essays placing the Abadan crisis in a longer historical context. Ali Ansari traces the complex history of Britain’s involvement in Iran and its oil industry, whilst questioning whether opportunities were missed for avoiding the crisis altogether. Gill Bennett compares the crisis in Abadan to the Suez crisis in a way that Butler was perhaps unable to do at the time, despite his commenting that the episodes were ‘contrasting yet largely complementary’.

In the preface to his report Butler admitted it was a source of regret that, given the confidential nature of the topic, his work would ‘not see the light of day’ in the form of publication. Sixty years on, this has been remedied. The report has been available for many years at The National Archives, Kew. However, given its size, it is unlikely that many scholars have had the time to read it in situ, or the inclination to photograph all 324 pages, or the financial means to get it copied. It is hoped, therefore, that publication will make its contents more accessible to scholars and the public. It also complements discussion of Anglo-Iranian relations found elsewhere in Documents on British Policy Overseas. 2 Butler thanked in his preface ‘Miss Sturgess’ for typing the ‘long and complicated manuscript with expert care’. Today we have to thank Gill Bennett for the herculean task of retyping the 250,000 words in Butler’s report. Thanks also go to Sue Fleming and Paul Bali for their assistance in the editorial process and Tom Loft for providing the map. References to, and cross-references within, the report have been changed to reflect the page numbering in this volume rather than the original document. However, footnotes in the report, along with spellings and place names, have been left as in the original.

Finally, Butler thought it would be a ‘happy outcome’ if his study made a ‘small but constructive contribution’ towards strengthening British foreign policy ‘for the great tasks and great opportunities which now lie ahead’.3 The Report stands, in the words of Gill Bennett, as ‘a singular testament to the potential influence, on both policy and administration, of an historical case study’.

Richard Smith

2 Issues relating to Anglo-Iranian relations, oil policy, the Soviet threat and US interests are principally covered in DBPO, Series I, Volume 7, The United Nations: Iran, Cold War and World Organisation, January 1946January 1947 (London: The Stationary Office, 1995) and also found in DBPO, Series I, Vol. 1, The Conference at Potsdam, July-August 1945 (London: TSO, 1984) and Vol. 2, Conferences and Conversations 1945: London, Washington and Moscow (London: TSO, 1985). 3 ‘Abadan and After in light of the comments by Lord Strang’ by Rohan Butler, 15 February 1963, FO 370/2964, TNA. The Strang commentary is undated.

The Butler Report on the Relinquishment of Abadan: An Unnecessary Crisis?

A.M. Ansari

Introduction Few episodes have come to define British-Iranian relations more than the Oil Nationalisation crisis of 1951-53. The febrile political atmosphere which led to the nationalisation of the Anglo-Iranian Oil company in 1951 and to the subsequent overthrow of the Mosaddeq administration in an Anglo-American engineered coup in 1953, has probably generated more literature that any other single event in the relationship, and catapulted its central figure, Dr Mohammad Mosaddeq, to an iconic status in the gallery of modern Iranian political figures. It would not be an exaggeration to say that he has transcended history and become a figure of popular mythology, and as a consequence has cast a very long shadow over contemporary Iranian politics. Championed by dissidents and establishment figures alike, Mosaddeq is, to paraphrase Hegel, an individual who has become identified with a principle.1 He has come to represent, in the popular imagination, the moment when democracy was derailed, and the autocracy of the Shah re-established under the imperial tutelage of the United States and Great Britain. This is regarded as the pivotal moment in the history of modern Iran to which all other developments— largely negative—can be traced: the original sin, for which the West must repent.

Like all good political myths, this narrative is painted in primary colours. There are sinners—Britain and the United States—and those sinned against—the Iranians—with little nuance or subtlety afforded. If debates have raged among Iranians about the level of domestic complicity in the coup, there is little such exploration of the diversity of opinion in Britain, nor the broader context of developments. This is a strictly bilateral exercise in which the wider political terrain remains firmly blurred and marginalised into irrelevance, where the British and American ‘States’ impose their inevitable imperialist desires on a subjected people largely devoid of any agency. Even where it is acknowledged that internal political forces aligned themselves against Mosaddeq, these are at best deluded and at worst mere lackeys of the West, unthinking, and to paraphrase Franz Fanon— whitewashed.

This debate, as febrile and contentious as it is, at least exists. While few Iranian intellectuals will criticise Mosaddeq’s ambitions, there is a lively debate about his methods and barely disguised irritation at some of the imprecision that has come to characterise the more popular histories, most obviously Mosaddeq’s status as the ‘first democratically elected prime minister’ of Iran, a statement so bland it serves to disguise both the reality of politics at this time and the Parliamentary system to which Iran aspired. 2 British attitudes to Mosaddeq were mixed. Negotiators came to

1 G.W.F. Hegel, ‘The German Constitution’ (1802), in Hegel’s Political Writings, trans. T. M. Knox, (Oxford: Oxford University Press, 1964), p. 216. 2 Mosaddeq himself famously protested the elections to the 16th Majlis: see Ervand Abrahamian, ‘The Coup’, (New York, New Press, 2013), p. 52. It is worth noting that in the ten years following Reza Shah’s deposition, Iran had 17 Prime Ministers, the longest serving being that of Qavam in 1946-7 at one year and 324 days, the

admire his civility, but he was also regarded as a romantic wedded to views that were impractical. Given to florid oratory which both attracted and deterred his countrymen depending on their political prejudices British assessments dismissed him as ‘a demagogue, a windbag’,3 a view that would be echoed in Butler’s report.

Butler’s report on the relinquishment of Abadan in 1950-51 provides the reader with a window into the complexity of the British position and perspective. For a crisis in which few if any sources can be considered impartial, he adds important granularity to an otherwise bland and largely over-simplified British position. Here we find the heated debates which existed within Government and crucially between HMG and the Company, as well as the often-fractious relations with the United States whose unsympathetic views on the British position were both seized upon and exploited by nationalists in Iran. Far from oblivious to Iranian demands, British ministers often struggled to reconcile what they viewed as legitimate Iranian concerns with wider British interests. All the while they were contending with a changing international order, cast in the shadow of the Second World War, in which the Cold War loomed large and through which almost all problems were filtered.

Whatever the merits of this position, oil nationalisation in Iran was but one of many problems facing British statesmen and their frame of reference was quite different to that of the Iranians. These perspectives mattered, and they helped shape approaches and one might argue, distinctive mentalities, towards the problem, driving both parties into uncompromising positions. Butler does not directly address the events that led to the coup in August 1953, but coup narratives are present in the text—both pro and anti-communist—while in one passage Foreign Secretary Anthony Eden refers to the possibility of the Shah dismissing Mosaddeq ‘which might involve a coup d’état’ . 4 The crisis which culminated in the coup of 1953 was not inevitable, but it was undoubtedly shaped by the wider historical inheritance and cultural misunderstandings that afflicted both sides. 5

Oil and Iran Oil transformed the Iranian state and redefined its relationship with Britain. The concession granted to the British-Australian entrepreneur William Knox-D’Arcy in 1901, was the last in a series of concessions offered to British economic interests in the aftermath of the Anglo-Persian War of 1856-7. The war which had been fought over the status of Afghanistan and settled its borders with Iran—effectively ceding Herat to the new Afghan state–had resulted in the comparatively lenient Treaty of Paris in 1857, an exemplary case of Britain not only winning the war but winning the peace. Iranian statesmen, having expected a repeat of the punitive Treaty of Turkmenchai with Russia in 1828 breathed a collective sigh of relief that the Treaty of Paris required no reparations and no further loss in territory. 6 The consequence

shortest, that of Reza Hekmat, lasting 11 days. It did not help matters that each Majlis sat for a two-year period with administrations having little time to settle before the next election was launched. 3 Report on Leading Personalities in Persia, 5 June 1946, FO 371/52755/E5131, TNA. 4 Butler, p. 237; it is worth noting that Eden was voicing contingency planning that had been drawn up in the previous administration. 5 We see coup narratives as a product of the Cold War, but they might better be understood as a legacy of the Second World War. 6 ‘The Sedr-Azem, on listening to the paragraphs of the Treaty . . . exclaimed . . . “Is that all?” and on being told there was nothing more, he uttered a fervent “Alhamdulillah! –Praise be to God’, Robert Watson, A History of Persia from the beginning of the 19th Century to the year 1858 (London: Smith, Elder and Co, 1865), p. 459.

was that they viewed Britain and the application of British political ideas as the route to salvation and sought ways to engender a political transformation through economic change.

A series of economic concessions were offered, some of which were ill considered and most of which reflected the relative economic power of the participants. For Iranian statesmen, it was important to provide an attractive package to prospective entrepreneurs. For many observers (Iranian or otherwise), they came precariously close to selling off the family silver wholesale. Curzon famously described the Reuter’s Concession of 1872 as ‘the most complete and extraordinary surrender of the entire industrial resources of a kingdom into foreign hands that has probably ever been dreamed of, much less accomplished in history’.7 International criticism, not least from within the Foreign Office, who were anxious about Russian reactions, resulted in the cancellation of the concession, with Reuter’s offered by way of compensation a reduced concession in 1888 involving the establishment of a bank—the British Imperial Bank of Persia—with sole rights over the issue of bank notes.

A few years later another ill-fated concession—that for the monopoly rights over the sale of tobacco—also had to be cancelled at much expense following international disquiet and a boycott of tobacco at home. Ironically, as the Tobacco Protest revealed, British economic penetration was catalysing protest inspired by British political ideas about rights and ‘national’ self-determination. This was the rejection of British policy through the application of British political ideas,8 and it revealed the complexity of the British relationship with Iran and the diversity of interests involved. Iranians tended to see the British as homogenous and singular in their approach. Those who engaged with Britain were increasingly aware of the diverse and often conflicting interests that were involved, not least between the governments in India and Britain, and between commercial interests and the government, as well as what we might term ‘dissident’ opinion within Britain, increasingly vocal in their criticism of British imperial policy.9 It was this ‘dissident’ opinion, not always to be found outside government, which helped shape and define the Constitutional revolution of 1906 and saw British political ideas and influence reach their apogee in Iran, only for these gains to be abandoned the following year. The decision by Sir Edward Grey, the Liberal Foreign Secretary, to sacrifice the achievements of 1906 on the altar of a rapprochement with Russia—the AngloRussian Convention of 1907—was the cause of considerable consternation in diplomatic circles. Cecil Spring-Rice, British minister in Tehran in 1907, made clear to Grey that ‘we are regarded as having betrayed the Persian people’.10

Perhaps more surprising was the factthat on pure self-interest, the Anglo-Russian convention made no concession to British commercial interests in Iran. The Convention was intended to settle wider imperial disputes with Russia in the

7 G.N. Curzon, Persia and the Persian Question (London: Frank Cass, 1966, first published 1892), p. 480. 8 For a wider discussion of this see my ‘Taqizadeh and European Civilization’ IRAN; also Jamal al Din al Afghani, ‘The Reign of Terror in Persia’. 9 On this dissent, see M. Bonakdarian, ‘Iranian Constitutional Exiles and British Foreign-Policy Dissenters, 1908-9’, International Journal of Middle East Studies, 27(2), 1995, pp. 175-191. 10 Quoted in Wright, ‘The English amongst the Persians’, (London: I.B. Tauris, 1985), p. 30. See also the reference to the questions raised in the House of Commons in Nazem al Islam Kermani, ‘Tarikh-e Bidari Iranian (The History of the Iranian Awakening), Tehran, Farhang, 1349/1970, [first published 1910] p. 22.

interests of a détente in Europe so that the threat posed by Germany might be better contained. As far as Iran was concerned this resulted in quite divergent spheres of influence, where Russia was accorded the lion’s share of the north—the most populated areas—while Britain satisfied herself with a buffer zone in Baluchistan, a zone which even the Government of India, in whose interests in was secured, considered meaningless. South-Western Iran, where Knox-D’Arcy had been granted a licence to explore for oil, was ignored, a remarkable omission when one considers the strategic importance Iranian oil was to assume for Britain. It is, nonetheless, a salutary reminder not to read back into the historical record the prejudices and perceptions of the present. For Grey, what mattered was the wider geopolitical situation; commercial contracts were of secondary importance, not least because this was considered a private matter, and oil had yet to be discovered in viable quantities.

11

Even after oil was struck a year later in 1908, it would take years of investment in infrastructure before the new Anglo-Persian Oil Company (APOC), as the subsidiary of Burmah Oil was christened, would deliver on its substantial promise. It was in these early years, when money was tight, when one Winston Churchill, as First Lord of the Admiralty, took the fateful step of encouraging the government to take a majority stake in the new company, arguing with considerable foresight that ‘Persian oil’ would soon come to be the mainstay of supply to the Royal Navy, as the ships were converted from coal to oil. The agreement, reached on the eve of the Great War on 20 May 1914 (it is worth remembering that the initial agreement was not reached with the immediate expectation of war—Archduke Franz Ferdinand was not assassinated till 28 June, some five weeks later), doubling the company’s capital in return for two ex officio directors who held a veto on the company’s decisions, was a move that many considered contrary to the principles of ‘free enterprise’. Perhaps to deflect any criticism the Treasury issued a letter (which remained confidential for 15 years) that provided assurances on the limited circumstances when a veto may be exercised—essentially restricting it to issues of national security—and it was on this basis that Churchill’s plan was approved by act of Parliament in August 1914, some six days after the outbreak of war. Churchill, in displaying such strategic foresight, was considered a latter-day Disraeli by the APOC chairman: ‘. . . indeed the successful operations of the company, centred upon Abadan, soon demonstrated that by its investment, His Majesty’s Government had added to the Suez Canal another great interest in the Middle East.’12

Such foresight does not seem to have burdened the negotiators from the Qajar court who viewed the interest in this new resource with some bewilderment, blithely unaware of its economic potential. The terms of agreement were generous to Knox D’Arcy, reflecting in part the risk he was undertaking and the investment that might be required to make any venture profitable, but the fact that the terms were agreed for a period of sixty years suggested little appreciation of the industrial nature of the

11 It is interesting to note that the concession merited a single sentence in the Government of India annual review for 1901/2, reprinted in R. M. Burrell, Iran: Political Diaries 1881-1965, Vol. II (London: Archive Editions 1997), p. 95. Similarly, the discovery of oil on 28 May 1908 warranted a modest factual notice in the report for the month of May 1908; there was nothing noted in the annual review, with the greatest space devoted to political developments (Vol. III, p. 172). 12 Butler, p. 38.