British Interests and Activities

  February 08, 2024   Read time 9 min
British Interests and Activities
By the time of hostilities in 1914 Great Britain had acquired an added interest in the Gulf area. This derived from the oil concession granted to William Knox D’Arcy in 1901 by Muzaffar al-Din Shah.
Sir Arthur Hardinge’s intervention in behalf of D’Arcy did not automatically give rise to direct interest on the part of the British government in the D’Arcy oil investment As an investor Britain became interested in this concession only in 1913-14, but as the protector of its private investor, the British government had become involved soon after the concession had been obtained. Normally the task of protecting a foreign concessionaire’s operations under the terms of his contract falls to the government that grants the concession. In such a case, of course, there is no need of protection by the agents of the state to which the concessionaire owes allegiance. Nor is it necessary for the concessionaire to become involved in the domestic affairs of the host country while trying to make arrangements for the safety of his operations with the local authorities. But internal conditions in Iran when the oil operations began were anything but normal.
Relatively important exploration activities began in 1905, the year that marked the beginning of the Iranian Constitutional Revolution. In that year a new company called the Concessions Syndicate was established at Glasgow to replace the First Exploitation Company, which had been established in 1903 under Article 16 of the D’Arcy concession. The syndicate began its operations in Mamatin north of Ahwaz, drilling two test wells under the supervision of G. B. Reynolds. The Iranian central government, caught up in the revolution, exercised little or no control over the outlying areas. When, because of failure to discover oil at Mamatin, the operations were moved to Maidan Naftun (now Masjid Sulayman), the syndicate had no protection from interference by local tribes. To provide the necessary protection, Great Britain dispatched a small force of Sikhs to Masjid Sulayman under the supervision of Sir Arnold Wilson, the British vice-consul at Ahwaz.
In May 1906 after seven years of test drilling the first geyser of oil burst forth at Masjid Sulayman. This success signaled the beginning of increased oil operations in the tribal lands, which meant that greater security for the oil installations was required. The government of Muhammad 'Ali Shah was in no position to provide such protection. The Shah had been at war with the Majlis ever since he ascended the throne of Iran in January 1907 and was now preparing for the last blow against it. The destruction of the Majlis and the reestablishment of autocracy further weakened the control of the central government over the provinces. In fact, on the day that the Majlis was destroyed the country was plunged into provincial uprisings against the central government. The most important uprising was that of the Bakhtyârî tribe, which, under the leadership of Samsàm al-Sal tanah, its chief, finally overthrew the central government at Tehran in June 1909.
These details are given in order to make dear the fact that, when the Anglo-Persian Oil Company was created in April 1909, the government of Iran was hardly in a position to provide security and safety for the company's oil operations and installations, and in fact about two months after the formation of the company the Bakhtyârî forces were actually in control of the central government at Tehran. Under the drcumstances the company had to provide for its own safety. Furthermore, the company needed to purchase more land for its operations. According to tribal laws and customs, the pasture land belonged to the individual members of the tribe, and therefore in theory, under the terms of the concession, the company could have made its purchases directly from the individual owners. But the Bakhtyäri chiefs and “deputies" posed as the true owners of the tribal land, leaving the company no choice but to deal with them. Whatever the problem, the company faced the powerful tribal chiefs.
The company entered into three kinds of agreements with the chiefs. These may be conveniently termed share, land, and safety agreements. A special agreement had been made in 1905 whereby the Bakhtyäri chiefs were to receive a subsidy of £3,000 a year as well as 3 per cent of the shares of any company that operated in their territory. A separate corporation, the Bakhtyäri Oil Company, was formed in 1909, with a capital of £400,000. Twelve thousand pounds’ worth of shares or 3 per cent of the total capital was issued to the Bakhtyäri khans, who reciprocated by protecting the installations erected in their territory.11 The second kind of agreement provided for the purchase of land at a fixed price each year from tribal chiefs who would undertake to pay the real owners of the land. If the land belonged to a chief or if there was no khan to claim the purchased land, the former would retain the payment. The third kind of agreement dealt more specifically with the problem of protecting wells and pipelines. Here again the company had to deal with tribal chiefs, who would undertake to appoint a khan and provide him with the necessary weapons and men. The company would pay the khan and his riflemen, in addition to an annual payment of £3,000 to the chief himself.
The company also reached an agreement with the Sheikh of Mohammarah (now Khoramshahr), Sheikh Khaz'al, in 1909. He was the hereditary Arab ruler of an enormous territory on the eastern side of the Shatt al-Arab, including Abadan Island, which the company had selected as the site for a refinery. Through Sir Percy Cox, British resident at Bushire, the company negotiated an agreement with the sheikh, giving the company a right of way for a pipeline to carry the oil and selling one square mile of Abadan for the refinery. Khaz’al was to receive an annual rent of £650, to be paid ten years in advance. In return the sheikh was to provide, at the company’s expense, guards for the pipelines and buildings. After signing the agreement, the sheikh received in addition to the advance rent a loan of £ 10,000, ostensibly from the British government but actually from the Anglo-Iranian Oil Company.
By 1913 this web of agreements with local elements had brought about involvement of the B ritish-the company and the consular service-in southwestern Iran. The decisions which involved Britain directly in the protection of the oil operations were reached in 1913-14. Since 1904, when the British and Germans had been competing for oil concessions in the Middle East, the British government had been considering the possibility of converting the British navy from coal to oil. On March 3, 1913, the British Royal Commission, which had been appointed to study the problem, reported that the British navy should use oil. Winston Churchill, then First Lord of the Admiralty, announced the Admiralty’s oil policy in a speech before the House of Commons : “Our ultimate policy is that the Admiralty should become the independent owner and producer of its own supplies of liquid fuel.. . . We must become the owners, or at any rate the controllers at the source, of at least a proportion of the supply of natural oil which we require.” This policy led to an agreement between the company, the Admiralty, and the Treasury, making the British government the major and controlling partner in the company. The government, by virtue of the agreement, was to appoint two ex officio directors “to enable the Government interests in the Company to be duly protected, but with the minimum of interference with the conduct of ordinary business.” A power of veto over all acts of the board and all committees of the company and its subsidiaries was conferred upon the two ex officio directors. Thus, first as protector of the interests of its nationals abroad and, finally, as a major and controlling partner, the British government possessed significant interests in the AngloPersian Oil Company. To preserve these interests against the German menace the British had to act, because the central government in Iran was hardly in a position to maintain internal security. The British action took both diplomatic and military forms.
The diplomatic settlement of 1907 with Russia was inadequate under the circumstances of 1914 and after. The partition of Iran into spheres of influence in 1907 had envisaged a British, a Russian, and a neutral zone. By 1914 the situation had totally changed. The British government had acquired definite and direct interest in the oil fields of southwestern Iran. This change required diplomatic recognition by its friend and ally, Russia, through revision of the 1907 settlement. This was not too difficult to obtain as Russia wanted a British favor in another area of the Middle East. Sazonov, the Russian Foreign Minister, stated, in a formal exchange of letters with the British Ambassador at St. Petersburg, that Russia desired to annex Istanbul and the Turkish Straits in the event of an Entente victory. As a counterclaim the British government informed Russia of its desire to include the Iranian neutral zone in the British sphere of influence. In a secret telegram of March 20, 1915, from the Russian government to Count Benckendorff in London, Sazonov confirmed Russia's “assent to the inclusion of the neutral zone of Persia in the British sphere of influence.” *' Russian assent, however, according to the so-called Constantinople Agreement, was based on three conditions: first, that the districts adjoining Isfahan and Yazd should be included in the Russian sphere; second, that a portion of the neutral zone adjoining the Afghan territory should also be included in the Russian zone ; and, third, that Russia “expects that in future its full liberty of action will be recognized in the sphere of influence allotted to it, coupled in particular with the right of preferentially developing in that sphere its financial and economic policy.” * This last condition amounted to a demand that Russian attempts at annexation of its sphere of influence in northern Iran would not be hampered by Great Britain.
The Constantinople Agreement, like the 1907 convention, was contrary to the “integrity and independence” of Iran,** and British military activities violated Iran’s proclaimed neutrality. These activities affected different Iranian areas in varying degrees, the southwest probably being the most affected. Even before war was declared by Turkey, Great Britain had sent a brigade to the Bahrein Islands. At the outbreak of hostilities, these troops seized the Turkish port at Fao, the point where the Shatt al-Arab flows into the Persian Gulf. This was followed by the arrival of a large expeditionary force from India. The force, commanded in succession by Generals Delamain, Barrett, and Maude, occupied Basra on November 24, 1914. The immediate objective of this occupation was "to protect the oil refineries on the Isle of Abadan.”

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