First discovered in 1908 by British companies at Masjed Soleyman, oil gradually assumed a key role in Iran’s economy and public livelihood.
It was explored and sold by foreigners up until March 1951, but calls for its nationalization were already being raised by national and religious forces under the leadership of Mohammad Mosaddegh, Iran’s 35th prime minister who assumed office from 1951 to 1953.
Following increasing pressure from political groups and the press as well as people, the nationalization of oil was finally approved by the Iranian Parliament on March 15, 1951, and the Iranian Senate on March 20 of the same year.
Morteza Afqeh, an economist, prefaced his article for the Persian daily Etemad with these statement. A translation of the text follows:
However, with the connivance of the US and the coup d’état of Mohammad Reza Pahlavi, the former Shah of Iran, the nationalization of Iranian oil ended.
Up until the Islamic Revolution in 1979, the legal status of the management of oil industry was uncertain. The fate of oil management fell into the hands of the revolutionary government in February 1979 and the National Iranian Oil Company began to run all oil sectors, but has oil really been nationalized 72 years after such a declaration?
The answer needs further explanation:
Legal Perspective: The nationalization of oil went through ups and downs from 1950 to the Islamic Revolution in 1979 from the point of view of international law. The management of oil industry fell totally under the control of the Iranian government with the victory of the Islamic Revolution.
Public Benefit Perspective: After more than four decades since the Islamic Revolution and the government’s total control over oil and gas resources, the question is whether oil has really become nationalized, i.e., do all members of the public enjoy the benefits of these God-given resources? Here nation refers to all the individuals of the current and future generations. The answer to this question can be explored in two ways.
First, are all revenues generated by oil being equally distributed among the public? One might say that after being received by the government, the oil revenues should be equally distributed among all people and the government should provide its public services by collecting taxes as a result of the flow of oil revenues by the people. But whether the benefits of oil should be left for the next generations depends on what share of oil revenues has been or will be spent on investments in infrastructures whose benefits are intergenerational. The second question is that if the above theory has never been accepted and implemented, has the government been able to invest and manage oil revenues in a way that benefits the entire nation?
International Law
The truth is that from the perspective of international law, the nationalization was and is a necessary requirement for the public to benefit from the full benefits of oil, but meeting this condition required other measures that do not seem to have been carried out so far. What is the difference between these two scenarios: first oil is not a national wealth and a significant part of its benefits are derived by foreigners; second, oil is nationalized, but as a result of mismanagement and abuse, its benefits are grabbed by a special few. The outcome of both scenarios is that a majority of people have yet to benefit from this God-given gift. In other words, oil has not been nationalized in the real sense of the word yet.
Technological Point of View
From a technological point of view, you can claim that oil has been fully nationalized when the will and desire of foreigners do not affect oil’s discovery, extraction and sale.
The truth is that despite the significant progress made by Iran in the technical sectors of oil extraction, there is still technical, scientific and technological dependence on advanced countries in all three stages of the oil industry.
We cannot claim that oil has been fully nationalized. This does not mean that the country must be self-sufficient in all stages of oil industry and sever all ties with other countries. Rather, it means that if other countries refuse to provide us with technical, scientific and technological assistance for any reason, the country would be able to continue to live by relying on its own human, financial, scientific and technological resources.
The imposition of sanctions over the past four decades, particularly at present, proves the claim that the country still needs other countries scientifically, technically and technologically in oil, gas and petrochemical industries. Therefore, the concept of oil nationalization in its true sense is under question.
Economic Viewpoint
With the injection of oil revenues into the country’s economy since its discovery 114 years ago, the economy has gradually and then quickly become dependent and addicted to oil.
This reliance has put the country in a vulnerable position. That’s why one of the goals of the country’s policymakers was to get rid of economic dependence on oil revenues even before the revolution. After the revolution, breaking free of the dependence on oil turned into one of the main slogans and was envisioned in all the plans and policies.
Four decades into the revolution, the country still wishes to materialize this goal. Statistics show both the government budget and the national production of the country are directly and indirectly dependent on oil revenues by more than 90% and the pressures coming from the sanctions of the past four years prove this claim.
Another analytical writing should explore the economy’s continued dependence on oil, as revenues from the sale of this resource have yet to benefit all the members of the public.
