It seemed to be a victory for everybody. Iran
regained its main source of revenue; Britain salvaged a handsome reward
from what once seemed a total loss; the U.S. found itself participating
for the first time in one of the world's richest oilfields. More than
that, a strategic chunk of the globe's surface was made safer from
Communist penetration. Last week, in the cool garden of Elah-yeh Palace
outside Teheran, Iran's Finance Minister and a U.S. oil negotiator put
their initials on a settlement of the vexed Anglo-Iranian oil dispute.
A formula had at last been found by which a combine of eight of the
world's largest oil companies will operate Iran's
nationalized oil industry, splitting the profits on a 50-50 basis with
the Iranian government. “Indeed gratifying,” said President Eisenhower.
“A major contribution,” said the British government.Mossadegh's Folly. It had been more than three years since the wild man
of Iranian politics, Mohammed Mossadegh, nationalized his country's oil
industry and started his country on the road to economic and political
ruin. Undoing the mischief and getting the disputants back together
took skilled diplomacy. Iran's young Shah and his strongman Premier,
General Fazlollah Zahedi, had to operate in an ugly, xenophobic climate
created by demagogues and Communists. Anglo-Iranian Oil Co. was unwilling to assent to any agreement
that seemed to reward illegal seizure, for fear of the effect it would
have on other Middle East rulers.Mediators, led by Engineer HerbertHoover Jr., found a happy solution. Last week's pact in effect
recognizes the transfer of full title of the British-built
billiondollar industry to the Iranian government, at a cost to Iran
that is a fraction of its real value. This should mollify Iranian
nationalists. For giant Abadan, the world's largest refinery, and its
huge network of affiliated production facilities, the Iranians will pay
Anglo-Iranian a mere $70 million in compensation.Britain's Reward. But in fact, Britain will get a lavish return for its
lost oil investment. The real compensation to Anglo-Iranian will be
borne by the other seven oil firms joining the consortium. For the
privilege of a share in exploitation of Iranian oil, the seven
will pay Anglo-Iranian about $600 million. In
addition to this compensation, Anglo-Iranian, with a 40% interest in
the new consortium, will still be the dominant oil operator in Iran. So
Anglo-Iranian has cause to be reasonably content.When Abadan shut down, there was a world shortage of oil. Since then,
other producers have more than made up Iran's loss, and currently there
is a market surplus of oil. Some of the nearby oil-producing countries
will have to cut back production to make room for Iran. Most of the
Iranian production will go, as it did before, to Asian markets, not the
U.S.
