Interview with Sir Peter Edward Ramsbotham
January 9, 2001
Conducted by Malcolm McBain, British Diplomatic Oral History Programme [link]

...So, back I went to the Foreign Office, and my first post there was in Economic Relations Department, in 1950... [...] I was in charge of the oil section, dealing with international oil problems working particularly with the American oil companies on the dollar-sterling problems which were very complicated. We were working out our agreements in the Gulf, new ones in Kuwait and Indonesia, just coming on.

Q: Thank you, that’s explanatory.

RAMSBOTHAM: The Americans at that time were under suspicion for trying to take things over from us as we were so weak after the war with our resources. It isn’t true, like many of the myths we have in the press today. On the whole, they never did that. They were much more concerned with protecting their own concessions in Venezuela and elsewhere; they didn’t want to start something going they couldn’t control. So that was what I was doing, and I went on doing that until early ‘53. At the same time I was also dealing with the sterling area interests from the Foreign Office point of view, helping with the negotiations. Iraq was there in the sterling area.

Q: That was the sterling area, wasn’t it, all the people we owed money to.

RAMSBOTHAM: Yes. It was very important to us and we also owed money to so many. We were always in debt. The only time I talked to Winston Churchill, who was very old by then, was in the debate in the House of Commons about sterling, Egypt and repaying the sterling debts there. It was difficult to get him to accept my drafts. At that time there was a Foreign Office paper devised by Roger Makins, Lord Sherfield as he became later. He became a close friend and in fact I gave the address at his funeral a few years ago. He was a great man; then he was the deputy secretary in charge of all the economic departments, including ours. He wrote a paper, which became accepted by the Foreign Office, on what our objectives were, our overseas objectives. I remember this clearly. There were four points to it.

The first was to maintain the cohesion of the British Commonwealth and Empire. (Imagine today the equivalent of your four objectives.) This is 1950.

Two, keep the sterling area together.

Three, stay close partners with the United States.

Four, (no special mention of Europe as I recall), maintain the balance of payments.

It is worthwhile recording those, because it is what governed our policies at that time, particularly the point you made about debts. At every turn we were aware of our weakness of resources. We’d sold up our great wealth and strength in Latin America (we’d owned the railways and all that). Our balance of payments had been covered by the surpluses we had there. We couldn’t pay our debts to the Americans. Every point you turned to, there was a balance of payment problem. It governed our attitudes at that time. This idea of losing money, whether it was in foreign exchange, balance of payments, taxation. This is why Abadan became so important to us. Now we would say there are so many resources. There weren’t those resources at that time, and, in a way, Germany, as you know, recovered more quickly than we did.

Q: Because they hadn’t inherited the same burden of debt?

RAMSBOTHAM: Absolutely.

Q: ...And been wiped out with all their wealth. Whereas we started off with negative balances everywhere.

RAMSBOTHAM: And we were so reluctant to knock down our cotton factories and start again. They had to.

Q: Well, they had them knocked down for them.

RAMSBOTHAM: This is probably a waste of time doing this, because everybody knows these facts.

Q: I think they don’t.

RAMSBOTHAM: You stop me if they do.

Q: They’ve forgotten.

RAMSBOTHAM: That’s why the Abadan crisis became so important. I should just refer at this point, because you mentioned before points of general interest in my work, to the significance of Anglo-American relations. How proud we were, including junior people like myself, of the wartime experience, and D-Day and everything else, of working with the Americans.

Apart from de Gaulle, we hadn’t been working with anyone else during the war years, and the soldiers in particular were very powerful in those days. [Charles de Gaulle] Later on I used to sit on the Chiefs of Staff committee on behalf of Pat Dean, with Mountbatten and all these top people, Solly Zuckerman and so on. [Louis Mountbatten, former Viceroy of India] We had resources; we were powerful in those days. These people had all their opposite numbers, (like General Bradley) whom they’d fought the war with, at hand. [Omar Bradley] That’s why, later on, Eden thought as he did about General Eisenhower who had become President of the United States. [Anthony Eden, Dwight D. Eisenhower] He assumed he would support him over Suez. I knew that to be true, in a funny unconscious way.

That’s an important aside, which people like me could notice. That is how the world had to be, particularly with people like Roger Makins. That took precedence over everything. He wrote, at the time of Suez, about how to handle the Americans. He was so effective as our ambassador. Yet he was also effective to the extent that he tended to ignore Europe, as reflected in our hesitancy, in ‘48/49, in the beginning of the European moves on coal and steel. It started building up then, our holding back on that story. A lot of it was due to a sense of unfamiliarity with the post-war Europe which contrasted with the familiarity we were so used to in the American context. It was very true of top mandarins like Sherfield, and partly true of even junior people like myself.

Q: Kirkpatrick was at one with Eden in connection with Suez, wasn’t he? [Ivone Kirkpatrick, Permanent Under Secretary of State at the British Foreign Office]

RAMSBOTHAM: Very much so. We’ll come to that. So, coming up to Abadan was this mandarin philosophy. We were impoverished, we would stick at all costs with the Americans, we mustn’t let the sterling area fall, we must keep our foreign exchange and our taxes flowing in.

Q: Can you remember why the idea of the sterling area was so important. It seems it was only a means by which we had to pay money we hadn’t got to other people.

RAMSBOTHAM: It was a world currency, which the French franc never was. That gave us access to resources of various kinds, in part with the Americans, which the others didn’t have. I think the IMF had just been created and the IBRD at this time. [International Monetary Fund, International Bank for Reconstruction and Development] We had a status in that as a world currency which gave us advantages. It also, I think, was a question of pride in the Empire, which we hadn’t yet lost. Colonies were only just beginning to come under attack in the early fifties. We had lost India, but we (apart from Churchill) meant to lose India, and we had a policy of moving from colonial to Dominion status, which the French were never wise enough to pursue with their colonies. Rather like Rome, they were all tied to Paris.

Dominions meant independence. My father, who went out to Ceylon to write the new constitution called for dominion status. [Sri Lanka] We were very proud of all that. Sterling area, world currency, goes with this concept, I think. There may be other reasons, but I think that’s probably how it worked. So Abadan became rather important at that time.

Q: We’re talking about 1950?

RAMSBOTHAM: 1951.

Q: 1951. That was when Mossadegh nationalized the Anglo-Iranian Oil Company. [Dr. Mohammad Mossadegh, Prime Minister of Iran]

RAMSBOTHAM: Yes. Now, my own views count for a bit at that time as I was later writing the papers of the Policy Planning Committee. I was aware then of Empire, of Commonwealth, because of my father too, who became Governor-General of Ceylon, the first and last white Governor-General of Ceylon, the good side of Empire, the moving side towards independence, and dominion status, and aware, as you say, of what happened in India. We were all quietly appalled at the way Mountbatten had handled partition; when you think of the good things we’d done in the Empire, and then the millions of people killed because of that kind of partition of Pakistan and India, and so on. I was aware of that. I was also aware, in 1949, of the Mandate of Palestine. It was our responsibility. We gave that up.

Again it was Empire, of some kind, slipping away, India first, Palestine second, a sign of the times we were talking about. And then two years later, Abadan, four or five years later, Suez. This was a sequence of events which I became part of, and never free of. Nor am I now, free of, in a sense.

The Abadan story was exactly what we were talking about. It had two parts to it. One was the practical one of the value to the Treasury of this immense resource. Sterling was Iran’s reserve currency, with large gold holdings. We had to discourage Iran from asking for payments in dollars and urge her to buy as much as possible for sterling in the UK. We (AIOC) were rather mean about the oil payment to the Shah, but Abadan brought in enormous sums of money in those days, to the Treasury, in terms of our balance of payments. We hardly hear of balance of payments nowadays. The figures are so enormous, trillions or billions. In those days, I assure you, whether you were £500 million above or below the line was crucial.

When I was ambassador in Tehran some years later, we sold the Chieftain tank to the Shah. We sold him almost as many Chieftain tanks (he had so much money at that time) as we had in BAOR [British Army of the Rhine]. I even had to lend him the one REME brigadier we had in BAOR, whom he rather needed, in order to help him with his new tanks. [Royal Electrical and Mechanical Engineers] That’s an indication of the impact of the balance of payments, of foreign exchange, also all these budgetary matters. So the financial side was immensely important.

Churchill had, after the First World War, switched over from coal to oil for the British Navy. [Winston Churchill, First Lord of the Admiralty] That was the major reason why we took 51% stock of the Anglo-Iranian Oil Company, which became BP. We took that as a precaution, so we had always this resource. There’s a wonderful passage, which I gave to the BBC, in which Churchill said how he’d saved money for the British taxpayer all the time, this oil for the British Navy from Abadan.

That was the one factor why it was so important. The second one was the prestige, one which we have already discussed. It stood for something still even after India and Pakistan. Here was the largest refinery in the world, the Americans had nothing like it, Germany and France, nothing like that, this was a unique thing which we had in the Middle East, of a colossal size. And we mustn’t let that go cheaply, or, if it was going, then the compensation must be enormous.

We were talking about Abadan, in two respects, one as a very important resource for the Treasury in budgetary terms, balance of payments, foreign exchange, and so on; and the other, after the losses in India and Palestine, the nibbling away, so to speak, of our pride in our Commonwealth and Empire. This was a major factor compared with which the Americans did not have a comparable experience. So, faced with Mossadegh’s challenge of nationalization, the last thing we wanted was to lose this important refinery. I was handling the matter on our side, from the Foreign Office point of view in London. There was then the Ministry of Fuel and Power, with Sir Donald Ferguson, very much on the side of the Anglo-Iranian Oil Company, and there was Willy Fraser, of course, the chairman of the Company. [Sir William Fraser] There were a lot of opinions about him and what he could have done.

We were, at different times, being challenged, why didn’t we use the government’s 51% holding to insist on a rather more conciliatory, sensible policy than Willy Fraser was adopting. He was wholly in charge. He had some very good technical people under him, but no one to stand up to him in the Anglo-Iranian Oil Company, later BP.

He used to annoy us very much by his attitude. He regarded the Foreign Office and the other people as ‘the West-End gentleman’ as he called us. He was the dour Scot and thought that we had no idea about business, certainly not doing business with Persians who ought to be kept where they were, happy, very well treated, they would never get what they were getting from any other source; we’d risked a lot, we’d taken the oil out, we had the tankers (which they didn’t have), to dispose of it, so why all this nonsense and bother. That was his attitude. We were vexed by this attitude, which we couldn’t change even though HMG had this 51% holding, because it was safeguarded by a clause which said you can’t interfere in commercial matters. [His Majesty’s Government] We said we’d gone beyond this, it had now become a matter of national interest. All that went on, and I played a part in it.

Then it was found that Mossadegh had not only nationalized the refinery, but was threatening to expel the British staff from Abadan. There were about 30,000 people working there, and I’m bound to say that they tended to live in ways, rather like in India, which excluded Iranians socially.

This is how it developed. A new Prime Minister called Razmara, had been appointed by the Shah, and was prepared to sign the supplemental oil agreement with the Anglo-Iranian Oil Company. [Ali Razmara] Then he was assassinated. Trouble started, and Mossadegh took power against the Shah, then nationalized the company. [Mossadegh was made Premier by a 79-12 vote in Parliament, then confirmed by the Shah] He regarded it as the symbol of everything he hated; the foreign power, particularly the British, gaining this strong position in that world. He was an old nationalist, aristocrat and landowner.

Q: Was there anything we could do about it?

RAMSBOTHAM: Yes. At the crucial time we had been mean. The Anglo-Iranian Oil Company were mean in what they were offering in terms of percentages and royalties and so on. We had this chap called George McGhee who came over. The Americans had just made an agreement with Venezuela, and an agreement with Saudi Arabia, what we called the 50-50 agreement, so they actually had a different basis for handing out a percentage to those governments. There was an agreement on prices, royalties and taxes on a 50-50 basis. The American companies could retain their necessary profits because the American Treasury gave them the tax relief. The British Treasury would not play that game.

Q: Who was McGhee? Was he British?

RAMSBOTHAM: George McGhee. No, he was the American State Department assistant secretary in charge of oil everywhere. He later became American ambassador to Turkey and Germany. He was a very powerful figure. He worked for Truman as a young man and was regarded by all the old pundits in the Foreign Office as, ‘Who is this young fellow, coming in, telling us how to run this affair’. He regarded us, and the AIOC, as out of date trying still to reach a settlement for an oil concession by paying royalties. They had this example, which we then adopted, eventually too late, which was on the basis of a 50-50 arrangement.

Q: But we had to accept nationalization by the Iranians.

RAMSBOTHAM: We had to. We were a Labour government who nationalized quite a lot of things in Britain themselves.

Q: How was the compensation worked out?

RAMSBOTHAM: We never got proper compensation. We insisted on it, but they never gave us adequate compensation. We tried all sorts of things to try to make an arrangement, but we, at least I and others, knew that it was impossible for Mossadegh to reach a negotiated agreement. He wasn’t dotty. He appeared dotty to us; he lay in bed and wept some of the time. He was quite difficult to understand, and, a traditional Persian landowner who had been a good governor of one of the provinces, of Fars, and he was quite popular in his way. All that he saw was this expropriation by the British, nearly fifty years before, of an Iranian resource, which should be theirs so he should lay down the terms who should run it, when and why. We said ‘He can’t run it, this is a very complicated affair, this refinery, there’s a thing called a catalytic cracker, which is a complicated machine for refining purposes, and only we could run it’. He got hold of some Yugoslavs who did it perfectly well. Exactly the same with Nasser at Suez, ‘Only certain pilots, they must be British, could get you through’, we said. We were in an unreal world dealing with him.

At that time, we did make preparations for military intervention. A lot of people in the media today, or people doing research, come across this in what’s been revealed from Cabinet files and so on. Mannie Shinwell [Emmanuel Shinwell)], was the Minister of War at that time and very popular with our military people. So often, Labour type people who become ministers of defence, get on particularly well with the chiefs of staff. Anyone looking at the record now might think that it was touch and go whether we would have invaded. We sent troops and a destroyer to Cyprus which was the potential invasion point in that part of the world, and there was the question whether we should just take the island of Abadan or just rescue our people on the island by using force. This threat of military action sounded off the alarm bells in Washington. I knew perfectly well, with Attlee there, there’d be no question of him approving such a thing.

Q: So we’re back to 1951? Before the election?

RAMSBOTHAM: Yes, just before. The election must have been September, October, something like that. Truman was there still, with his people, and Acheson was his right hand. [Sec. of State Dean Acheson] They were worried about it in Washington. They always thought we might mishandle our relations with Iran and push Iran into the eager arms of the Russians. This is what dominated their thought. It was the time of the Korean outbreak, the Korean War, where China was prepared to play a new offensive role.

The Americans thought too much in cold war terms. They saw the Iranian problem differently; it wasn’t depriving them of their budgetary resources or anything like that, but they were concerned that we were mishandling it with Mossadegh, were obtuse, too obtuse, not controlling Willy Fraser, and were allowing Mossadegh and these people to ruin the Iranian economy because they were not going to get sufficient revenue if they nationalized everything. And we were stopping them selling their oil because we controlled, with the Americans, all the tankers. If the economy collapsed, the Russians might come in (they had before tried to take over the north-west part of Iran for their own oil purposes), and this worried them.

So they then sent Averell Harriman to Iran, in about July. They wanted us to make enough concessions to Mossadegh to keep him in power so that things wouldn’t be so chaotic that he would be thrown out. We saw things quite differently. The British ambassador there, called Shepherd, who was a bachelor, was cut off by Mossadegh from all negotiations. [Francis Shepherd] He would only negotiate with Richard Stokes (the Minister of Materials who was, curiously, in the Cabinet in those days). He led the British Mission to negotiate in the place of AIOC. Our team comprised the Treasury people, the Ministry of Fuel and Power, and the Anglo-Iranian Oil Company people, and myself, in control to the extent that I handled not only the communications to the Foreign Office, but I accompanied Stokes every day on our talks with Mossadegh in his little villa. Mossadegh spoke some terrible French he learnt in the Sorbonne in 1890, and Stokes couldn’t speak it. So a lot of this was done through me. [Mossadegh went to Paris in 1909 where he studied for two years. He attended Sciences Po, not Sorbonne University.]

Q: You cut out the ambassador all together?

RAMSBOTHAM: The ambassador was cut out. We didn’t cut him out, Mossadegh wanted to talk to the team from London (with Anglo-Iranian Oil within our team, so to speak), rather than to the British ambassador. I knew and reported at the time that the Americans were over-alarmed by this cold war fear and the communist bogey, while we wanted to make no unnecessary or risky concession. Our policy was a policy of what used to be called ‘masterly inactivity’, in other words ‘Let Mossadegh stew in his own juice’. That was approved. That’s what happened. Eventually, even Dean Acheson accepted, reluctantly I think, that you could not do a deal with Mossadegh because he was not capable of coming to a practical agreement. He was being threatened all the time by his own Frankensteins, all the extreme parties and strong personalities, which he had stimulated. A chap, rather like Khomeini, called Kashani, who was the Khomeini of his day, had stirred up fierce anti-British elements and that was what Mossadegh was having to contend with; so a deal became impossible. [Ayatollah Kashani] McGhee never realised that, but Acheson did towards the end.

The final outcome involved Monty Woodhouse. [Montgomery Woodhouse] He worked with Kermit Roosevelt, who was the CIA representative then, to oust Mossadegh and put someone else in power. They started doing it, then it didn’t come off, and the Shah fled away to Rome for two days. A long story, I won’t bore you with it all. But it only became a possibility after Winston Churchill came back to power in late 1951 and Eisenhower came back to power in Washington in 1952. They agreed together, these two, to mount this venture at the end of ‘52 to oust Mossadegh. That was one of Winston’s last roles, as he was a bit past it himself by that time. Anyhow, the Shah resumed control. How far it was due to MI6 and the Americans, and how far, as the Americans more or less claim, it was all them, we don’t bother with that. It happened.

The Shah then, having been a timid figure, became encouraged to do a deal now with his new Prime Minister, General Zahedi, father of Ardeshir Zahedi, whom first I knew as Foreign Minister when I was ambassador in Iran in 1971 and, later in 1974 when we were both the respective ambassadors to the United States. [Fazlollah Zahedi] I’m sure Denis Wright would have talked to you about the consortium, the multinational oil consortium there, because he had a hand in that, did he not? Anyway, whoever it was, he was very good at it.

I can’t let this one go without blowing a small trumpet. On the British side, I think I invented it, at least I helped to invent it back in London, and it’s quite good to know that although the Americans might claim now that it was all their invention, in point of fact, the basic idea also emerged from the Foreign Office.

British Petroleum (they were called that under the new agreement in 1954), would return to Iran as part of this multinational consortium, with the Iran National Oil Company now owning all the reserves and facilities, and the consortium managing the oil and purchasing and disposing of the output, as we had the tankers and all that to go with it. [National Iranian Oil Company] Each company in the consortium sold its own share of the oil through its own marketing arrangements. BP again, curiously after all that had happened, were dominating the scene, owning 40% of the consortium, with Shell 14% and five American companies owning other little bits.

William Roger Louis, of Texas University, one of the best American historians to have written major works on the British empire, Commonwealth and the Middle East wrote a book in 1988 on “Mossadegh, Iranian Nationalism and Oil”, which says that the establishment of the consortium was a great turning point worldwide for the oil industry “when the former concept of foreign concessions was replaced by negotiation and co-operation”, and “the actual architect of the reorganization of the Iranian oil industry on the British side was Peter Ramsbotham, then at the oil desk at the Foreign Office”. So I have to put this in, of course. [Musaddiq, Iranian Nationalism, and Oil, with James A. Bill]

Q: Yes. Very good. So after that little episode, you went off as head of chancery to UKDEL New York. [UK Delegation]

RAMSBOTHAM: That’s right. I think I was asked to go there by Gladwyn Jebb who was our key figure, the ambassador, there, who incidentally had drafted a large part of the UN Charter at the formation. He had seen me when Mossadegh went to the Security Council. I went out to New York to advise Gladwyn on how to handle Mossadegh, who was in an impossible position at that time. We got on well, and he asked me to come out and succeed Denis Lasky as head of chancery in our UN delegation, which I did. That was quite fun. I was there right through to Suez, and I came back just after Suez.

• Source: University of Cambridge, Churchill College > Churchill Archives Centre > British Diplomatic Oral History Programme [Annotated by Arash Norouzi]

• Ramsbotham was also interviewed in the 1985 TV series End of Empire.

• Source: University of Cambridge, Churchill College > Churchill Archives Centre > British Diplomatic Oral History Programme [Annotated by Arash Norouzi]

• Biography below prepared by the U.S. State Department in April 1974, when Ramsbotham became the new British Ambassador to America.

BIOGRAPHY - Sir Peter Ramsbotham, K.C.M.G.

United Kingdom

Sir Peter was born October 8, 1919, the son of the first Viscount Soulbury, a former Governor General of Ceylon. He was married in 1941 to the former Frances Blomfield; there are three children from the marriage, two sons, born in 1943 and 19-49, and a daughter born in 1945.

He was educated at Eton and Magdalen college, Oxford. Leaving the University in 1940, he served until 1946 in the intelligence branch of the Army there he made an outstanding record. He achieved the rank of Lieutenant-Colonel, was “mentioned in despatches”, and was awarded the Croix de Guerre in 1945. During 1946-47, he was chief security officer of the Military Government in Hamburg. In 1948, he joined the Diplomatic Service, serving as Second Secretary in the Political Division of the Allied Control Commission, Berlin, from November 1948 to late 1950, when he was transferred back to London as First Secretary in the Foreign Office, dealing with Middle Eastern financial and economic affairs.

In 1953, Sir Peter was assigned as Head of Chancery in the UK delegation to the United Nations and served there for four years. In 1957, he was again posted to London, where in 1961 he was made Counselor and Head of the Western Organizations and Planning Department. In 1962, he was assigned to Paris as Counselor and Head of Chancery, serving there until 1966. During 1967-68, Sir Peter was back in London on sabbatical leave at the Institute of Strategic Studies. From 1969-71, he was High Commissioner in Cyprus, and in 1971, went to Tehran as Ambassador there he has served until the present.

Sir Peter has been characterized as having a penetrating, flexible and open mind. He is well versed in the Middle East, international organizations, and from his Foreign Office tours, European organizations. He worked closely with Prime Minister Heath in the early 1960’s when the latter was in charge of the UK negotiations re entry into the EEC. He is also reported to be warm and friendly toward Americans.

Mossadegh & Arbenz & Lumumba & Sukarno & Allende... shirts

Denis Wright’s Post In Iran Got Off To A Disastrous Start (Dec. 1953)

Search MohammadMossadegh.com