Anglo-Iranian Oil Company’s Failure Offers Lesson in Industrial Behavior

Constantine Brown — October 10, 1951

Arash Norouzi

The Mossadegh Project | July 17, 2020                     

Constantine Brown, former Chicago Daily News foreign Bureau Chief and nationally syndicated columnist, on the AIOC’s PR problems.

The same week, Brown’s column was plagiarized entirely by John C. Henry of the North America Newspaper Alliance.

Iranian Company Lost Friends by Wrong Attitude, Injurious Propaganda

By Constantine Brown

Columnist Constantine Brown WASHINGTON, D.C. — There have been many factors involved in the misfortunes which have befallen the Anglo-Iranian Oil Company. One of the relatively intangible ones but certainly not the least important has been the complete failure of the company to recognize the value of a sound public relations program.

The oil industry is probably the most completely global in dimension of any modern day commercial endeavor — drawing its raw materials, its labor and its markets from all quarters of the world. It is competitive on all levels of exploration, production, research and selling. In all of these categories Anglo-Iranian has ranked with the leaders of whatever nationality.

In the opinion of American oil people, AIOC operations in the fields and in the management of the world’s largest refinery, at Abadan, were efficient and economic in cost. It owns or controls the largest tanker fleet in the world and its synchronization of transport — about 40 tankers per day every day, in the year we’re entering, loading or leaving the Abadan port — with production of some 650,000 barrels per day of crude and refined oil reflected a high level of management skill. Its marketing structure was world-wide and assured the profitable disposition of the product.

Within Iran the company provided first class social services — housing, hospitals, schools and recreational facilities — for its employees, Iranian as well as foreign. Its wage scales were comparable to those of other foreign enterprises in the Middle East. Its royalty payments, lower in rate than some of the others in the area were also higher than some of the others. In total, they comprised approximately 40 per cent of Iranian government income annually. Yet with all this the company failed to win friends and influence people. It was unpopular with the Iranian government because it did not pay more; it was presented in an unflattering light to the Iranian people as a selfish and greedy instrumentality of exploitation that somehow or other was responsible for the mass poverty of the country. During the critical period of the recently stalemated negotiations it was a favorite device of Prime Minister Mossadegh to shed tears about the Iranian slums; foreign observers were taken on tours of the areas of desolation and by word or implication the blame was handed over to AIOC. The Iranian masses, who have lived too closely to the feudal practices of their landowner class to be able to recognize responsibility, were quick to believe this anti-company propaganda even though the foreign observers were not.

Meanwhile, in the years when it would have counted, the company maintained an aloof disdain for public sentiment, either in Iran or elsewhere in the world. The company was big, powerful, prosperous and competently operated in the field of producing and selling oil. It thought it needed to be nothing else, that it could watch Iranian political factions quarrel with each other and rely on a colonial type of dignity to counter local suspicion and ill will. It is safe to say that it never occurred to the topside of the company, until recently, that such a far-off intangible as public sentiment in the United States for example, could have any interest or bearing upon the fortunes of the AIOC.

In all of its negotiations the company was behind the pace. Even when given advance warning of the 50-50 American deal in Saudi Arabia and even when professedly willing to make some such bargain itself, the company was slow in disclosing its willingness and inept in capitalizing on the dramatic appeal of such an over-simplified formula. Most of its concessions during the bargaining had an air of reluctance about them which has permitted the Iranians to win every propaganda advantage.

The very fact of the British Government moving in openly to take over the negotiating responsibilities from company officials tended to prove the company’s failure in the field of public relations. When it attempted to remedy these shortcomings, it was alternately scornful and defensive, too far behind to mount any attack, or make any constructive program, if it had one, sound generous.

It is a lesson in industrial behavior worthy of serious study.


Related links:

Loss of Iranian Oil is U.S. Diplomatic Flop | Ray Tucker, Oct. 11, 1951

Harriman Must Show Great Diplomatic Ability | Edgar Ansel Mowrer, July 16, 1951

Soviet Tempts Britain with Iran ‘Deal’? | Constantine Brown, April 29, 1953

MOSSADEGH t-shirts — “If I sit silently, I have sinned”

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