The present Iranian situation has a long historical background. The Anglo-Iranian Oil which has exploited the oil of Iran, is under the direct control of the British government, and this company and other concessions in the middle eastern area provide the bulk of Britain’s oil.

The Anglo-Iranian Oil Co. has had such power that in some ways it has been almost an extraterritorial government; this concession now abuts sharply against the growing nationalism of Iran.

As Angus Sinclair puts it in a comprehensive study titled Iranian Oil, Iranian “pride in sovereignty and freedom of action in internal affairs must be reconciled with the economic necessity of Great Britain.”

The word “vital” is perhaps too strong to apply, but the oil of Iran is well-nigh vital, economically at least, to Britain.

Hence the threatened complete nationalization of the Anglo-Iranian Oil Co.—which is not just a private company but an agency partly owned by, and entirely controlled by, the British government—has been viewed with the greatest seriousness by Britain, and if the Iranians attempt complete seizure of the company’s plants, the British may well move troops into the Persian Gulf region.

The results of such a move might, in turn, induce Russian reaction; Soviet troops might move across the northern borders of Iran, and in effect the country might be partitioned as it was during and after World War II, with consequent increased dangers to world peace.

There is another and perhaps equally dangerous possibility. If the British move—or even if they do not—the Communist Tudeh Party in Iran might, possibly with covert Russian help, stage an internal coup or come to power by quasi-legal means.

This seems unlikely, in fact impossible, unless Russia intervenes openly or stirs up some of the Iranian tribes, so long as the Iranian army and police remain loyal to the Shah, Mohammed Riza Pahlevi. [Mohammad Reza Pahlavi]

American observers who have recently been in the Middle East believe that the army, which numbers 60,000, and the police, about 21,000, will remain loyal and will never support the Tudeh party.

The army’s pay, however, was about two months in arrears some time ago and only in recent weeks has part of this pay deficit been made up.

Obviously, with nationalism flaming brightly, and with Soviet and Iranian Communists doing their best to stir up trouble, the situation is explosive.

Mr. Sinclair, in his study, offers a number of logical observations—which, however, are certain to fall upon emotional ears.

He comments, “There is little doubt that in the past Iran has received a disproportionate share of the net profits. The British government and company stockholders have benefited to a much greater extent than the Iranian government . . . in the past, Iranians have felt that they did not occupy administrative positions in the company commensurate with their ability.”

However, Mr. Sinclair points out that complete nationalization and seizure of the company properties by Iran with attempts by that government to operate those properties offers no solution of Britain’s need for oil and Iran’s need for revenue.

He declares:

“Iran is not in a position to render just compensation for expropriated company property.

“Iran does not possess the industrial capacity to operate the company’s Iranian properties with any degree of efficiency.

“Iran does not control any outlets for petroleum products nor does she possess any foreign marketing facilities.

“Disruption of the company's operations will adversely affect the treasury of Iran and will cause widespread unemployment and unrest.”

Mr. Sinclair urges a “mandatory” a cooling-off period for both sides and then negotiations based on “equality of interest and parity of return to both parties.”

This is obviously a sane and logical program, but the “commissar for mucking things up,” who wears many medals on his chest for past services rendered to the Kremlin, is going to be doing his best to stir up the “unrest” that Mr. Sinclair fears. It is clear that London as well as Teheran must exercise careful restraint.