An Inflammable Situation
House of Lords | May 29, 1951

The Mossadegh Project | November 8, 2021                      

A discussion in the British House of Lords on what to do about oil nationalization in Iran. This was followed by a lengthy debate concerning Britain’s own nationalized gas industry.

Persian Oil Dispute

3:45 pm

My Lords, with the permission of the noble Marquess, Lord Reading, perhaps it may be convenient if I take this opportunity of making a Statement on Persia. This Statement is being made by the Foreign Secretary in another place. It is as follows:

[Reading a statement by Herbert Morrison, which Morrison read the same day in the House of Commons]

“In my Statement in the House on May 1, I explained the background of the dispute which had arisen between the Persian Government and the Anglo-Iranian Oil Company, and His Majesty’s Government’s attitude towards it. The following is a summary of the main developments which have taken place since then.

“On May 2 I sent a personal message to the Persian Prime Minister asking his Government to refrain from unilateral action against the oil company and again suggesting that we should negotiate a solution. Dr. Musaddiq’s reply, delivered to me on May 8, contained no response to my suggestion of negotiations and amounted to a reaffirmation of his intention to execute the Persian nationalisation laws.

“The Anglo-Iranian Oil Company then asked the Persian Government to adopt the arbitration procedure provided for in the Concession Agreement of 1933, and nominated the company’s arbitrator, Lord Radcliffe. [Cyril Radcliffe]

”On May 19, His Majesty’s Ambassador at Teheran left with the Persian Government an Aide-Mémoire which has been published in the Press. Briefly, it set out again our view of the legal position, reserved our right to take the case to the International Court if the Persian Government rejected the company’s request for arbitration, reiterated our hope that the problem could be solved by negotiation, and offered to send a Mission to Teheran for that purpose.

“The Persian Government have not yet replied to this Aide-Mémoire. On the other hand, on May 20 the Persian Ministry of Finance wrote to the company’s manager at Teheran rejecting the company’s request for arbitration, claiming that the nationalisation of the Persian petroleum industry was not referable to arbitration and that no international authority had competence to deal with the matter. The letter went on to invite the company to nominate representatives to meet the Oil Committee ‘to arrange the execution of the nationalisation laws.’ On May 24 the Ministry of Finance sent the manager a further letter, in terms which amounted to an ultimatum, giving the company until May 30 to send representatives to meet the Oil Committee, failing which the Persian Government would themselves proceed to execute the laws.

“In the light of these two communications, His Majesty’s Government felt obliged to institute proceedings in the International Court of Justice at the Hague, and did so on May 26. In their application they asked the Court to decide that the Persian Government were under a legal obligation to submit their dispute with the Anglo-Iranian Oil Company to arbitration, or, alternatively, to decide that the Persian Government were not entitled to alter the Concession Agreement, even by legislation, except by agreement with the company. A copy of the application is being placed in the Library, and summaries of it have already appeared in the Press. I therefore do not think I need refer further to it now.

“At the same time the company, still following the procedure laid down in the 1933 Agreement, has asked the President of the Hague Court to nominate a sole arbitrator, since the Persian Government have refused to appoint an arbitrator. The company has also informed the Persian Minister of Finance [Mohammad Ali Varasteh] that, as a measure of respect to the Persian Government, its representative will, as requested, meet the Oil Committee but will be able only to listen to what the Committee have to say and report it to the company’s head office.

“So much for recent developments. His Majesty’s Government are still anxious to see this dispute settled by negotiation; and their offer to send a special Mission, if that would help, still stands. Moreover, as His Majesty’s Ambassador in Teheran has informed the Persian Government, while His Majesty’s Government cannot accept the right of the Persian Government to repudiate contracts, they are prepared to consider a settlement which would involve some form of nationalisation, provided (a qualification to which they attach importance) it were satisfactory in other respects. Their difficulty has been, and still is, that the Persian Government have hitherto not seen fit to respond in any way to their repeated suggestions of negotiation, but on the contrary have indicated merely their intention to proceed unilaterally. His Majesty’s Government could not accept such a procedure, and they believe that their attitude in this matter is generally recognised and understood. In particular, they have noted with satisfaction that the United States Government have spoken publicly against the unilateral cancellation of contractual relationships and actions of a confiscatory nature. His Majesty’s Government earnestly hope that wiser counsels, taking full account of the dangerous potentialities of the present situation, will prevail in Teheran, and that negotiations can be initiated in an atmosphere of reason and good will.”

3:52 pm
THE MARQUESS OF SALISBURY [Robert Gascoyne-Cecil aka Viscount Cranborne, Conservative Party]
My Lords, I should like to thank the noble Lord for the full statement that he has made on behalf of His Majesty’s Government. This is clearly an inflammable situation, and no one, in any part of the House, would wish to say anything which would make it more so. This afternoon, I would, if I may, and with real deference, emphasise the importance not merely of our doing nothing that is actually weak in defence of our just cause, but of doing nothing which gives the impression of being weak. That impression, I think, would be dangerous indeed, and not in the interests of peace. As I see it, the point is not whether or not at some proper time Persia should nationalise her oil industry. The point is whether Persia has any justification for repudiating a financial Agreement to which she was a willing party. I believe that in no circumstances should we accept that assumption. From the Statement we have just heard—and I should like to give it more study before saying anything very definite—I am a little afraid that the Government’s Statement of their actions and their opinions is not sufficiently forthright in this respect. That is the impression I have gained, and that is the danger that I beg them to guard against. In the meantime, I suggest to His Majesty’s Government that it would be helpful to Parliament and to the nation if they could produce a White Paper, giving not only the Agreement itself but all the recent Notes and communications which they have had with the Persian Government, in order that we may be able to form our own opinion on the events that have taken place.

LORD HENDERSON [William Henderson again]
My Lords, the noble Marquess will not expect me to give an undertaking at this moment about the publication of a White Paper, but I will certainly raise with my right honourable friend the Secretary of State the suggestion that he has made.

• Source: Parliamentary Debates (Hansard): House of Lords Official Report
[Annotations by Arash Norouzi]

Richard Stokes’ Second Thoughts on Iranian Oil (1951 Letter)
Richard Stokes' Letter to Clement Attlee, Aga Khan Concurs (1951)


Related links:

British Oil Interests In Persia | House of Lords, May 1, 1951

Trouble In Iran | May 21, 1951 editorial

A Principle in Persia | The Tablet (London), May 19, 1951

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

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