China and Iran: Ancient Partners in a Post-Imperial World

2. The PRC--Kingdom of Iran Relationship, 1971-78

2 / The prc–Kingdom of Iran Relationship, 1971–78 the shah’s “great civilization” and mao’s united front penchant M ohammad Reza Pahlavi, the shah or king of Iran from 1941 to 1979, wasinspiredbyavisionof restoredIraniangreatness.Inthisvision, Iran was to be a prosperous, industrialized, welfare state with formidable economic and military power. Iran’s enhanced power would enable it to deal eªectively with challenges to Iranian interests in the Persian Gulf andnorthwestIndianOceanregionandtoconductrelationswithIran’sneighbors from a position of strength. Iran would be the paramount power in the Persian Gulf–Arabian Sea region, dealing confidently and proactively with challenges to Iran’s interests in that region. Iran’s achievement of a “great civilization ” was the term the shah sometimes used to refer to the realization of this vision.1 The shah, like his father, Reza Khan, was a modernizer in the mold of Japan’s Meiji emperor or Turkey’s Mustafa Kemal Ataturk. Like Meiji and Ataturk, the shah saw Western society as the model for modernization and pushed through extremely ambitious programs designed to tear his nation away from traditional ways and propel it along the path of modernization. The shah was determined to override the inevitable opposition to such an ambitious eªort, although his ultimate flight into exile in 1979 indicated he lacked the iron resolve necessary for this task.2 The shah recognized internal economic development as the crucial basis for such a “great civilization,” and from the early 1960s he presided over ambitious modernization programs financed by oil revenues. In 1963 the shah launched a wide-ranging land reform program dubbed the “white revolu29 tion,” giving land to 1.6 million farming families and thereby greatly alleviating the problem of tenant farming. Land reform also deepened tensions between the shah’s government and Iran’s Islamic clerics since mosques or clerics were often landlords. Other of the shah’s modernizing reforms also had the eªect of reducing the clergy’s influence in the villages: the establishment of state-run schools, the extension of political rights to women and the enforcement of a minimum age of eighteen years for females at marriage, thedevelopmentof modernelectronicmasscommunication,andtheembrace of Western fashions by much of Iran’s elite. Female wearing of the chador was banned from universities and government o‹ces. Industrialization and urbanization proceeded at a rapid pace.3 Realization of state control over Iran’s oil and gas resources was a key component of the shah’s vision of restored Iranian greatness. According to R. K. Ramazani, Iran under the shah waged a twenty-year struggle to overthrow what Iranians universally viewed as a humiliating agreement imposed on Iran by Western oil companies after the u.s.-sponsored 1953 coup ousting reformist leader Muhammad Musaddiq. Within three years of the unsatisfactory 1954 oil agreement, the shah was building up the National Iran Oil Company(nioc)intoafull-rangeinternationaloilcompanycapableof someday assuming operation of Iran’s oil industry. By the late 1960s that objective had been realized; nioc was involved in a wide range of exploration, production, and “downstream” operations, domestically and internationally, in cooperation with nonmajor Western oil companies outside the geographic scope of the 1954 agreement. By 1968 the shah began challenging the big Western oil companies within the geographic area of the 1954 agreement. Through a series of tough negotiations and confrontations between 1968 and 1973, Iran forcedthebigWesterncompaniestoaccept,first,increasesinproductionlevels andthenincreasedtaxesandper-barrelsalesprices.By1970theshahhadestablished the principle that Iran’s oil resources constituted its national wealth, and that the government had the right to take whatever measures it found necessary to use that wealth for the benefit of the nation’s development. The culmination of this two-decade-long struggle came in 1973 with the nationalization of Iran’s oil resources. On the tenth anniversary of the launching of the white revolution, the shah confronted the Western oil majors’ signatory to the 1954 agreement with an ultimatum. Either they could sign a new agreement recognizing Iran’s full sovereignty over its oil, or they could insist on continuing the 1954 agreement. In the former case, the companies could continue cooperating with Iran on friendly terms. In the latter case, the Western firms would suªer a number of penalties. The companies saw the wisdom of continued cooperation with the shah’s government, and a new 30 the prc–kingdom of iran relationship agreement was signed in February establishing Iran’s full sovereignty over all oil...