Businessweek Archives

How Oil Money Polluted Iran


Books

HOW OIL MONEY POLLUTED IRAN

BLOOD & OIL

Memoirs of a Persian Prince

By Manucher Farmanfarmaian and Roxane Farmanfarmaian

Random House 514pp $35

Oil is invariably seen as a first-class ticket out of poverty and backwardness for developing countries. Yet in practice, the bonanza often brings epic misery in its wake. Look at the corruption and political strife that have plagued Mexico for most of this century, or the tragic costs of helter-skelter urbanization in such energy-rich lands as Algeria and Nigeria. No wonder Ahmed Zaki Yamani, the former Saudi Arabian Oil Minister, used to warn that oil riches were as much a curse as a blessing.

Probably no oil exporter has been more cursed than Iran. It was the first country in the Middle East to have an oil industry, and oil has played a central role in the turmoil that has rocked Iran in this century. Oil was at the heart of Iran's troubled relations first with Britain and then, after World War II, with its new protector, the U.S. By the 1970s, oil riches were not only fueling the delusions of the Shah but had turned traditional Iranian society on its head. "Oil wealth poured down like a huge river and drowned Iran," says Manucher Farmanfarmaian in Blood & Oil, an autobiographical account of 20th century Iran written with his daughter, Roxane Farmanfarmaian, an editor at Publishers Weekly.

This important and well-written tale benefits from Manucher Farmanfarmaian's inside perspective and eye for detail. In 1917, when he was born, Iran was in the twilight days of the Qajar monarchy that had ruled the country since the 18th century. Farmanfarmaian's father, a leading Qajar prince, held sway over a Tehran palace, complete with a harem and 700-member household. One family retainer was a broad-shouldered guard named Reza Khan, who later rose to military prominence and ultimately overthrew the Qajar dynasty in 1925, proclaiming himself Shah.

The Farmanfarmaians managed to prosper under the Pahlavis, Reza Khan's new dynasty. But as members of the old aristocracy, they were never quite trusted. Manucher, who in 1941 returned to the country from Birmingham University with a petroleum-engineering degree, was well-placed to start a career in oil.

But Persians had little say in their own industry. Oil was discovered in Iran by English prospectors in 1904, and by the outbreak of World War I, Persia's rich resources had become the British Empire's most important strategic prize: Two years earlier, the Royal Navy had begun converting its entire fleet from coal to oil. So vital was Persian oil to the war effort that London bought a controlling stake in Anglo-Iranian Oil Co. (AIOC), which held the concession.

As Farmanfarmaian discovered, Persians were second-class citizens in Abadan, the sweltering Persian Gulf town where AIOC owned and ran the world's largest refinery. More than 2,000 British executives had their clubs, private villas, and Indian bodyguards, while Persian employees toiled away on day wages without days off, education, or decent housing. Just 16 Iranians with British degrees had made it into AIOC's middle management by the early 1940s. And total segregation was the rule, as Farmanfarmaian learned when he tried getting a ride his first day of work. "Mine's a British bus," shouted the driver. "No Persians allowed."

Such racist and imperious behavior fed growing anti-British resentment. To make matters worse, AIOC and the British government refused to increase royalties paid to Iran, though other oil producers in the region were starting to get far better deals. In the end, this led to Iran's fateful 1953 nationalization of AIOC.

The British era was over, and the American one had begun--"a presence that eventually proved too suffocating to bear," writes Farmanfarmaian. The Shah's disastrous, American-backed economic reforms in the early 1960s angered the elite and the middle class and led to the first revolt of the Islamic clergy. Rioting was brutally suppressed. But the Americans, myopic as ever, were taken in: "What's going on in Iran," said an effusive Lyndon Johnson in 1964, "is about the best thing going on anywhere in the world."

It was monumental self-deception that continued right up to Jimmy Carter, who famously toasted Iran as "an island of stability" during a stopover in Tehran on New Year's Eve, 1978. The country by that time was going up in flames. The Shah, despite having built the world's fifth-largest standing army, clearly had lost the will to govern. Barely one year later, he and his family fled the country. Farmanfarmaian, hounded by trigger-happy thugs of the new Islamic regime, lingered on in Tehran for another year before a harrowing escape over the border into Turkey.

Could Iran have avoided its slide into Islamic fundamentalism? Farmanfarmaian suggests not. Decades before, the battle for control of Iran's oil had already sparked the xenophobic nationalism that ultimately would lead to the rise of Ayatollah Ruholla Khomeini. As early as the 1950s, Iranian cities had begun to fill up with displaced villagers who were "overwhelmed by the onslaught of Westerners," writes Farmanfarmaian. "They felt threatened by what they saw as the moral laxity of Western values.... The sole continuity for the peasants was the unbending rituals of their clerical mentors--and the overarching strength of Allah." Today, 18 years after Iran's Islamic revolution, the world is still grappling with the consequences.BY JOHN ROSSANTReturn to top


China's Killer Profits
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus