Abdolhossein Teymourtash - Foreign Affairs

Foreign Affairs

The primary foreign policy objective pursued by Iran during the early Pahlavi era was to loosen the economic grasp of foreign powers on Iran, and in particular to mitigate the influence of Britain and the Soviet Union. While a number of individuals were appointed as Iran's Foreign Ministers, their capacity to act as the architects of the country's foreign affairs was nominal. It was the energetic Teymourtash who became the principal steward and strategist who managed Iran's foreign relations during the first seven years of the Pahlavi dynasty, a task for which he was eminently suited.

Teymourtash assumed the lead role in negotiating broadly on the widest range of treaties and commercial agreements, while Ministers ostensibly in charge of Iran's Foreign Ministry such as Mohammad Ali Foroughi and Mohammad Farzin were relegated mainly to administering official correspondence with foreign governments, and assumed roles akin to the Court Minister's clerk.

Among the first acts performed by Teymourtash in the realm of foreign affairs shotly after he assumed the position of Minister of Court was travel to the Soviet Union in 1926 on a two month visit. The lengthy discussions led to the adoption of a number of significant commercial agreements, a development deemed significant by ensuring Britain would be precluded from exercising its domineering economic position since the negotiation of the Perso-Russian Treaty of 1921, whereby the Soviet Government agreed to the removal of its troops from Iran. To this end, Teymourtash also attempted to assiduously foster improved economic ties with other industrialised countries, amongst them the United States and Germany.

During this period, Iran also assumed a lead role in cultivating closer ties with its neighbours, Turkey, Iraq and Afghanistan. All these countries were pursuing similar domestic modernization plans, and they collectively fostered increased cooperation and formed a loose alliance as a bloc, leading the Western powers to fear what they believed was the creation of an Asiatic Alliance. In the mid to late 1920s the Turkish and Iranian governments signed a number of frontier and security agreements. Furthermore, when King Amanullah of Afghanistan faced tribal unrest in 1930 which would ultimately lead to his removal from the throne, the Iranian government sent out several planeloads of officers of the Iranian Army to assist the Afghan King quell the revolt. Indeed, the diplomatic steps that were first taken in the 1920s, would eventually lead to the adoption of the non-aggression agreement known as the Treaty of Saadabad between the four countries in 1937.

Another significant initiative spearheaded by Teymourtash was the concerted effort to eliminate the complex web of capitulation agreements Iran had granted various foreign countries during the Qajar dynasty. Such agreements conferred extraterritorial rights to the foreign residents of subject countries, and its origins in Iran could be traced back to the Russo-Iranian Treaty of Turkmenchay of 1828. Despite considerable opposition from the various foreign governments that had secured such privileges, Teymourtash personally conducted these negotiations on behalf of Iran, and succeeded in abrogating all such agreements by 1928. Teymourtash's success in these endeavours owed much to his ability to methodically secure agreements from the less obstinate country's first so as to gain greater leverage against the holdouts, and to even intimate that Iran was prepared to break diplomatic relations with recalcitrant states if need be.

Teymourtash's success in revoking the capitulation treaties, and the failure of the Anglo-Iranian Agreement of 1919 earlier, led to intense diplomatic efforts by the British government to regularize relations between the two countries on a treaty basis. The ire of the British Government was raised, however, by Persian diplomatic claims to the oil rich regions of the Greater and Lesser Tunbs islands, Abu Musa and Bahrain in the Persian Gulf region. On the economic front, on the other hand, the Minister of Court's pressures to rescind the monopoly rights of the British-owned Imperial Bank of Persia to issue banknotes in Iran, the Iranian Trade Monopoly Law of 1928, and prohibitions whereby the British Government and APOC were no longer permitted to enter into direct agreements with their client tribes, as had been the case in the past, did little to satisfy British expectations. The cumulative impact of these demands on the British Government was well expressed by Sir Robert Clive, Britain's Minister to Tehran, who in 1931 noted in a report to the Foreign Office "There are indications, indeed that their present policy is to see how far they can push us in the way of concessions, and I feel we shall never re-establish our waning prestige or even be able to treat the Persian government on equal terms, until we are in a position to call a halt".

Despite an enormous volume of correspondence and protracted negotiations underway between the two countries on the widest array of issues, on the Iranian side Teymourtash conducted the negotiations single-handedly “without so much as a secretary to keep his papers in order”, according to one scholar. Resolution of all outstanding differences eluded a speedy resolution, however, since the British side progressed more tediously due to the need to consult many government departments.

The most intractable challenge, however, proved to be Teymourtash's assiduous efforts to revise the terms whereby the Anglo-Persian Oil Company (APOC) retained near monopoly control over the oil industry in Iran as a result of the concession granted to William Knox D'Arcy in 1901 by the Qajar King of the period. "What Persians felt", Teymourtash would explain to his British counterparts in 1928, "was that an industry had been developed on their own soil in which they had no real share".

Complicating matters further, and ensuring that such demands would in due course set Teymourtash on a collision course with the British Government was the reality that pursuant to a 1914 Act of the British Parliament, an initiative championed by Winston Churchill in his capacity as First Lord of the Admiralty, led the British Government to be granted a majority fifty-three percent ownership of the shares of APOC. The decision was adopted during World War I to ensure the British Government would gain a critical foothold in Iranian affairs so as to protect the flow of oil from Iran due to its critical importance to the operation of the Royal navy during the war effort. By the 1920s APOC's extensive installations and pipelines in Khuzestan and its refinery in Abadan meant that the company's operations in Iran had led to the creation of the greatest industrial complex in the Middle East.

By this period, popular opposition to the D'Arcy oil concession and royalty terms whereby Iran only received 16 percent of net profits was widespread. Since industrial development and planning, as well as other fundamental reforms were predicated on oil revenues, the government's lack of control over the oil industry served to accentuate the Iranian Government's misgivings regarding the manner in which APOC conducted its affairs in Iran. Such a pervasive atmosphere of dissatisfaction seemed to suggest that a radical revision of the concession terms would be possible. Moreover, owing to the introduction of reforms that improved fiscal order in Iran, APOC's past practise of cutting off advances in oil royalties when its demands were not met had lost much of its sting.

The attempt to revise the terms of the oil concession on a more favourable basis for Iran led to protracted negotiations that took place in Tehran, Lausanne, London and Paris between Teymourtash and the Chairman of APOC, First Baron, Sir John Cadman, 1st Baron Cadman, spanning the years from 1928 to 1932. The overarching argument for revisiting the terms of the D'Arcy Agreement on the Iranian side was that its national wealth was being squandered by a concession that was granted in 1901 by a previous non-constitutional government forced to agree to inequitable terms under duress. In order to buttress his position in talks with the British, Teymourtash retained the expertise of French and Swiss oil experts.

Teymourtash demanded a revision of the terms whereby Iran would be granted 25% of APOC's total shares. To counter British objections, Teymourtash would state that "if this had been a new concession, the Persian Government would have insisted not on 25 percent but on a 50-50 basis." Teymourtash also asked for a minimum guaranteed interest of 12.5% on dividends from the shares of the company, plus 2s per ton of oil produced. In addition, he specified that the company was to reduce the existing area of the concession. The intent behind reducing the area of the concession was to push APOC operations to the southwest of the country so as to make it possible for Iran to approach and lure non-British oil companies to develop oilfields on more generous terms in areas not part of APOC's area of concession. Apart from demanding a more equitable share of the profits of the Company, an issue that did not escape Teymourtash's attention was that the flow of transactions between APOC and its various subsidiaries deprived Iran of gaining an accurate and reliable appreciation of APOC's full profits. As such, he demanded that the company register itself in Tehran as well as London, and the exclusive rights of transportation of the oil be cancelled. In fact in the midst of the negotiations in 1930, the Iranian Majles approved a bill whereby APOC was required to pay a 4 percent tax on its prospective profits earned in Iran.

In the face of British prevarification, Teymourtash decided to demonstrate Iranian misgivings by uping the ante. Apart from encouraging the press to draft editorials criticizing the terms of the D'Arcy concession, he arranged to dispatch a delegation consisting of Reza Shah, and other political notables and journalists to the close vicinity of the oilfields to inaugurate a newly constructed road, with instructions that they refrain from visiting the oil installation in an explicit show of protest.

In 1931, Teymourtash who was travelling to Europe to enrol Crown Prince Mohammed Reza Pahlavi, and his own children at European schools, decided to use the occasion to attempt to conclude the negotiations. The following passage from Sir John Cadman, 1st Baron Cadman confirms that Teymourtash worked feverishly and diligently to resolve all outstanding issues, and succeeded in securing an agreement in principle:

"He came to London, he wined and he dined and he spent day and night in negotiating. Many interviews took place. He married his daughter, he put his boy to school, he met the Secretary of State for Foreign Affairs, a change took place in our government, and in the midst of all this maze of activities we reached a tentative agreement on the principles to be included in the new document, leaving certain figures and the lump sum to be settled at a later date."

However, while Teymourtash likely believed that after four years of exhaustive and detailed discussions, he had succeeded in navigating the negotiations on the road to a conclusive end, the latest negotiations in London were to prove nothing more than a cul de sac.

Matters came to a head in 1931, when the combined effects of overabundant oil supplies on the global markets and the economic destabilization of the Depression, led to fluctuations which drastically reduced annual payments accruing to Iran to a fifth of what it had received in the previous year. In that year, APOC informed the Iranian government that its royalties for the year would amount to a mere 366,782 pounds, while in the same period the company's income taxes paid to the British Government amounted to approximately 1,000,000. Furthermore, while the company's profits declined 36 percent for the year, the revenues paid to the Iranian government pursuant to the company's accounting practices, decreased by 76 percent. Such a precipitous drop in royalties appeared to confirm suspicions of bad faith, and Teymourtash indicated that the parties would have to revisit negotiations.

However, Reza Shah was soon to assert his authority by dramatically inserting himself in to the negotiations. The Monarch attended a meeting of the Council of Ministers in November 1932, and after publicly rebuking Teymourtash for his failure to secure an agreement, dictated a letter to cabinet cancelling the D'Arcy Agreement. The Iranian Government notified APOC that it would cease further negotiations and demanded cancellation of the D'Arcy concession. Rejecting the cancellation, the British government espoused the claim on behalf of APOC and brought the dispute before the Permanent Court of International Justice at the Hague, asserting that it regarded itself "as entitled to take all such measures as the situation may demand for the Company's protection." At this point, Hasan Taqizadeh, the new Iranian minister to have been entrusted the task of assuming responsibility for the oil dossier, was to intimate to the British that the cancellation was simply meant to expedite negotiations and that it would constitute political suicide for Iran to withdraw from negotiations.

Shortly thereafter, Teymourtash was dismissed from office by Reza Shah. Within weeks of his dismissal in 1933, Teymourtash was arrested, and although charges were not specified, it was rumoured that his fall related to his secretly setting up negotiations with the APOC. In his last letter addressed to his family from Qasr prison, he defensively wrote:

"according to the information I have received, in the eyes of His Majesty my mistake seems to have been that I defended the Company and the English (the irony of it all - It has been England's plot to ruin me and it is they who have struck me down); I have refuted this concoction which was served up by the English press; I have already written to Sardar As'ad telling him I never signed anything with the company, that our last session with Sir John Cadman, 1st Baron Cadman and the others had broken off".

The principal reason for Teymourtash's dismissal very likely had to do with British machinations to ensure that the able Minister of Court was removed from heading Iranian negotiations on discussions relating to a revision of the terms of the D'Arcy concession. As such, the British made every effort to raise concerns with the suspicion-prone Reza Shah that the very survival of his dynasty rested on the shoulders of Teymourtash who would not hesitate to take matters into his own hands should the monarch die. To ensure that Reza Shah did not consider releasing Teymourtash even after he had fallen from favour, the British also took to persuading the British press to pen flattering stories whereby they attributed all the reforms that had taken place in Iran to him "down to, or up to, the Shah's social and hygiene education".

It is generally agreed that Teymourtash proved a convenient scapegoat for the deteriorating relations between the British and Iranian governments After the dispute between the two countries was taken up at the Hague, the Czech Foreign Minister who was appointed mediator put the matter into abeyance to allow the contending parties to attempt to resolve the dispute. Reza Shah who had stood firm in demanding the abolishment of the D'Arcy concession, suddenly acquiesced to British demands, much to the chagrin and disappointment of his Cabinet. A new agreement with the Anglo-Persian Oil Company was agreed to after Sir John Cadman visited Iran in April 1933 and was granted a private audience with the Shah. A new Agreement was ratified by Majles, on May 28, 1933, and received Royal assent the following day.

The terms of the new agreement provided for a new sixty year concession. The Agreement reduced the area under APOC control to 100,000 square miles (260,000 km2), required annual payments in lieu of Iranian income tax, as well as guaranteeing a minimum annual payment of 750,000 pounds to the Iranian government. These provisions while appearing favourable, are widely agreed to have represented a squandered opportunity for the Iranian government. The agreement extended the life of the D'Arcy concession by an additional thirty-two years, negligently allowed APOC to select the best 100,000 square miles (260,000 km2), the minimum guaranteed royalty was far too modest, and in a fit of carelessness the company's operations were exempted from import or customs duties. Finally, Iran surrendered its right to annul the agreement, and settled on a complex and tediously elaborate arbitration process to settle any disagreements that should arise. Despite the resolution of the Iranian dispute with APOC, Teymourtash remained incarcerated in prison, and charges of minor embezzlement were leveled against him. The increasingly arbitrary Pahlavi Monarch had previously metted out similar fabricated charges against other leading politicians before, a course of action which would be repeatedly resorted to against others as well after Teymourtash had been removed. A court sentenced Teymourtash on spurious charges to five years of solitary confinement and a total fine of 10,712 pounds sterling and 585,920 Rials on charges of embezzlement and graft. (figures are in 1933 values)