3 - The Mosaddeq Challenge

Summary

In 1951, Mohammed Mosaddeq rose to power in Iran and nationalized the country’s British-owned oil industry. The nationalization triggered an international crisis as the British, together with major oil companies, placed an embargo on Iran, effectively de-integrating Iranian oil from the global oil market. Convinced that pressure on Mosaddeq would worsen Iran’s political instability and push the country toward communism, the United States attempted to broker a settlement that would produce a suitable definition of “nationalization,” satisfying Iranian nationalism while preserving the dominance of the oil oligopoly. Successive negotiations in 1951 and 1952 failed to produce a settlement. A myth of Iranian incapacity obscured the companies’ use of market power to isolate Iran while the United States helped redirect flows of oil to make up for Iran’s de-integration.