The Persian-British Oil Dispute

Courtesy Reuters

ON MAY 28, 1901, William Knox D'Arcy obtained an exclusive petroleum concession for a period of sixty years covering all of Persia except the five northern provinces. On November 27, 1932, the Persian Government announced the cancellation of the concession, which since 1909 has been owned by the Anglo-Persian Oil Company, a British corporation in which the British Government is a majority stockholder. Great Britain promptly denied Persia's right to cancel the contract. After rejecting a British proposal to refer the dispute to the Hague Court, Persia agreed to its submission to the Council of the League of Nations. During the February meeting of the Council, Great Britain and Persia agreed that the League proceedings should be suspended until the Council meeting in May, and that meanwhile direct negotiations would be carried on by the Anglo-Persian Oil Company and the Persian Government regarding a new concession.

The commercial production of petroleum in Persia, all of which is monopolized by the Anglo-Persian Oil Company, amounted in 1932 to about 6,000,000 tons. In the preceding year Persia ranked fifth among the producing countries of the world, being exceeded only by the United States, Russia, Venezuela and Rumania. The Anglo-Persian Oil Company -- an organization which has great financial strength and which possesses extraordinarily rich petroleum deposits, a worldwide marketing system, and strong alliances -- ranks at present among the leading petroleum companies of the world. It has developed in Persia a modern industry, the only one of any importance that the country has had.

In its communication of November 27 to the company, the Persian Government declared that it "cannot legally and logically consider itself bound to the provisions of a concession which was granted prior to the establishment of a constitutional régime, in view of the manner in which such concession was obtained and granted at that time." About two weeks later, more specific reasons were advanced, including charges that the concession had been obtained under pressure, that the amount of royalty had been unfairly calculated, and that the

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