Iran vs. Point Four

July 30, 1951

In 1901, the Iranian Government granted, on terms and for a consideration that must have been satisfactory at the time, a concession to what is now the Anglo-Iranian Oil Co. In 1933, Iran granted the company another 60-year concession under which the government got a greatly increased share of profits. A few months ago the Iranian Government repudiated its contract and seized the properties of the company, including its huge installations. The company’s value is estimated at $600,000,000 to $1,000,000,000.

In the wicked nineteenth century the British Government would probably have sent warships and troops immediately to Iran to protect the lives and property of British citizens. Such action is now universally condemned as “imperialism.” So the British, after delays and vacillation, submitted the dispute to the International Court of Justice at The Hague. When the British got a verdict substantially in their favor, however, the Iranians denounced the court and rejected its decision.

What happens now? How does the International Court enforce a decision when a country spurns it? Through the United Nations? Is it likely that the U.N. would order international troops to protect British property? Would any nation besides Britain actually send troops for that purpose? And would not the fatal delays involved in the whole process in fact decide the issue against Britain?

So far as we can see at the moment, the actual result of present procedure is that Britain and the Atlantic Pact nations have lost a vital source of war—strategic oil. Worse, the probabilities seem high that, in one way or another, Iran’s oil will now fall under the control of the Kremlin before a year has passed. Stalin will have won another great bloodless victory—bloodless, at least, for the Russians.

The course of our own government in this affair has been peculiar. After the irresponsible Mossadegh had rejected the Hague Court’s decision, President Truman sent him an astonishing message. In it he wrote: “You know of our sympathetic interest in this country in Iran’s desire to control its natural resources. From this point of view we were happy to see the British Government has on its part accepted the principle of nationalization.”

This seems to support the Iranian contention that a government is entitled to sell a concession, invite foreign capital in, then repudiate its contract and seize the capital. It clearly supports the “principle of nationalization”—i.e., the principle of government seizure, ownership, and management, the principle of socialism. And through the Export-Import Bank Mr. Truman has offered the Iranian Government $25,000,000 to reward its expropriation and to finance its socialistic planning.

In the old days before the Export-Import Bank, ECA, and Point Four, the governments of economically “underdeveloped” countries, like Iran, before joyfully seizing the foreign investments already made there, would have had to reckon with the consequence of an immediate halt to any further significant investment from abroad. But today they can get American Government funds by a simple form of political blackmail. They need merely threaten to seize Western investments, or to bring about a famine by bad policies, or to go Communist, or not to like us.

As long as they have such easy ways of getting money, such governments need not and will not bother to set their economic house in order. They need not fear the usual consequences of breach of faith. Point Four is based on the assumption that what the “backward areas” chiefly need is technical advice. What they really need is internal political stability, order, and good faith, and the adoption of policies calculated to attract the confidence rather than distrust of domestic as well as foreign private capital. That is why our government foreign give-away and lend-loose programs do not in fact tend to increase world production. On net balance they retard world production and the rise of living standards.