Your Official Source for Cold War Politics and History

By the 1970s Iran’s rentier state had broad influence — politically, socially, and economically.

The shah had adopted a capitalistic program of industrial and economic expansion to be fueled by the regime’s expenditures on industry, construction and services. The program relied on the Third, Fourth, and Fifth Development Plans (1962-1977) for implementation and planning. The expenditures delineated in these plans were closely linked to shifts in the price of oil and, thus, to the world capitalist economy.

When the OPEC oil cartel raised prices in the early 1970s, the shah had a large influx of revenue that could be used for industrial and military modernization. When world demand for oil contracted from 1975-1977, projects had to be cut and many workers lost their jobs. Since the shah personally made all major decisions, resentment with such happenings was focused on his person. Moreover, the reliance on oil was closely intertwined with the activities of foreign transnational corporations and issues of national security.

To compare, the arrival of the American multinational in Taipei in the early 1960s had the effect of fueling extraordinary economic growth. Not only did MNCs provide labor intensive employment for thousands of Taiwanese (especially for young women), they inaugurated a proliferation of SMEs since the state required the use of local inputs wherever possible.

The role of the transnational corporation in Iran, on the other hand, was quite different. Two major sectors — oil and defense — had the most substantial impact over time.

Although oil had been Iran’s link to the global economic system since its discovery in 1908, in the context of the Cold War conflict it became a strategic commodity.

American administrations were forced to come to grips with the strategic nature of oil because, as Simon Bromley notes:

. . . oil alone, at least in the postwar period, played such a large and central role in military mobility . . . . Because of this strategic quality, US control over the international oil order played a vital role in the constitution and maintenance of its postwar hegemony.

Oil represented both the military and the economic aspects of American grand strategy.

In Taipei, the penetration of the multinational corporation, while facilitated by cooperation between the US military and the KMT government, had been dictated by the economic needs of the capitalist enterprise — a search for cheap labor and high profits.

In Iran, the penetration of the multinational oil corporation was determined by both the strategic necessity of ensuring access to oil for military purposes and by the competitive nature of the capitalist system. Consequently, the pressures on American oil companies from the US government were at least equal to those emanating from the Iranian state.

In the case of oil . . . US policy in the Middle East — specifically, in Saudi Arabia during the 1940s, in Iran in 1953-1954, and with respect to OPEC until the winter of 1973-1974 — was primarily concerned with the stability and general pro-Western orientation of the conservative oil-producing regimes, a task rendered problematic by the United States’ simultaneous support for Israel. US policy in the period leading up to the events of 1973-4 maintained this stance despite the objections of the major oil companies to price increases and nationalizations.

Still, while American oil companies were sometimes pressured by the US government to make concessions to Iran, acting in the interest of US national security rather than according to their preferred corporate strategy, unlike the case of Taiwan, the Iranian state had not been able to dictate MNC entry on its own terms.

In order to successfully resolve the Mossadegh crisis of the early 1950s, Iran had opened its doors to American oil companies under less than optimal conditions.

Regardless, by the mid 1970s, Iran had gained control. The reasons for this were twofold.

While the stated goal of the United States government was the containment of communism, oil was also of growing importance to the general coherence of world capitalism and the unity of the world market. Importantly, in the case of Iran, oil also became linked to the international arms trade.

As oil revenues grew almost exponentially, profits were used to obtain the world’s most technologically advanced weaponry which Iran was now encouraged to purchase in order to implement the Nixon Doctrine.

{ 0 comments }