Oil Revenue and Iranian Economy

OPEC's founding

Founded by Iran, Iraq, Saudi Arabia, Kuwait and Venezuela; a 1960 memorandum stated the charter aimed at the "unification of oil policies of member countries" and to "safeguard the interests of the members"

1973 oil price rises

CIA OPEC Handbook 1986: members met in Kuwait in 1973 to raise the price to $5.12 per barrel; Iran argued in December in Tehran to raise it to $11.65 per barrel to offset higher-priced manufactured goods imported from industrial countries

Strait of Hormuz

NYT 1974: 60% of Western European and 50% of US oil consumption passed through it; Premier Hoveida called it the "jugular vein" and the "Shah's lake"

Iran as a rentier state

Iran rented out its natural resources; oil revenue rose from $34 million in 1954-55 to $5 billion in 1973-74 to $20 billion in 1975-76, making up 60% of government revenue

The 1954 consortium

Gave Iran 50% of the profits, but 40% of the oil shares went to America and 40% to BP

US economic aid

The US gave $1.2 billion of economic aid in the decade following the coup; GNP increased at an average rate of 10% between 1963-73, second only to Japan

Iran California Company

Planned a $10 million investment into crops of wheat, cotton and oil seeds, displacing 58 villages in Khuzestan

Proletarianisation of the peasantry

Iran's peasantry was forced to work for Farm Corporations; Iran went from a net exporter of food in the 1960s to importing $1 billion per year of agricultural products, to the detriment of small rural farmers

Industrial growth

1953-75: small factories increased from 1,500 to 7,000, and large factories from under 100 to 150

Old landed families

The Bayats, Moqadams and Davlus became capitalist entrepreneurs owning 85% of large firms in insurance, banking and manufacturing

George Wilson on Iran

President of Trans World Agriculture: "you can sit down in other countries and figure out more profit…but they don't have the stability than Iran does"

Khomeini on foreign exploitation

April 1964 Embassy telegram noted his claim the government was "giving away our resources to foreigners"; in his 1 December 1978 PBS interview: "The American government, they have committed the biggest crime by imposing on our people the Pahlavi dynasty. Through this support they have plundered our natural resources"

Class structure: bazaar

Despite modernisation, the bazaar controlled half of handicraft production and two-thirds of retail trade

Class structure: salaried and working class

The salaried class (rowshanfekr) included teachers, engineers and civil servants; the urban working class was more than 30% of the labour force, with 880,000 working in modern industrial factories