Abadan Crisis - Nationalization

Nationalization

The AIOC was nationalized by the Iranian Parliament in March 1951. In Iran this was enormously popular and seen as a long overdue staunching of its national wealth which could now be harnessed to fighting poverty in Iran. In Britain the nationalisation was widely seen as an intolerable breach of contract or theft. British emissaries in the United States after the nationalisation, argued that allowing Iran to nationalise the oil company "would be widely regarded as a victory for the Russians" and would also "cause a loss of one hundred million pounds per annum in the United Kingdom's balance of payments, thus seriously affecting our rearmament program and our cost of living."

British warships blockaded Abadan. On 22 August, the British cabinet imposed a series of economic sanctions on Iran. It prohibited exports of key British commodities, including sugar and steel, directed the withdrawal of all British personnel from Iranian oil fields and all but a hard core of about 300 administrators from Abadan and blocked Iran's access to its hard currency accounts in British banks.

After the withdrawal of the British workers in the fall of 1951, the Iranians felt confident that they could easily hire non-British technicians to run the industry and then quickly train their own nationals to replace them. Unfortunately, this did not prove to be the case; the United States, Sweden, Belgium, the Netherlands, Pakistan, and Germany all refused to make their technicians available to the nationalized Iranian industry. Only Italy complied, demonstrating that most industrialized countries supported Britain over Iran in the nationalization dispute."

In July 1952, the Royal Navy intercepted the Italian tanker Rose Mary and forced it into the British protectorate of Aden on the grounds that the ship's petroleum was stolen property. News that the Royal Navy was intercepting tankers carrying Iranian oil scared off other tankers and effectively shut down oil exports from Iran.