Contrast Between the Saudi and Iranian Relations with the West Over Oil

The "founder" of Saudi Arabia, Ibn Saud -- the person who first obtained control of the greater part of the Arabian peninsula -- was supported by funds from Chevron, the first to discover commercial quantities of oil around the Persian Gulf. Over time the joint ventures between US oil companies and the Saudi government changed -- by the late 'eighties, US oil interests had been bought out, compensated, by the Saudis. But this peaceful transition from joint to complete Saudi ownership was enabled by careful attention to not follow the Iranian experience.

The British engaged in joint oil production with the monarch of Persia just prior to WWI. The joint venture was renegotiated in 1932 giving Persia a greater share of the profits. When Persia changed its name to "Iran" in 1935 they also renamed the joint venture as the Anglo-Iranian Oil Company. As time went on Iran demanded more of the profits and in 1951 the oil company was nationalized and the person most responsible for nationalization was Mohammed Mossadegh -- Time's 1952 Man of the Year.

Click for Source The power of the Iranian monarch, Riza Shah followed by his son, Shah Mohammed Reza Pahlevi, had been in decline as the secular, democratic forces of the Iranian parliament and Prime Minister had been acquiring power. When the parliament voted to nationalize oil they named Mossadegh, the chief advocate of nationalization, as Prime Minister in 1951. It was the British who first advocated a covert operation to support a military coup to remove the Prime Minister, dissolve parliament and restore Reza Pahlevi as an absolute monarch. The British approached US President Truman who was not attracted to the idea. But the anti-communist period of the McCarthy era was on the ascendency in the US and the new (1952) Eisenhower administration was concerned about Iran's relations with the Soviets and was, therefore, more sympathetic to British concerns. Allen Dulles, head of the CIA, allocated resources in 1953 to agents in Tehran
  "to bring to power a government which would reach an equitable oil settlement [with Britain], enabling Iran to become economically sound and financially solvent, and which would vigorously prosecute the dangerously strong Communist Party."
More recent publications (e.g., Guardian May 2000) indicate that British intelligence operatives (MI6) helped topple Mossadegh.

In retrospect
 "What we had not predicted was that a 78 year old man, an Ayatollah who had spent 14 years in exile, could forge together these forces and turn all of these volcanos into one immense volcano, into a national and real revolution." -- Stansfield Turner, Director of the CIA

Click for Source
After twenty years of increasingly despotic rule, the Shah (picture on the left) was overthrown by Islamic Shiite fundamentalists led by Ayatollah Khomeini. The 1979 Iranian Revolution (street scene shown on the right) was one of the first major "blowbacks" in US foreign policy. And it led to widespread fear in the West about Islamic fundamentalism and the Shiite branch of Islam that dominates Iran. Fear that Shiite fundamentalism might sweep other parts of the Middle East was an important reason that the U.S. supported Iraq, with its supposed majority of Sunni Muslims in their 1980-88 war with Iran. This now-obviously exaggerated fear of Shiites over the supposedly less threatening Sunnis unfortunately led the US to, at least tacitly, support Iraq's use of chemical weapons against Iran as documented by the NYT 18Aug02 and argued more vigorously by GreenLeft.org.au 28Aug02.

Having watched the political upheavals following Iran's effort to gain a larger share of revenue from their joint ownership of the Anglo-Iranian Oil Company, the Saudis carefully began a gradual buyout of American oil interests (Chevron, Mobil, Texaco, Exxon) in 1973. During the period of joint ownership the name, Saudi Aramco Oil Company (where "Aramco" meant "Arabian American Company") was changed to Aramco Oil (where "Aramco" is no longer regarded as an acronym). The terms of the buyout (in which reliance on American expertise was phased out over an extended period of time) were sufficiently favorable to US oil companies that there were no major complaints. By the late 'eighties Saudi Aramco was wholly owned by the Saudi Arabian government. On the other hand, the Kingdom of Saudi Arabia, is still ruled by an absolute monarchy which is increasingly at odds with aspirations of the body politic. Whether the replacement to Saudi monarchy takes the form of democratic, secular forces or as Islamic fundamentalism depends, at least in part, on US foreign policy.