The Shah of Iran led a coup d’état in Iran in 1953, with the help of the UK and US. This article considers what happened after the coup, in particular how the awarding of a road-building contract to a British company ultimately led to resistance to awarding major contracts to some foreign companies. Guan Kiong Teh explains.
I wrote this article on the road building and vehicle industry in the late Pahlavi state to respond to two aspects of Iranian historiography. The first is the lack of scholarship on the technique of science and technology within Iranian modernization. Many scholars mention science and technology within Iranian political discourse. However, I focus upon scientific technique - defined as the legal, political and societal context and consequences of the application of technology. This only started gathering force recently, with for instance, Katayoun Shafiee’s focus on ‘sociotechnical’ processes in Machineries of Oil(2018).
The second is the thin analysis of the social impacts of consumerism during the years between the 1953 coup and the announcement of the Peykan car in 1966 through an integrated system of the private market and public infrastructure. Drawing upon British governmental and personal sources, and documents produced by the Iranian Government, Mowlems, and Chrysler, I examine how road building and the related vehicle industry contributed to Iranian political practice and discourse between the spring of 1954 and the announcement of the Peykan car in 1966, particularly towards the concept of independent foreign policy and an Iranian state for the Iranian people. The Mowlems contract was a blessing and a curse. While it demonstrated to the Iranian government that they had the sophistication to turn perfidious Albion on its heads, its costliness contributed to the pro-business spirit of the 1960s and the mythical White Revolution.
Iranian Vehicle Industry
The vehicle industry represented a fertile opportunity to win over the Iranian people and execute leverage against countries such as Britain, America, and Germany, particularly given the lessons of the Mowlem’s affair from 1954-57. Commercial development projects grew in geopolitical significance during the Cold War. Iran shared a border with the Soviet Union. The increasing burden of aid, military and nuclear expenditure in Iran in the 1950s compelled Mohammad Reza Shah to pursue a more independent foreign policy, most notably through the ‘soft’ weapon of the trade of goods and services within Iran. The logic: to reap the benefits of aid and expenditure without furthering the impression and consequences of Anglo-American political puppetry. Between 1954 and 1959, the PO sought to consolidate its uniquely ‘educated’ and powerful role in government through these formative exercises, refining its technique of portraying British firms as undeserving of their prestigious commercial reputation. The diplomatic successes and economic costs, however, led the government to pursue diplomatic success through economic profit, as evidenced in the birth of Iran’s automotive industry, culminating in the Iran N Peykan.
John Mowlem & Co Ltd. were British construction agents. By the 1950s they were established names in Britain, supervising Thames drainage projects at the turn of the century. In April 1954, Glossop was approached by Ebtehaj, Fazlollah Zahedi and the Shah to negotiate for a road-building contract, with vocal support from Roger Stevens, the British Ambassador to Iran. Mowlem’s first problem was demonstrating hostility towards the Iranian Government’s demands for accountability in technical expertise, exacerbated by the British Embassy’s lack of technical knowledge. A July 27 telegram states the position of the Iranian Government as interpreted by Ambassador Roger Stevens. Mowlems was expected to seek a contract to acquire the road plant material from a preferably non-British firm. The Iranian Government did not, as a matter of practice, enter multiple contracts in its pursuit of development projects. The Embassy advised that this was a clear warning that Mowlems’ would be held to the highest technical scrutiny. Since the previous month, Ebtehaj repeatedly expressed that he was under pressure from American firms to ensure that plant contracts were not exclusively awarded to British firms. Finally on May 10, 1955, Richard Glossop, the Managing Director of John Mowlem & Co. Ltd, exchanged contracts with Abdolhassan Ebtehaj. These were the roads to be constructed.Mowlems committed, as ‘managing agents’, to supervise the construction of 6,000 kilometers of roads in Iran over eight years. This was, according to the British Embassy, ‘the most important contract we have secured in Persia since the resumption of diplomatic relations. For years past foreign contractors have tried and failed to get it.’ Yet Mowlems’ shortcomings in its mastery of technical information served as a wake-up call for the Iranian government. When this contract was terminated in December 1957, barely 300 kilometers of roads had been refurbished in small stretches, with no new roads built. The contract was formally annulled on September 10, 1958. Further road building contracts until the mid 1960s never rivaled the Mowlems’ contract on scale, and were overwhelmingly awarded to Iranian firms or, at most, a minor supervisory role was awarded to Belgian, South African or Danish firms notably Kampsax - never Anglo American again.
How the Agreement Ended
The Plan and Budget Organization enacted political leverage against Britain by purporting that Mowlems failed to deliver the technical excellence necessary to justify maintaining the contract. The experience demonstrated that Iran had the strategic sophistication to manipulate perceived British commercial opportunism. Yet this was executed at the expense of contributing towards a balance of payments crisis between 1958-60 and presenting unfinished roads to the public, instilling further ambivalence about the merits of the incorporation of ‘Western’ development and Iranian nationalism advocated by the Shah.
While the extraordinary expenditure of the Mowlems’ contract makes it difficult to argue that money was judicially used, the Plan Organization took some steps towards independent foreign policy by challenging Mowlems not on explicitly financial or political but technical grounds. The PO presented limitations upon British commercial advantage as a moral and financial obligation to find the most technologically competitive route to infrastructure development. The contract negotiation period between April 1954 and May 1955 was formative for the PO in coming to terms with manipulating technical expertise of road building.
Relations were warmest where British and Iranian interests in road building and foreign policy clashed. During the second half of 1956, Mowlems’ dedication towards technical competitiveness improved. In November, a 36 kilometer stretch of road between Qazvin and Takestan was successfully refurbished, of which General Ansari gave a tour to Majlismembers at the end of the year. By December 1956, Ebtehaj grew more praiseful of Mowlems, announcing early in January 1957 to commit to fund a new flagship project: a road from Qazvin to the Turkish border at Jolfa, via Tabriz, and a direct route between Isfahan and Shiraz. The route to the Turkish border provided easy access to a ‘friendly’ missile base, and would also serve Iranian interests in regional links.
However, Mowlems’ astonishing cost-saving by refusing to study soil composition exasperated the Iranian government. By mid-1957, only 240 kilometers of roads had been refurbished with no new roads built. Early batches were cracking and potholed, the result of importing a road plant mixture designed for British weather and soil. The Shah summoned Stevens, decrying it as ‘the worst piece of propaganda I’d ever seen’. Once he said this, Ebtehaj went for the pincer. The Shah had promised Mowlems’ reputation to the Majlis in 1955. If Mowlems’ did not improve or concede incompetence, the Iranian state was headed for a crisis of confidence that could rival what happened 1953. Eventually, Ebtehaj wrote to Mowlems to annul the contract on 23 December 1957. 450 million rials had been wasted over two and a half years.
The Consequences for Iran
This experience primed commercial instinct during the White Revolution. It gave the Iranian Government an obsession with ensuring Iranian - particularly Persian,Pahlavicharacter was evident in national ‘modernization’ and ‘development’, as evidenced in the automotive industry, particularly the Iran National Peykan, announced 1966, and the Pars Khodro Shahin, announced 1967. Cars were a uniquely potent symbol of the West and a unique absorption point for discontent therewith. Unlike Western lecturers or artists, ‘ordinary’ Iranians interacted with the benefits of the car on a practical (as opposed to abstract) level. Unlike refrigerators, hydroelectricity or the sewage system, ‘ordinary’ Iranians interacted with the car for extended periods of time. Unlike radios or TV sets, the value of the car as a tool and means of earning income were more obvious. Further, in an experience common around the world, the car was often the most expensive product and second-most expensive that a family bought, after their house. The passenger car has political capital. Note the situation that Volkswagen found themselves in during 2018, when they faced criticism that they withdrew from the Iranian market due to lobbying by the American ambassador in Germany.
To begin, the Government ostensibly took steps to secure Iranian national input; ostensibly committed to Import Substitution Industrialization as defined in the Third Development Plan (1963-68). A June 1963 news broadcast announced that the Government was planning initiatives to boost car battery production within Iran. The Government favored entrepreneurs to the detriment of the consumer’s pockets by enforcing considerable economic incentive to encourage importers and distributors to seek tenders for nationalized Complete Knock-Down Kits. For instance, 126 ‘saloon cars’ were imported between 27 September and 2 October 1965. These cars were worth 9,500,000 rials to their importer and subject to governmental duties of 92%, at 8,740,000 rials. High tariffs were imposed upon cars that were supposed to be relatively affordable. While the exact make and model of the 126 saloons are unknown, they were all the same model, giving a market price of 75,397 rials and a tariff of 69,360 rials per vehicle, costing the importer 144,757 rials per vehicle in total. As sold to consumers, the vehicle would have cost slightly more than the 150,000 rial Peykan and was a likely competitor. Yet the pressure upon importers was clear: one could be subject to heavy tariffs, or one could try hard to persuade car brands to license cars for CKD production. These were not technologically advanced cars: the Volkswagen Beetle’s air cooled engine was far more appropriate for Iran’s arid climate. Overall, the impetus to produce the national car came from an interest in profit and symbolism of adopting a British and American car; symbol that the Iranian government could actually reign in foreign powers and, to quote British politician Nigel Farage, ‘make a titanic success out of it’.
The Peykan divided urban and rural more than it united. The Hillman Hunter GT was rebranded the Peykan Javanan, heralding the prominence of youths in the country and the role of youth in Iranian politics. Few in the countryside, however, could afford to maintain cars. In villages, those who drove taxis were respected as ‘chauffeurs’, their ability to drive singled out by hopeful mothers trying to matchmake sons. In 1969, 4 million - 15% of Iran’s population - lived in cities. Yet 80% of the passenger car market was urban.
The Pahlavi state made genuine efforts to ensure that ‘development’ initiatives from the United States, Britain and their Cold War allies were practical for those outside Tehran and Iran’s major cities. The road building experience was good. However, the Pahlavi state focused on the wrong aspect of the lessons, valuing money over expertise. This was the main takeaway: without subscribing to determinist narratives on the inevitability of the White Revolution leading to a Black instead of Red Revolution, Iran’s determination to make sense of the point of scientific and technical control meant that following a clear path of ‘development’, as suggested by Huntington or Moore, was never going to be likely.
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Tehran to FO, 16 February 1957, FO 371/127117