Iran Confrontation With U.K. Reflects History of Bad Blood

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20 juli 2019, 19.18

(Bloomberg) -- The reopening of the British embassy in Tehran was meant to usher in a new era in relations. As the Union Jack flag was raised above the lush, landscaped gardens of the complex in August 2015, then-Foreign Secretary Philip Hammond said the event marked “an important milestone.”

That was just six weeks after an international accord was reached to restrict Iran’s nuclear program in return for relief from penalties that had strangled its economy. But since the accord started to unravel last year, tensions between Britain and Iran have been growing.

Then came Friday’s dramatic seizure of a British-linked tanker in the Gulf, a tit-for-tat response to the U.K.’s detention of a vessel carrying Iranian oil through the Mediterranean Sea. The U.K. has threatened Iran with “serious consequences,” which could include a package of sanctions.

How did things get so bad? The U.K. is after all part of a European trio trying to rescue the nuclear deal U.S. President Donald Trump pulled out of, triggering its demise. But it is also breaking away from the European Union and desperate for a free-trade agreement with the U.S., still the world’s dominant economy.

It’s Complicated

In short, its geopolitical priorities are complex.

Britain’s relations with Iran stretch back to the 1600s and are marked by periods of conflict, some were resolved fairly swiftly, others endure to this day. For example, Iranians still blame Britain for a famine 100 years ago. Underlying it all is a sense the U.K. is playing a double game.

“Iranians are obsessed with the idea that the British are the arch-manipulators in the background, manipulating the U.S.,” said Ali Ansari, a professor of modern history in the Middle East at the U.K.’s University of St. Andrews. “It dominates the narrative in a way you’d never imagine.”

Brexit-ravaged Britain is trapped in a political crisis, transitioning from one prime minister to another. The two Conservative candidates slugging it out to become leader also happen to be both the current and former foreign secretary: Jeremy Hunt and Boris Johnson, favored to win and whom Trump calls a friend.

Iran was never a colony of the Empire on paper, but nevertheless the U.K. has wielded outsized influence in the country over centuries. During the Great Game of the 19th century, Victorian Britain and Tsarist Russia, battled for dominance in Central Asia, Persia was caught in the middle.

Liquid Gold

It struggled to balance the demands of the two imperial powers and though Russia was always the more brutal of the two, Britain left deeper political scars. That’s partly because events of the early 20th century “altered the historical perspective,” Ansari said.

Then, as now, those events revolved around oil.

In 1901 British entrepreneur William Knox D’Arcy began searching for oil in Persia and under the terms of a deal struck with the monarchy, he became the sole owner of whatever oil he’d find, while Persia would get just 16% of profits annually and no say over how the company was run. The Anglo-Persian Oil Company was born seven years later when D’Arcy’s surveyors discovered crude beneath the southern desert.

“Fortune brought us a prize from fairyland beyond our wildest dreams,” said Winston Churchill, who was in charge of the Navy at the time and oversaw its switch from coal to oil.

Colonial Baggage

The British government injected new capital into the Company just before World War I, acquired a controlling interest and built the world’s largest refinery near the Persian Gulf to process the oil and ship it back to Britain.

The Company ran the city like a virtual colony: British employees and their families lived in luxury in a peaceful oasis on one side of the city and non-British laborers in a shanty town on the other.

Unsurprisingly, strikes and riots broke out sporadically. In 1951, as a wave of anti-colonialism swept the region, the Company was nationalized under the government of Prime Minister Mohammad Mosaddegh. Iran canceled its right to extract oil and seized its assets. Britain shut down refineries, blockaded Iran’s ports and froze Iranian bank accounts.

When it became clear Mosaddegh had the upper hand, the U.K. lobbied the U.S. to install a shah sympathetic to the west. Together in 1953 they overthrew him in a coup.

Birth of BP

Iranian oil began flowing again and the Company -- which had by then rebranded itself as British Petroleum and is now known as BP -- tried to regain its old position. But Iranian public opinion was so fiercely opposed the new government couldn’t let that happen. Instead it was forced to accept membership in a consortium of companies. After the repressive shah was exiled during 1979 Islamic Revolution, the anti-western regime of Ayatollah Ruhollah Khomeini nationalized the oil industry again.

The seizure of the tanker carrying Iranian oil off the southern tip of Spain earlier this month, like most of U.S. policy toward Iran under Trump, has unified rival political factions. It’s also given the Islamic Republic’s stalwarts a fresh opportunity to attack Britain as an imperialist, colonialist, pro-monarchist power intent on meddling in Iran’s affairs.

‘Queen’s Pirates’

On July 6 -- two days after British forces seized a supertanker suspected of carrying Iranian oil to Syria -- Iranian media was swift to respond. The headline in the moderate Arman newspaper read “A U.S. Scenario with British Actors” while the reformist Aftab spoke of “Extremism in Gibraltar.” The ultra-hardline daily Kayhan has called for retaliation against “the Queen’s pirates.”

The Iran-Iraq war of the 1980s, in which the U.K. backed Saddam Hussein, and a fatwa against the writer Salman Rushdie have been among low points in ties between Iran and Britain.

More recently, the fate of U.K.-Iranian dual national Nazanin Zaghari-Ratcliffe -- held by Iran on spying charges since 2016 -- has poisoned the well.

She’s recently been transferred from the notorious Evin prison to a hospital psychiatric ward and is barred from contacting her family. Johnson, as foreign minister, was widely criticized for contributing to her fate by saying publicly she was in Iran teaching journalism.

Should he become prime minister, as is widely expected, the crisis with Iran will demand his immediate attention.

Just before Friday’s extraordinary seizure of the tanker by Iran, Ayatollah Ali Khamenei said he wouldn’t allow the “evil” acts of Britain to go unanswered. Such menacing rhetoric was used back in 2011 in the run-up to an attack on the U.K. embassy in Tehran by hardliners.

They left behind scrawl on walls that read “Death to England” near a portrait of Queen Elizabeth and a bust of Queen Victoria.

Britain closed the embassy.

(Adds latest U.K. actions.)

--With assistance from Tim Ross.

To contact the reporters on this story: Caroline Alexander in London at calexander1@bloomberg.net;Golnar Motevalli in Tehran at gmotevalli@bloomberg.net

To contact the editors responsible for this story: Rosalind Mathieson at rmathieson3@bloomberg.net, Mark Williams, Flavia Krause-Jackson

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