9/5/12 -the sale of the Iranian tobacco industry

In today's excerpt - Nasir al-Din Shah, who was King of Iran from September 17, 1848, to May 1, 1896, sold concessions to Iran's markets and resources to foreign corporations and governments in order to support his extravagant lifestyle. The result was the tobacco revolt of 1890.

"The British were his first customers. British officials were worried by native uprisings in India and wanted a telegraph line to their command posts there. In 1857 they bought a concession to build one across Iran. French, German, and Austrian groups bought a variety of other concessions. A German-born British subject, Baron Julius de Reuter, of news agency fame, won the most breathtaking one of all. In 1872, for a paltry sum and a promise of future royalties, he acquired the exclusive right to run the country's industries, irrigate its farmland, exploit its mineral resources, develop its railroad and streetcar lines, establish its national bank, and print its currency. Lord Curzon described this as "the most complete and extraordinary surrender of the entire industrial resources of a kingdom into foreign hands that has probably ever been dreamt of, much less accomplished, in history." ...

"Iranian patriots ... were naturally outraged. So were merchants and businessmen, who saw their opportunities suddenly snatched away from them. Clerics feared for their status in a country so fully dominated by foreign interests. Russia, Iran's most powerful neighbor, was alarmed to see a British concern take so much power just across its southern border. Even the British government, which Reuter had not consulted in negotiating the concession, doubted its wisdom. Finally, Nasir al-Din Shah realized that he had overstepped the limits of the possible, and he revoked the concession less than a year after granting it. ...

"Over the next few years he sold three [concessions] to British consortiums. One bought the mineral-prospecting rights that had briefly belonged to Reuter, another the exclusive right to establish banks, and a third the exclusive right to commerce along the Karun River, the only navigable waterway in Iran. Russia protested but was placated when the Shah sold Russian merchants the exclusive right to his caviar fisheries. Through these and other concessions, control over the nation's most valuable assets passed from the hands of Iranians to those of foreigners. The money they brought into the Iranian treasury sustained the Shah's lavish court for a while, but then, inevitably, it ran out. He raised more by borrowing from British and Russian banks. ...

Nasir al-Din Shah, isolated in the private world of the Qajar court, was oblivious to ... rising discontent. In 1891 he sold the Iranian tobacco industry for the sum of £15,000. Under the terms of the concession, every farmer who grew tobacco was required to sell it to the British Imperial Tobacco Company, and every smoker had to buy it at a shop that was part of British Imperial's retail network.

Iran was then, as it is today, both an agricultural country and a country of smokers. Many thousands of poor farmers across the country grew tobacco on small plots; a whole class of middlemen cut, dried, packaged, and distributed it; and countless Iranians smoked it. That this native product would now be taken from the people who produced it and turned into a tool for the exclusive profit of foreigners proved too great an insult. A coalition of intellectuals, farmers, merchants, and clerics, such as had never before been seen in Iran, resolved to resist. The country's leading religious figure, Sheik Shirazi, endorsed their protest. In a shattering act of rebellion, he endorsed a fatwa, or religious order, declaring that as long as foreigners controlled the tobacco industry, smoking would constitute defiance of the Twelfth Imam, "may God hasten his appearance." News of his order flashed across the country through telegraph wires the British had built several decades earlier. Almost all who heard it obeyed. Nasir al-Din Shah was bewildered, frightened, and then overwhelmed by the unanimity of the protest. When his own wives stopped smoking, he realized that he had no choice but to cancel the concession. To add to the indignity, he had to borrow half a million pounds from a British bank to compensate British Imperial for its loss. ...

After several years during which he drifted ever further from his royal duties and from reality itself, Nasir al-Din Shah was shot to death in 1896 while visiting a mosque near Tehran. ... His son Muzzaffar ... soon after ascending to the throne ... embarked on a lavish European tour, paid for with money borrowed from a Russian bank. Upon his return he took out another loan, this one from British financiers, and gave them in exchange a share of his customs revenue. Disgusted Iranians began denouncing him in public. When he responded by arresting some of the agitators, antigovernment riots broke out in Tehran and other cities.


Stephen Kinzer


All the Shah's Men: An American Coup and the Roots of Middle East Terror


John Wiley & Sons, Inc.


Copyright 2008, 2003 by Stephen Kinzer


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