British top the list in Iran’s search for scapegoats, Financial Times, May 7, 2002.

By Guy Dinmore

“The smell of gas continues and it can be seen rising from the hole in the sunlight.” So recorded George Reynolds – British engineer, accomplished linguist and fine horseman – shortly before a 25-metre-high fountain burst from the ground on May 26, 1908. Middle East oil had been discovered.

Nearly a century later and the town of Masjed-e-Soleiman (Solomon’s Mosque) has grown around that first find on the fringes of the Zagros mountains in south-west Iran. A small outdoor museum preserves what is still known as Well Number One with its original rig, boiler and pump.

For the people of Masjed, the riches of the earth have been a blessing and a curse. Oil still seeps naturally into streams flowing from the Zagros, but so does the gas that Reynolds reported as threatening the lives of his crew.

Because of this natural hazard, the municipality is moving residents out of the area, offering what they say is derisory compensation for their homes. It is a common refrain in this part of Iran that only the faraway central government, and foreign oil companies, have truly benefited from their labours.

But despite the run-down circumstances of the hill-town, there is still a strong sense of pride among the people of Masjed that they repeatedly changed the course of history – and not just for Iran. Oil piped over 200km south to a refinery at Abadan, at the head of the Persian Gulf, powered the ships of the British navy, newly converted from coal, to victory in the first world war. Three decades later Iranian oil fuelled allied aircraft over Asia and the Pacific.

Moreover, it was the Masjed concession granted to William Knox Darcy by Muzaffar al-Din, Shah of Persia, that was to give birth to the Anglo-Persian Oil Company, later renamed Anglo-Iranian and, eventually, British Petroleum.

Even now, Darcy and BP are still household names in Masjed. They are spoken of both with a sense of nostalgia and a strong dose of suspicion that surrounds anything foreign in Iran, especially if related to Britain.

On the one hand, old-timers recall with fondness the times they mingled with British and American oil workers, drinking cocktails in the sailing club in the oil capital of Ahwaz before an outing to the bowling alley or the latest Hollywood film at their own cinema.

“Those were the days,” sighs Hussein, a semi-retired engineer now running a taxi. “Ties were compulsory then to get in. Now you’ve got to have a beard,” he laughs.

At the same time, Iranians are immensely proud of the day in 1951 when Mohammad Mossadeq nationalised the oil industry and seized all assets of Anglo-Iranian. For the first time in its modern history, Iran had stood up to a foreign power and prevailed. The day is still celebrated as a national holiday. The foreigners were soon back, however, a year after Mossadeq was deposed in a coup orchestrated by the US and backed by Britain. This time BP was obliged to share the spoils, becoming the largest shareholder in what was known as the “consortium”, with Royal Dutch-Shell, five US majors and Compagnie Française des Petroles.

Ahwaz was on a roll again as the oil hub of the Middle East. Working with the consortium, the National Iranian Oil Company (NIOC) brought great riches to Iran, mostly squandered by the Shah. Just before oil workers went on strike, hastening the downfall of Reza Pahlavi in the 1979 Islamic revolution, Iran was pumping some 6m barrels a day, nearly double today’s output.

Before the revolution, NIOC became a quasi-state in itself, running hospitals, schools, shops and cultural centres for its workers, even airports in remote towns that now barely have a bus service, villas on the Caspian coast, even a ski slope. To be an oil worker then was really to be someone.

“My father was a truck driver for the British and Americans,” recalls Ahmad who sells dates in the Masjed bazaar. “He worked for 47 years. He was famous in the village and actually had a driver who would pick him up. The driver with a driver.”

The revolution came, the foreigners left again and the clerics of the Islamic republic took over. Iraq invaded. Ahwaz and Masjed found itself in a war zone and oil production plummeted.

NIOC’s southern subsidiary in Ahwaz has never really recovered. Many of its top engineers went abroad. No longer do the oil workers enjoy such perks.

Nonetheless it remains a formidable organisation, a bastion of nationalists as well as Islamists given senior posts for their religious credentials rather than job experience. Within the industry they are known as the “Taliban”.

It is in this atmosphere that BP has been struggling, so far unsuccessfully, to get a toe-hold back in Iran.

Bijan Zanganeh, the oil minister, has also found himself up against a monolith in his efforts to implement reforms, including privatisation, and get the foreign oil companies back.

Last year, when Italy’s Eni was awarded development of Darkhoein, the first onshore field since the revolution, there was an outcry among local engineers who launched a public campaign declaring they could do the job far more cheaply. According to one aide, an angry crowd greeted the minister on his only visit to the region. “Everyone in Ahwaz believes Zanganeh is destroying the industry. People are afraid for their future,” said a local politician.

Court cases involving the bosses of NIOC in Tehran have added to the sense of fear and confusion down in Ahwaz. Hussein Shahabedin was sacked as head of NIOC-South several months ago after being detained at Ahwaz airport and barred from any government office for eight months. Colleagues were surprised. “He seemed very religious, had a degree in Arabic,” commented one.

Mr Zanganeh’s candidate to replace him was rejected by the conservative Islamic Association in Ahwaz, so a compromise was found. Regrettably, Zohrab Hatampour, a technocrat said to have “modernising tendencies”, is suffering from lung cancer and has been unable to take up his post.

Such is the atmosphere of uncertainty within NIOC headquarters in Tehran and the lack of trust between there and Ahwaz, that NIOC’s top management in the capital forbade any contact with this reporter during a recent visit. Requests for interviews in Tehran were also turned down.

Iranian journalists complain of similar treatment from an organisation they say is equal in secrecy to the intelligence ministry. Only a few foreign reporters outside the country, who rarely visit Iran, are given interviews.

But foreigners are still a convenient scapegoat. Ignoring the fact that the government’s attempt to pass a foreign investment law has fallen victim to internal wrangling, a senior official opening Tehran’s oil and gas fair last month blamed the western media for the lack of money entering Iran.

Down near Masjed, a junior official barring access to a small oilfield whispered what amounts these days to an Iranian proverb- “All the disasters we have now are because of the British.”