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How a Labour Government Helped to Crush Iran’s Workers’ Movement

As the Second World War came to a close, the rise of Iran's workers' movement posed a growing threat to British capital – so a Labour government set about crushing it for a generation.

Opponents of Western intervention stage a protest in Tehran in the 1950s. (Credit: Wikimedia Commons)

Popular historiography of pre-revolutionary Iran’s relationship with the West is dominated by the 1953 CIA-led coup d’état against Mohammad Mossadegh. But far less attention is paid to the role Britain played in the country a decade prior – both in safeguarding its oil interests and in repressing Iran’s nascent labour movement.

In August 1941, British and Soviet forces invaded and occupied Iran, a country whose stance in the Second World War was formally neutral but which was led by the Nazi-sympathising Shah Reza Pahlavi. The country was strategically important for two reasons: first, the Persian Corridor was a key supply line for Lend-Lease aid to the Soviet Union. Second, it was the prime source of British oil, with the Abadan oil refinery identified as ‘irreplaceable’ in a report for the War Cabinet.

As a result of the occupation, the Anglo-Iranian Oil Company (AIOC)—of which the British government owned a majority stake—solidified its foothold over Iranian oil and, with its own infrastructure and social and security networks, Iranian society. By 1945 the AIOC was at its zenith and one of the Empire’s most valuable assets.

Paradoxically, the occupation also revitalised participatory, constitutional politics – not only at the ballot box through free elections, but on the streets and in workplaces.

These forces collided as popular resentment towards Britain’s informal empire in Iran blossomed. In 1945 the Labour government was faced with increasingly challenging questions as to how Iran’s burgeoning democracy aligned with their economic interests.

The Party of the Masses

The first stirrings of change in Iran came with the formation of the Tudeh (Party of the Masses) in September 1941. Although often mischaracterised as a Soviet puppet, the Tudeh was a contested coalition of social democrats, communists, and progressive intellectuals, and one which consciously sought to avoid a revolutionary image.

Indeed, the party was far more interested in the strengthening of Iran’s working-class movement, seeing it as a means of raising consciousness and confidence among the Iranian people. In autumn 1941, its union wing, the Trade Union of the Workers of Iran, was formed.

Across Iran, local howzeh (branches) established themselves, with particularly strong support among workers in Tehran and the northern provinces occupied by the Soviet Union. The movement first demonstrated its power in February 1942, when some 1,500 unskilled builders constructing the Ministry of Justice downed tools, eventually winning a 25 per cent pay increase for themselves and securing formal commitments for a nine-hour workday.

By April 1944, the Tudeh-aligned unions merged with the majority faction of the Central Board, a union grouping that was previously politically unaligned, to form the Central United Council of the Trade Union of Workers and Toilers (CUC). By 1945 it was estimated by the American Embassy that the CUC could command the loyalty of 100,000 people – an impressive feat in an economy typified by small, family-run firms.

But despite the CUC’s blossoming, the oil industry focused on Khuzestan and the vast Abadan oil refinery was largely free from its influence. As industrial disruption became a regular feature of working life across Iran’s building sites and factories, the Anglo-Iranian Oil Company ensured that the oil industry was untouched by this disruption.

The Second World War were boom years for the AIOC and crystallised its importance to the British government. The conflict saw crude production more than double, as the Abadan refinery became the largest supplier of the new 100-octane aviation spirit that proved crucial to the air war on the Eastern and Western fronts, producing over one million tonnes of the spirit by war’s end.

An ‘Independent Power’

As the AIOC grew, it became steadily more entrenched in the Iranian economy and the country’s wider national life. By 1945, it was Iran’s largest source of both tax income and foreign currency, and the country’s single biggest employer. The AIOC, not the state or regional government, was the leading provider of infrastructure, constructing a network of roads between oilfields, plants, and docks alongside houses, schools, and hospitals for employees.

During this period, Iran’s railway network and half of its trucks—be they public or privately owned—had been commandeered for the war effort. This removed around three-quarters of Iran’s food distribution network, leading to the crippling of private enterprise and the country’s grain production falling by a fifth. In the subsequent nationwide food shortages, outbreaks of sporadic violent protest were not uncommon.

Crucially, these protests were not only suppressed by the Iranian police, but by the AIOC’s private security forces and the British Army. As time went by, Foreign Secretary Anthony Eden’s insistence that the occupation’s purpose was not ‘to steal prizes or pilfer loot’ became harder to reconcile with the experiences of many Iranians. American politician Louis Dreyfus went as far as to suggest that as a result of the exploitation, ‘no country in the world today’ was ‘more ripe’ for ‘socialistic indoctrination’ than Iran.

As these conditions in Iran reached their nadir, Clement Attlee’s Labour government came to power on a wave of optimism. However, the new rulers of Britain faced a myriad of challenges; chief among these was an economic outlook that Chancellor Hugh Dalton described, plainly, as ‘pretty bleak’. Wartime damage totalled around £3 billion, and by 1946, Britain—a pre-war creditor—faced £24.7 billion worth of debt, roughly two and a half times its gross domestic product.

The prospects of domestic growth were stymied by shortages of materials and manpower, as well as the abrupt termination of Lend-Lease aid from the United States. Profitable pre-war industries like pottery and textiles had been subsumed into the war effort, and required time and investment to return to their former productivity levels.

The Spectre of Organised Labour

Britain’s ace in the hole was its overseas assets. Despite a ‘premature, hurried scuttle’ from India, Attlee’s Cabinet concluded that ‘the Colonial Empire could make a major contribution towards the solution of our present economic difficulties.’ This included not only those territories painted imperial pink in atlases, but also Britain’s informal empire of trade, investment, and commodity rights. Iran’s vast oil reserves, in particular, was singled out by Foreign Secretary Ernest Bevin as ‘one of our most important strategic interests.’

The centrality of Iran’s place in British planning was boosted by its growing military importance. Even before the war’s end, Anglo-Soviet relations in the Middle East were souring. Despite a perceived Soviet threat to British interests in Iran, a more pressing priority was growing industrial unrest, as the Tudeh and their associated unions made headway in the oilfields for the first time. In May 1945, a strike was called at Kermanshah refinery, leading British officials to suggest ‘we cannot be over-nice about legality and fair play where it is a question of our vital oil interests.’

The following year, after considerable Tudeh organisation, 80,000 people took part in May Day parades in Khuzestan, home to the Abadan Refinery. The British Consul warned that the party, its unions, and its newspaper reached ‘at least 70 percent of the population who represent the working class.’ Reporting from Iran, Labour MP Jack Jones suggested that marchers were ‘intent on serious business’ and ‘an industrial force to be reckoned with.’

Jones’ assessment was proven correct some two months later, when the Khuzestan branch of the CUC struck in the Aghajari oilfield. The scale of the disturbance was vast, spreading for almost 100 miles to Ahwaz. With the threat of a general strike in Khuzestan looming, the governor general declared martial law and the Iranian Department of War dispatched a battalion of soldiers and twenty-four trucks to quell the violence. Following sporadic rioting, some 17 deaths and 150 injuries were reported among the workers.

Despite little evidence to support their claims, AIOC officials reported that the strike had been launched ‘at the instigation of the Russians’ who sought to ‘put the company out of business.’ Worried that further industrial strife could undermine productivity, Bevin sent a parliamentary delegation to Iran to investigate. At the same time, despite Iranian government objections, 15,000 British soldiers were dispatched to Iran with a warning that they would take whatever steps necessary to protect British interests.

The delegation’s report focused largely on pay and conditions, not least the ‘low-order’ housing and the ‘cave-like existence’ endured by many Iranian oil workers. The depths of feeling towards foreign intervention itself was recorded only by Conservative MP William Cuthbert, who noted the ‘anti-British and anti-company attitude’ of the ‘great majority of the Persian employees.’ He suggested that banners declaring ‘Persian Oil for the Persians’ showed that ‘there is something much more important behind it all’ than just demands over pay and conditions.

Ernest Bevin, who was simultaneously Britain’s foremost trade unionist and an unabashed imperialist, sympathised with the report’s conclusions. He suggested that the strike was the result of historic ‘anti-trade union organisation’ that had been exploited by Soviet-backed malcontents. Far from acting independently, the Tudeh were identified as ‘an instrument of a foreign power’. A subsequent Cabinet paper argued that the best response was ‘to wean the Tudeh Party, or at least some parts of its adherents, from extremist or communist courses.’

Documents produced by a Ministry of Fuel and Power official were more blunt:

The Persians are a weak and shiftless people, ill-prepared for democracy and their present shift towards the Tudeh can be arrested. This would be achieved through the restructuring of Iran’s labour movement and improved relations between workers and managers along corporatist lines.

A Company Union

Trade unions, Bevin argued, should become knitted into the AIOC’s fabric: enhancing terms and conditions, preventing insurrection, and preserving profitability. CUC members were to be dispensed with in favour of industry-specific, nationwide unions with strong links to central government and supported by a network of ‘factory councils’. This model was applauded by the British TUC as a means of encouraging better industrial relations and social peace not only in Iran, but across the Empire.

On the advice of Bevin and the British Embassy, the AIOC appointed an industrial relations advisor, ACV Lindon, and entered into talks with trusted employees to establish a ‘legitimate’ trade union. The body envisaged by bosses would be ‘a channel for industrial relations between management and labour’ and a means of restoring ‘a sense of personal liberty amongst labour.’ It would act as a ‘firm authority’ in the workplace, headed by what Company Chairman Sir William Fraser dubbed ‘properly accredited leadership’.

In January 1947, the Oil Workers Union (OWU)—‘a new union opposed to the Tudeh’—was established with AIOC support. After having been allowed to bypass normal certification procedures, OWU’s approach couldn’t have differed more to its militant predecessors. In its literature, members were threatened:

This new union of ours has nothing to do with politics. It is simply for the welfare of the workers. Do not abuse the government and the company which are always working for your welfare… the government has the right to imprison anyone abusing peaceful citizens or government officials.

Workers did not take to the OWU, and it struggled to attract support. Despite a well-funded, company-backed recruitment drive, its membership remained small, peaking at little over 2,000. Widely seen as illegitimate, oil workers turned their backs on OWU and unsuccessfully lobbied to be allowed to start their own union without interference from the company.

As the OWU failed, repression intensified. On the encouragement of the British, the Iranian authorities unveiled a new wave of powers for the police and army which saw thousands of union militants fleeing or being forced into hiding. The severe restrictions allowed by martial law broke up the Tudeh as an organised presence so aggressively that within a matter of weeks, a British official felt confident enough to declare that Tudeh ‘agitators’ had been ‘banished or shut up’ across Khuzestan.


By the end of 1947, the Tudeh’s influence had been effectively suppressed. There is no doubt that this effort to crush the organised presence of workers in Iran on behalf of the AIOC was due in no small part to Bevin’s choices, and the Labour Cabinet at large. In Westminster, the post-war government spoke of wanting to ‘build a new Jerusalem’ and manage nationalised industries for Britain’s workers. But these admirable ambitions were coupled with the denial of similar rights to workers across the Empire.

Self-organisation by Iranian workers was effectively orientalised, with workers’ self-activity treated as anything from native infantilism to evidence of foreign influence – rather than legitimate political collective expression. Messages exchanged between the Foreign Office, the British Embassy, and the AIOC reveal little self-reflection, but a determination to maintain Britain’s monopoly rights at all costs.

And while the crippling of Iran’s fledgling trade union movement has been treated as a footnote in imperial history, it is useful today as a demonstration of the multifaceted reality of Labour’s time in office. The party’s 1948–9 handbook for speakers claimed that ‘the empire has been given a new life. Socialist planning is developing it not for personal profit, but the Common-Weal’. Figures across the political left also herald this period as a golden age of triumph. But the reality is far harder to justify.

In Iran popular resentment did not diminish, but grew and evolved. In 1951 Mohammad Mossadegh became prime minister after a two-year campaign by the National Front, a cross-party group that included not only veteran nationalists, but an array of socialists and trade unionists.