Was the oil nationalized or state-owned?

This is a question that arises from time to time, especially on the occasion of March 20th (29th Esfand), and much has already been written about it. But briefly, it should be said that the term “national” is not the opposite of “state-owned”. In the political and economic culture of modern Iran, it is more closely associated with the idea of “expropriation.” If instead of “the day of nationalization of the oil industry” it had been called “the day of expropriation from the Anglo-Iranian Oil Company,” perhaps this misunderstanding would not have occurred.
Here we turn to the concept of expropriation in international law. Expropriation is recognized both in customary international law and in treaties. In international law, local governments are entitled to expropriate foreign investors under three conditions: 1. The expropriation must serve national interests. 2. It must not be discriminatory (compared to other foreign investors under similar conditions). 3. It must be accompanied by prompt, adequate, and effective compensation.
For these reasons and more importantly, to protect their credibility and avoid increasing country risk, most states resort to indirect expropriation, also known as creeping expropriation. In this case, formal ownership remains intact, but the investor is deprived of the benefits of their investment.
In fact, host countries must consider their country risk in relation to capital-exporting states. Country risk is a post-colonial concept that has become highly significant in today’s global economy. Ancient Arab and Chinese traders crossing the Indian Ocean, or English and Dutch migrants traveling between the Indonesian islands and Europe, faced enormous dangers—sometimes not returning alive. Today, the set of risks associated with investing in a foreign country—including political risk, currency risk, governance, and capital transfer risk—is referred to as country risk.
Regardless of what happened in 1951, we should not overlook the reality that in today’s transformed world, attracting foreign investment in oil resources is essential. Nationalization in its old sense has lost its place. Paradigms such as independence may still have political appeal, but in the context of globalization they often lead to isolation and have little relevance in industry. Today, participation and cooperation—while preserving sovereignty and within a legal framework—using others’ technical, software, and financial resources to serve national interests is an advantage.
Thus, as noted, the meaning of nationalization of the oil industry was expropriation from the British. Indeed, the official title of the delegation led by Engineer Mehdi Bazargan, which went to Abadan to take over the oil industry, was the “Expropriation Committee.”
Overall, however, the method of *renegotiation in a new political-social context increases the host country’s risk far less than outright expropriation.

Sources:
– Dolzer, R. et al.; Principles of International Investment Law*, Oxford University, 3rd Edition, 2022 – Taksooz, Mina; Guide to Country Risk, Economist, Amin al-Zarb Publications, 2019