In 1901, the Shah of Persia (the country was renamed Iran in 1935) granted the Anglo-Iranian Oil Company (the corporate predecessor of today’s BP) a monopoly on extracting, refining, and selling Iranian oil. The Persian government had no idea about how to exploit its oil assets, and so made a deal to let Anglo-Iranian (owned by Britain) pay Persia just 16 percent of earnings (although the company could well have paid Persia even less, since its books were never subject to scrutiny).
After World War II however, anti-colonialist sentiments roiled countries around the world, including Iran. An Iranian nationalist, Mohammad Mossadegh, became prime minister in 1951. In Iran, nationalism meant controlling its own oil resources, and so Iran passed a law nationalizing the oil industry. The Iranian Government agreed to compensate Anglo-Iranian shareholders for its investment in infrastructure, but not to pay anything for the “going concern” value of the company. Britain was outraged.
Mossadegh learned of a British plot to have him assassinated, so he closed the British embassy and evicted all of its diplomats. But Mossadegh had not counted on the unique friendship between Britain and another great imperialist opportunist, the United States. Britain argued to American intelligence that nationalization was just one step away from Communism, the common enemy after World War II.
John Foster Dulles, Secretary of State from 1953 to 1958, had a deep Christian faith and was looking for a way to channel it into the fight against “the evil methods and designs of Soviet Communism.” His campaign speeches on behalf of Eisenhower promised that Communism would be “rolled back” by securing the “liberation” of nations that had fallen victim to its “despotism and godless terrorism.” With his brother Allen as head of the CIA, the U.S. commitment to the Cold War was assured. Together the Dulles brothers convinced Eisenhower of the need for and benefits of helping Britain get rid of Mossadegh.
Kermit Roosevelt, Jr. was a grandson of U.S. president Theodore Roosevelt, and the chief of CIA operations in the Middle East. He slipped into Iran on July 19, 1953 and immediately began his subversive mission. This work included bribing journalists, editors, Islamic preachers, and members of the police and army to “create, extend and enhance public hostility and distrust and fear of Mossadegh and his government.” Thugs were hired to stage attacks that could be blamed on Mossadegh. Roosevelt decided that Mohammad Reza Shah would be the perfect puppet, and pressured him to join the coup. Roosevelt used agents that he both bribed with cash and threatened with death in order to get street gangs to set off riots around the city. These rioters claimed to be acting in the name of “Mossadegh and Communism!”
Several American authors credit Roosevelt with arranging mass demonstrations and orchestrating the seizure of Radio Tehran, the foreign ministry, the central police station, and the army’s headquarters. Mossadegh himself was arrested and the new Shah was placed on the Peacock Throne (i.e., made the leader of Iran) and a pro-western politician was installed as prime minister.
The revolution against Mossadegh was over, but the revolution in Iran was just beginning. The people of Iran remained fundamentally split politically. The Shah’s reign lasted until 1979, when he was overthrown by Khomeini and Shiite theocracy.
The Shah traveled from country to country in his second exile, seeking what he hoped would be a temporary residence. In October, President Jimmy Carter reluctantly allowed the Shah into the United States to undergo medical treatment for his pancreatic cancer. This act further inflamed Iranian revolutionaries, who already resented the U.S. role in the overthrow of the democratically elected Prime Minister Mossadegh, and its support for the Shah’s rule. The Iranian government demanded the return of the Shah to Iran to stand trial; the American government refused to turn him over.
This refusal resulted in the storming of the U.S. Embassy in Tehran and the kidnapping of American diplomats, military personnel and intelligence officers, which soon became known as the Iran hostage crisis. It ended after 444 days, when the hostages were released on the day of Ronald Reagan’s inauguration.
[Much of the source material for this article was derived from the book Overthrow by Stephen Kinzer. Additional insight can be gained from the book CIA: A Legacy of Ashes by Tim Weiner. Both are excellent books.]