US-Iran Series – Part 2: From Mossadeq to the Shah

In part two of Revolution Observer’s US-Iran series, Idrees Devries discusses the struggle for control of Iranian oil between world superpowers, and the role of Mohammed Mossadeq and the Shah in fulfilling western interests.

After World War II the British tried hard to main­tain their con­trol over the Iran­ian oil indus­try through the Anglo-Persian oil com­pany (later British Petro­leum). Anglo-Persian con­trolled the pro­duc­tion, refin­ing and mar­ket­ing of Iranian oil.

From 1945 to 1950 this earned it over £250 mil­lion. Over the same period Iran made just £90 mil­lion on its oil, even less than what the British gov­ern­ment made from taxes on Anglo-Persian. Because of the Iran­ian oil, but also because of the influ­ence that could be pro­jected over the Mid­dle East from Iran, both the Soviet Union and Amer­ica worked to take over the “Per­sian Prize” from Great-Britain.

The US

The Amer­i­cans had a num­ber of CIA agents sta­tioned in Iran who worked to find poten­tial agents amongst the Iran­ian polit­i­cal and financial elite. On behalf of the CIA, Dr. Taqi Nasr approached crown prince Abdoreza and Gen­eral Ali Razmara. The lat­ter gave the impres­sion he was will­ing to work with the Amer­i­cans to fur­ther his own career. Razmara told Dr. Taqi Nasr that if the Amer­i­cans would sup­port him to become prime minister of Iran, he would make Dr. Nasr min­is­ter of econ­omy, start an anti-corruption cam­paign against British agents from influ­en­tial cir­cles in Iran, and break the Anglo-Persian monop­oly. In 1950 Wash­ing­ton ordered its ambas­sador in Iran John C. Wiley to “urge” the Shah to appoint general Raz­mara as prime minister. The Shah heeded the advice.

Fol­low­ing his appoint­ment as prime minister, gen­eral Raz­mara indeed imple­mented far reach­ing reforms. He fired some 400 high-placed civil ser­vants and signed the “Point Four” agree­ment with Amer­ica, which enabled the Amer­i­cans to buy influ­ence in Iran under the guise of eco­nomic sup­port.

In the mat­ter of Anglo-Persian, how­ever, Raz­mara did not do as the Amer­i­can wanted and expected from him. He signed an agree­ment with Anglo-Persian which legit­imised the latter’s con­trol over Iran­ian oil. Shortly after this, Raz­mara was mur­dered.

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Mohammed Mossadeq

The Majlis, where Colonel Schwarzkopf was so influ­en­tial, then pres­sured the Shah to appoint Mohammed Mossadeq in place of Raz­mara. Until 1919 Mossadeq had been a very impor­tant Iran­ian politi­cian because he was against the British influ­ence in Iran, he was forced to leave the coun­try in that year.

In 1921 the British through Reza Khan invited him back to the coun­try, with the aim of uti­lising his influ­ence to solid­ify Khan’s posi­tion. Mossadeq accepted the invi­ta­tion to return to Iran­ian pol­i­tics, but when Khan crowned him­self Shah in 1925 he argued so strongly against this move that again he was sidelined. Mossadeq hated the British Empire because of this, which attracted the Amer­i­cans towards him. Amer­ica saw Mossadeq as some­one who could help them remove the British influ­ence in Iran, so they kept an eye on him. In 1944 the Amer­i­can con­sul in Tehran reported back home that Mossadeq was “a very pop­u­lar man in Iran, and his words carry a great deal of weight”.

Indeed Mossadeq’s first deed after being appointed prime minister was to nation­al­ise the Iran­ian oil indus­try. The British were absolutely furi­ous and devel­oped a plan to have its mil­i­tary invade Iran just as in 1918. When they approached the Amer­i­cans with this plan to get their endorse­ment, how­ever, the Amer­i­cans refused and flatly told the British they would not tol­er­ate any mil­i­tary moves against Iran. Amer­ica took Mossadeq’s side and forced the British to enter nego­ti­a­tions. This the British refused. Instead, through the United Nations (UN) Britain orga­nised a global embargo on Iran­ian oil and it instructed its agents on the ground in Iran to orga­nise a mil­i­tary coup against Mossadeq. Amer­ica was dis­pleased with the British ini­tia­tives.

The CIA and Operation Ajax

The oil embargo upset the global oil mar­kets. There was a con­cern in Wash­ing­ton that the Soviet Union might try to make use of the insta­bil­ity caused by a mil­i­tary take-over and launch a counter-coup to estab­lish a com­mu­nist regime in Iran.

America’s abil­ity to go against Britain was lim­ited, how­ever, as it needed British sup­port in the Cold War against communism, espe­cially in the Korean Penin­sula were Amer­ica was fighting a war at the time. There­fore, Amer­ica began to put pres­sure on Mossadeq. It wanted him to make a deal with the British. Mossadeq, how­ever, refused to com­pro­mise and in dis­cus­sions with the British refused to give in on critical sub­jects.

Some within the Amer­i­can admin­is­tra­tion saw this as betrayal and sus­pected Mossadeq of work­ing with the Iran­ian com­mu­nists. The CIA was there­fore ordered to orga­nize a coup against Mossadeq. In 1953 the CIA oper­a­tion “Ajax” was executed and Mossadeq was removed from power.

Oper­a­tion Ajax returned Shah Mohammed Reza Pahlavi to power. He knew who he had to thank for his posi­tion. It is said that in front of Ker­mit Roo­sevelt Jr, head of the CIA in Iran, he remarked that he real­ized he owned his thrown “to God, my peo­ple, my army – and you”. The return of the Shah saw an increase in the Amer­i­can influ­ence in Iran.

The CIA orga­nised for the Shah a new inter­nal secu­rity orga­ni­za­tion named SAVAK. Colonel Schwarzkopf returned to Iran in 1955 to take respon­si­bil­ity for this oper­a­tion. Amer­ica also sup­ported the Shah finan­cially. It gave him $68 mil­lion fol­low­ing his return to power, approx­i­mately one-third of the oil rev­enues the Iran­ian state had missed out on due to the British embargo. Dur­ing the remain­der of the 1950’s Amer­ica would lend the Shah a fur­ther $300 mil­lion for eco­nomic devel­op­ment, and $600 mil­lion to equip his army.

All this firmly estab­lished the Shah in his posi­tion, to the point that he began dream­ing of a future inde­pen­dent from Amer­ica. His poli­cies began focus­ing on turn­ing Iran into a regional power, will­ing to com­pete with Amer­ica for influence in the greater Mid­dle East, and he began spend­ing large amounts of money to build the strongest army in his region. Amer­ica did not like this as it threat­ened to upset the regional bal­ance of power, which could push Saudi Arabia back into the hands of the British.

When the Shah also began threat­en­ing Amer­ica, his fate was sealed. In an inter­view with US News and World Mag­a­zine in 1976 the Shah said about America’s power and influ­ence in Iran: “But if you try to take an unfriendly atti­tude toward my coun­try, we can hurt you as badly if not more so than you can hurt us. Not just through oil — we can cre­ate trou­ble for you in the region. If you force us to change our friendly atti­tude, the reper­cus­sions will be immea­sur­able.” Amer­ica was furi­ous and decided to remove the Shah from power.

In part 3, the impact of the emer­gence of Aya­tol­lah Khome­ini and the “Islamic rev­o­lu­tion”, on US-Iran rela­tions will be analysed.

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