Iran’s nuclear deal has big ramifications for the county’s other major source of energy: oil. Iran has the fourth largest proven reserves of oil in the world but production has halved since 2011 when US and European sanctions took hold. Iran faces many challenges to double its output back to two million barrels a day, not least due to its ageing infrastructure, but the country has long history in the oil game and was the first country in the middle east to drill for oil in 1901. But Iran also has a long history of interference from the west and if suspicious Americans look back in anger to the hostage drama of 1979, Iranians look back further to the way the Americans and British sabotaged their young democracy in 1953.
Iran had been of massive interest to the Allied Powers in the Second World War and the site of one of that war’s most famous meetings. In December 1943 Stalin, Roosevelt and Churchill met on a sunny Tehran morning to discuss how to divvy up the post-Nazi world. They pledged to work together “in war and the peace that will follow”. After the photographers searched their faces for smiles on the veranda, the three great men retired to a hall for a more private conversation. Before they discussed weighty matters of empire, Roosevelt asked Churchill what became of Iran’s former Shah Reza, adding, “if I’m pronouncing it correctly”. Churchill told Roosevelt he became a Nazi and denied Britain and Russia the use of oil and a supplies railway. They invaded Iran in 1941 and Shah Reza was forced to abdicate in favour of his son Mohamed Reza Pahlavi. The father moved to a comfortable life in Johannesburg where he died not long after the Tehran conference. Roosevelt’s question showed up US ignorance of Iranian affairs.
Yet the choice of Tehran to hold the meeting was no accident. Iran had been zone of influence for Britain and Russia since a 1907 treaty shared the country’s spoils between them. The terms of the 1907 and 1941 conquests allowed Iranians to rule as long as they did not act against their powerful guests. An officially neutral Iran was of vital strategic importance to both. Roosevelt was happy to let the two fight it out over Iranian oil while the US maintained control of the bigger fields in Saudi Arabia.
The turmoil of the 1917 Russian revolution left Iran almost entirely a British colony. AIOC, the Anglo-Iranian Oil Company (then nationalised by Churchill, now corporatised as BP) was Britain’s main supplier of oil. Another Churchill decision, to convert the British Navy from coal to oil in 1913, saw AIOC become one of the world’s leading producers supplying Britain in two world wars. In 1947 it reported an after tax profit of £40 million and gave the young Shah’s country just seven million. It reneged on a 1933 deal with his hard-nosed father to provide the workers with better pay, more schools, roads, telephones and job advancement. The young Shah was a playboy and had little interests for his people’s problems but as long as he kept control of the military, Britain didn’t care how badly his country fared.
Mohammad Mossadegh was less sanguine. He knew Iranians chafed bitterly about their abject poverty. Born in 1882, he was a parliamentarian for over three decades, implacably opposed to foreign influence. In a wave of fervour, he was elected Prime Minister in 1951 with a mandate to throw AIOC out of Iran, reclaim the oil reserves and end the British influence. Mossadegh was in his seventies and in the manner of Proust, did much of his business in bed. But when he nationalised Anglo-Iranian, he became a national hero. Shortly after, Iran took control of the refinery.
The British were outraged. British Labour prime minister Clement Attlee was conducting mass nationalisation of British assets but would not grant Iran the same licence. His government declared Mossadegh a thief and demanded he be punished by the UN and the World Court. When neither would support Britain, they imposed an embargo that devastated the Iranian economy. Mossadegh was unmoved and said he “would rather be fried in Persian oil than make the slightest concession”. Mossadegh became a third world hero and delighted his admirers further when he ridiculed Britain at the World Court saying it was trying “to persuade world opinion that the lamb had devoured the wolf”.
Time Magazine made him their man of the year in 1951 saying he “put Scheherazade in the petroleum business and oiled the wheels of chaos”. They called him a “strange old wizard” in a region where, importantly, the US had no policy. Attlee warned President Truman not to interfere with the dealings of “an ally.” The US complied but would not support a British military invasion of Iran.
Events changed dramatically when Britain and the US turned to the right. In autumn 1951 the old warhorse Churchill denounced Attlee in several speeches on the election trail for failing to confront Mossadegh firmly. Churchill said the Prime Minister had betrayed “solemn undertakings” not to abandon Abadan. He saw the loss of Iranian oil as the loss of empire and considered Mossadegh “an elderly lunatic bent on wrecking his country and handing it over to the Communists.” Britain’s position toughened when Churchill won the election.
Truman was also up for re-election in 1952 but decided not to contest. As in Britain, a Second World War hero won and Dwight Eisenhower became the new Republican president. The Cold War was Eisenhower’s biggest focus and Iran was one of his first challenges. Britain cleverly played up to the new regime in Washington claiming Iran was in crisis under Mossadegh and could easily fall to the Communist Party backed by Moscow.
Eisenhower’s new team prepared to organise a coup in Iran. Eisenhower’s former wartime chief-of-staff and now undersecretary of state General Walter Bedell Smith linked the campaign with the State Department and the CIA. At the head of these organisations were a pair of remarkable brothers. John Foster Dulles was a world-class international lawyer now turned Secretary of State while Allen Dulles now ran the intelligence organisation. The brothers had a special interest in Iran and Allen went to Tehran in 1949 where he met the Shah and Mossadegh. The Dulles brothers were ideological warriors determined to prevent Communism in Iran.
Eisenhower gave implicit approval for Operation Ajax but presented a front of plausible deniability. Behind the scenes the two Dulles and Smith had full authority to proceed. They appointed secret agent Kermit Roosevelt to bring the coup together. Kermit, who preferred to be called Kim, was a grandson of the first Roosevelt president Theodore. Independently wealthy, he was a history professor at Harvard until he joined the newly established Office of Strategic Services in the war. His work in the OSS remains shrouded in mystery but he stayed on in peacetime when it was rebadged as the CIA.
Working from the US embassy in Tehran (a fact angry Iranians remembered in 1979) Roosevelt quickly liaised with his British counterparts in the Secret Intelligence Service – MI6. Iranian tribal leaders on the British payroll launched a short-lived uprising. Roosevelt met with anti-Mossadegh politicians and persuaded the Shah to sign a “firman” (a document of doubtful legality sacking the Prime Minister). By mid-August 1953 Roosevelt and his local agents were ready. He paid newspapers and religious leaders to scream for Mossadegh’s head and organised protests and riots turning the streets into battlegrounds.
But at the last minute Operation Ajax failed. On August 15 an officer arrived at Mossadegh’s house to present the firman only to find the Prime Minister was tipped off in advance. The Shah fled the country while units loyal to Mossadegh surged through Tehran. Roosevelt did not quit and three days later he organised a second attempt. Once again he launched a massive mob in the capital. Crucially Mossadegh did not call out the police to stop them. Armed units loyal to the Shah launched a gun-battle against Mossadegh’s supporters. The following morning Tehran Radio announced “the Government of Mossadegh has been defeated!”
Mossadegh was under arrest and the Shah flew home from Italy in stunned triumph. The New York Times wrote “the sudden reversal was nothing more than a mutiny by the lower ranks against pro-Mossadegh officers”. Roosevelt was understandably delighted. Barely a day earlier he had been ordered home, now he would be returning in triumph. Mossadegh was given a three year prison sentence. He served it until 1956 and was confined to home in Ahmad Abad until his death, aged 85 in 1967.
The Anglo-Iranian Oil Company tried to return to their old monopoly position after his overthrow. But the US had invested too much in the coup to let that happen. They organised an international consortium to assume control of the oil. AOIC held 40 percent, five American companies held 40 percent and the remainder was split between Royal Dutch Shell and Compagnie Francaise de Petroles. The consortium agreed to split the profits fifty-fifty with the Shah but never allowed Iranians to examine the books.
Though Mossadegh was a forbidden topic in Iran, new enemies emerged within. By the late 1970s the Shah had crushed all legitimate political parties and a new religious force filled the void. When he was forced to flee the country in 1979 as a reviled tyrant, the first government to replace him was determined to invoke Mossadegh’s legacy. New Prime Minister Mehdi Bazargan had been dispatched by Mossadegh to Abadan after the British fled in 1951. Another Mossadegh admirer Abolhassan Bani-Sadr was elected president. But behind the scenes Ayatollah Khomeini was consolidating power. Before long he was arresting all his enemies. Mossadegh had been defeated again, this time in death.
The Mossadegh coup had profound impact on America. Overnight the CIA became a central part of foreign policy apparatus. While Roosevelt went home in quiet retirement, the Dulles brothers used the new template to overthrow other rulers such as Arbenz in Guatemala (1954) and Allende in Chile (1973). The incident also changed how Iranians viewed the US. Before 1953, Britain was the rapacious and greedy enemy. Now the US was the sinister party, manipulating quietly in the background. The 1979 embassy hostage was a direct result of Carter’s decision to allow the Shah into America. But the reason the crisis last 14 months was a distrust going back to 1953.
This week’s nuclear deal between the countries won’t immediately heal half a century of hurt. But it is crucial it is ratified despite hardliners in both countries. The bleatings of Israel should be ignored as a country with its own nuclear arsenal can look after itself no matter what happens in Iran. Mohammad Mossadegh offered a template of what Iran might have been, had the west not been blinkered by its own suspicions. Now is the time to make good on his legacy and bring Iran in from the cold.