From Shahs to the CIA: The History of Western Intervention in Iran (Part 2)


Tyler Durden | Zero Hedge – TRANSCEND Media Service

In part 1 we examined the early history of the West’s domination of Persian natural resources, especially the establishment and rise of the Anglo-Persian Oil Company which led to multiple 20th century British interventions in Iranian politics in an attempt to ensure permanent access to oil. Part 2 tells the story of Operation Ajax.  

“The Empire Must Go On”

Once Europe erupted in world war (WWI), the British dispatched their armed forced to refineries all over Iran in order to protect what they considered their property – Iranian oil.  After the cessation of hostilities in 1919, the British bribed and intimidated the new regime of Ahmad Shah into accepting the terms of the much hated Anglo-Persian Agreement which in all but name, made Iran a protectorate of the British Empire.  No longer would the Iranians control their own army, transportation system, and communications network.  It all passed under the control British occupiers and with it the last vestiges of Iranian sovereignty. This once again ignited the fervent nationalist spirit across Iran and new rounds of protests and opposition.

Even the U.S. president, Woodrow Wilson, disapproved of the agreement.  But, true to their colonial and imperialist spirit, the British rebuffed such protestations and opposition by saying, “These people have got to be taught at whatever cost to them, that they cannot get on without us.  I don’t at all mind their noses being rubbed in the dust.”  The empire must go on.


The opening sequence from the 2012 movie ‘Argo’ features a brief history of aggressive Western intervention which shaped modern Iran.

And go on it did, fueled by the black gold that flowed beneath the Iranian deserts. For the next thirty years, relations between the Iranians and the British revolved mainly around oil. The British deposed and installed new kings, and prime ministers and members of Iranian parliament were bought off to help ensure the Anglo-Persian Oil Company (by that time renamed the Anglo-Iranian Oil Company, or AIOC) had a free hand in the exploration, refining, and exportation of Iranian oil.  For that was indeed the bottom line for the British – the Iranian venture was extremely profitable for the them.

Churchill’s Dream Prize

Indeed, for Churchill, it was, “a prize from fairyland beyond our wildest dreams.” When they started in 1913, the British were extracting only 5,000 barrels of oils per day, and by 1950 they were extracting 664,000 per day.  Had the wealth from the oil been humanely shared with the Iranian people, the Iranians themselves likely would have seen such growth as part of a mutually beneficial relationship and endeared them to the English.  However, the long list of grievances hardened the hearts of the average Iranians and confirmed what they had long known: Britain was an empire whose only objective was preserving its interests, whatever the costs to Iranians, notwithstanding British protestations to the contrary.

It is easy enough, however, to see why the British were prepared to go to the extreme to protect their direct access to cheap Iranian oil.  Iranian oil was vital, not only to the Royal navy, but to the entire economy of Great Britain and their way of life.  It fueled their industries and growing automobile culture. The AIOC was a vast company with seemingly limitless profits and resources, yet it sought still more from the Iranians.  From the British perspective the situation seemed like good capitalism, but from the perspective of the average Iranian, their British “benefactors” were greedy imperialists who were prepared to suck Iran dry.

The majles (Iranian parliament, which held its first session in 1906), weakened though it was, gradually regained strength throughout the late 20s, 30s, and 40s, mainly from the rise of anti-British and anti-Shah sentiment coursing through the nation.  The majles forced the Shah and the oil companies to come to the negotiating table time and a again seeking just compensation and to redress the wrongs commited by the oil company. The list of grievances was indeed long.  At the top was the irregular bookkeeping that systematically deprived them of their contractual rights to royalties.  Instead of calculating the Iranian 20 percent before taxes, the British calculated the Iranians their portion after they had already sent huge sums to the British treasury, which meant, the Iranians received much smaller royalties.

Recently declassified documents like the above ‘The Battle for Iran, 1953’ (Contents page: view more here) tell the CIA’s secret internal history of the 1953 coup. It was only in 2013 that the CIA formally acknowledged its role in bringing down the Mossadegh government after the agency was forced to declassify and publish secret documents related to Operation Ajax, (and first disclosed by The New York Times’ James Risen) and to this day most Americans are unaware that it happened.  

Additionally, in 1943 the British stubbornly, and in the eyes of the Iranians, greedily, refused to renegotiate their contract to reflect the growing global trend to fairer and more equal contracts.  Venezuela signed a 50/50 deal with the foreign companies refining its oil; Aramco, an American oil company, signed a 50/50 deal with Kuwait and Saudi Arabia; and Mexico took advantage of the chaos of WWII and did the unthinkable and completely nationalized American and British oil companies.  The Iranians felt it was time that the British dealt justly and fairly with them as well.

Not only did the British fail to fairly compensate the Iranians for their oil, they only paid them in sterling, effectively barring them from buying from other countries and forcing them to buy from the British.  They also secretly conducted geological explorations without the consent of the Iranian government, much less the Iranian people.  These explorations, plus the building of pipelines, often laid waist to forests, water sources, and other natural resources resulting in massive ecological disasters.  To add insult to injury, the British often imported labor from neighboring countries, rather then giving the Iranians the opportunity to work and make a living, much less take leading and managerial positions, in their nation’s most vital industry.   Squalid company housing, hospitals, and working conditions coupled with firings and military action against unions were also on the Iranians’ long list of grievances against the oil company.

The Shah meets the CIA

Beginning in the mid-40s tensions between Iranian workers and the Anglo-Iranian Oil Copany came to a critical impasse.  In July of 1945  7,500 AIOC workers led an unsuccessful strike demanding equal pay, decent housing, and paid Fridays.  They took to the streets again in May of 1946 with similarly disappointing  results.  It wasn’t until May of 1946 when 50,000 workers organized the greatest strike in Iranian history that the AIOC realized it had no way forward unless it made some concessions, though they probably came too little, too late to turn the tide of antiimperialism/colonialism felt by the vast majority of Iranians.

Negotiations between the majles and the AIOC stalled and stagnated for the next 5 years.  With each passing year, the bitterness and resentment grew among the Iranian people who were tired of decades of what they felt was theft and national humiliation at the hands of British colonialists. The thirty-year old monarch, Mohammed Reza Shah Pahlavi did little to assist his countrymen in redressing the wrongs of the British.  In fact, at the height of the conflict between the majles and the AIOC, the young Shah abandoned Iran and set off on a American expedition where he mingled with the most wealthy and powerful of America’s elites.

In November of 1949, at the invitation of Allen Dulles, the future head of CIA introduced Mohammed Reza Shah to the members of the newly formed Overseas Consultants Inc.  Mohammed Reza singlehandedly committed his country to paying the OCI an astonishing $650 million to complete a massive development project in Iran.  The deal was not well received at home since the majles had not approved of it or been consulted.  It did nothing more than stoke the flames of revolution that much more.  The final straw that broke the proverbial camel’s back came in March of 1951.

Nationalizing Oil under Mohammed Mossadegh

Having failed to reach a just and equitable agreement with the AIOC, the majles felt it had no other recourse than to take the course of action that the Mexicans had taken a decade before and nationalize their oil industry.  In March of 1951 the majles voted to take that fateful step and a few days later they elected the charismatic nationalist, Mohammed Mossadegh to the office of prime minister.  One of the first casualties  of the Mossadegh-led majles was the $650 million OCI deal, an act Allen Dulles would remember with bitter resentment.  Mossadegh believed with every ounce of his body that the Iranian oil fundamentally belonged to the Iranians.  Prior agreements with corrupt kings could not and should not be honored since they were made without the knowledge or consent of the people through their elected officials.

Meanwhile the British took no notice of these legitimate claims and by June British warships menaced the Iranian coast and plans had been drawn involving seventy thousand troops invading Iran to seize what it claimed were British oil fields. The American ambassador, Henry Grady, warned the Truman administration that the British intransigence and belligerence was utter folly and could easily trigger World War III.  Truman, in no uncertain terms, informed Churchill that the United States would not agree to or support the overthrow of another democratically elected government.

Even after nationalization, the Iranians sought to compensate the British by sharing 25 percent of  the net profits of the oil operation.  It also guaranteed that the British citizens who stayed and worked for the newly formed Iranian Oil Company would be welcome to stay.  It would also continue to sell the oil exactly as the British had done making sure not to disrupt the long established system of controls.  The British were not content with these compromises and stubbornly insisted on a return to the status quo where they, and they alone owned, managed, and controlled every aspect of the Iranian oil industry.  “We English have had hundreds of years of experience on how to treat the natives.  Socialism is all right back home, but out here you have to be the master” boasted one British minister.

British Dirty Tricks, Eisenhower, and the Dulles Brothers

Over the next year the British contemplated every trick they had learned in their long years of empire building: sabotage, assassination, bribery, and even a full on military invasion. But Truman’s opposition to regime change limited their options.  So in the meantime they settled  on imposing a crippling blockade of Iranian ports so that no country could buy oil from the Iranians.  Any tankers caught trying to slip through would be detained.

The British also took their case to the International Court of Justice in the hopes of getting the international community to bolster its position only to be told that the ICJ had no jurisdiction in the case since it involved agreements between Iran and a private company.  They took their case once again to the UN in New York in the fall of 1952 but met a brick wall there as well.  Mohammed Mussadegh was present and he spoke forcefully and eloquently about the plight of the Iranians and about the history of the AIOC’s predations. His speech was well received especially by those leaders who themselves had been brought to power on the waves of nationalism in Asia, Africa, and South America.

Having exhausted all resources, the British resolved to covertly overthrow Mohammed Mossadegh, even though 95-98 percent of the population of Iran time and time again favored him as their one true leader in elections and referendums.  They could not count on the Truman administration for support, so they bided their time until after the 1952 elections which could bring someone that was more to their way of thinking or could be brought around to it.  They found such a men in Dwight Eisenhower, in his Secretary of State, Foster Dulles, and in Allen Dulles, head of the CIA. 

A Deep State Purge

The British argument for overthrow rested on the necessity to regain the control of the oil industry away from the Iranians.  However, that argument alone would not be enough to win over Eisenhower and Dulles.  All three men were ardent anti-communist and the British used that to their advantage painting Mossadegh as a communist at worst and at best, a weak leader who’s government could easily fall which could lead to a Soviet takeover of Iran.  These were all the reasons and proofs Eisenhower and Dulles needed.  Without consulting experts or career diplomats on Iranian affairs they forged ahead with their plan to help the British topple Mossadegh.

They even went so far as to dismiss any who disagreed with them.  One such unfortunate was none other than the chief of the CIA field office in Tehran, Roger Goiran.  If any body knew what the realities on the ground were, it was he.  Having learned of the plot he was repulsed by the idea, and thought that regime overthrow in the cause of a preemptive strike of sorts in order to prevent the Soviets from theoretically moving in was too dramatic a move.  His objection was noted after which he was quickly relieved of his duties and replaced by Kermit Roosevelt, one of the conspirators.

Ultimately, seasoned intelligence veteran Goiran disagreed with and was subsequently purged by the ‘deep state‘ as Stephen Kinzer’s book All the Shah’s Men (John Wiley and Sons, Inc., Hoboken, New Jersey, 2003, pg. 164) explains:

Goiran had built a formidable intelligence network, known by the code name Bedamn, that was engaged in propaganda activities aimed at blackening the image of the Soviet Union in Iran. It also stood ready to launch a nationwide campaign of subversion and sabotage in case of a communist coup. The Bedamn network consisted of more than one hundred agents and had an annual budget of $1 million–quite considerable, in light of the fact that the CIA’s total worldwide budget for covert operations was just $82 million. Now Goiran was being asked to use his network in a coup against Mossadegh. He believed that this would be a great mistake and warned that if the coup was carried out, Iranians would forever view the United States as a supporter of what he called “Anglo-French colonialism.” His opposition was so resolute that Allen Dulles had to remove him from his post.

This was new and unchartered territory for the United States in Iran or anywhere.  Up to then, most Iranians had a positive view of America and look up to Americans because of their own revolutionary history, constitution, form of government, and insistence on the rule of law.

Operation Ajax Launched with False Flag subversion

The Iranians viewed the Americans as allies and friends.  By undertaking regime change, the Americans risked losing the goodwill of the Iranians and earning their much deserved scorn.  Nevertheless, Kermit Roosevelt took the reins of the operation and plotted his coup for several months.  Once he was given the green light by the Dulles brothers and President Eisenhower, Roosevelt set his plan in motion.  In late July of 1953 he crossed over into Iran under an assumed name and headed directly to Tehran to meet up with the valuable Iranian, British, and American assets.  They immediately set out to subvert the Mossadegh government by paying off street gangs, corrupt mullas, and radio stations to create entirely fabricated anti-Mossadegh protests.  They also bribed members of the majles to support a vote of no confidence.  Mossadegh caught on to the plot and immediately dissolved the assembly, denying the conspirators any chance at a quasi-legal way of deposing him.

Persian soldiers chase rioters during CIA-orchestrated civil unrest in Tehran, August 1953. Archive photo via Foreign Policy magazine.

Once plan A crumbled, Roosevelt put plan B into action which called for the Shah himself to sign royal decrees dismissing Mossadegh from office and appointing General Fazlollah Zahedi as his new prime minister.  The Shah demurred, going so far as running away to the Caspian Sea.  In the end Roosevelt caught up with him and convinced him him to sign.

On the night of August 14, 1953 Roosevelt sent Colonel Nassiri and a contingency of soldiers to Mossadegh’s house.  Their task was to present the royal decrees to Mossadegh and take him into custody.  To their surprise, Mossadegh had been tipped off about the plot and had in the shadows a contingency of officers of his own ready to take Col. Nassiri and his men into custody.  The following morning, Radio Tehran announced that the government had successfully foiled the plot by the Shah and foreign elements to overthrow the government.

Having heard the news, Roosevelt’s CIA superiors urged him to give up the plot and return home.  However, not being one to back down, Roosevelt forged ahead.  For the next 4 days, through his Iranians assests Roosevelt hired more street gangs to simultaneously put on pro and anti Mossedegh demonstrations.  The demonstrations had the desired effect of plunging Tehran into an abyss of violence and lawlessness. 

Coup d’état

On August 19th the violence reached its climax paving the way for the final part of Roosevelt’s plan: a full on military coup. At noon the military and police officers Roosevelt had bribed, stormed and took control of the foreign ministry, the central police station, the headquarters of the army’s general staff, and laid siege to Mossadegh’s house.  Mossadegh narrowly managed to escape, but turned himself in the following day to General Fazlollah Zahedi, not wanting to be the cause of further blood shed. Zahedi played a large role in the coup in cooperation with the CIA and Britain’s MI6, and would go on to replace Mossadegh as prime minister.

The fall of Mossadegh, on August 20th, 1953 also marked the end of Iran’s long and painful march to true and complete democracy and national sovereignty.  It also marked the beginning of a 26 year reign of corruption and oppression in which Mohammed Reza Shah, quickly returned to power by the 1953 coup d’état, brutally stamped out the pro-democratic reforms of the majles, violently put down any opposition, as well as what arguably angered the Iranians the most: the Shah returned the oil industry back to Western corporations, once again depriving the citizenry of the wealth that rightly belonged to them.

Iranians, unlike many average Americans who are not taught this history in school, have always known that America was involved in the overthrow of their democratically elected government and have thus hated the US government ever since.  This hatred was seen most vividly in 1979 Islamic Revolution when 52 embassy staff in Tehran were held hostage for 444 days.

It was only in 2013 that the CIA formally acknowledged its role in bringing down the Mossadegh government after the agency was forced to declassify and publish secret documents related to Operation Ajax, (and first disclosed by The New York Times’ James Risen) and to this day most Americans are unaware that it happened. Yet it is essential to understanding the historical domino effect that American and British interventionism played in bringing the US and Iran to their modern period marked by decades of animosity and enduring mutual distrust.


Zero Hedge is an English-language financial blog that aggregates news and presents editorial opinions from original and outside sources. The news portion of the site is written by a group of editors who collectively write under the pseudonym “Tyler Durden” (a character from the novel and film Fight Club).

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