WHEN WORD REACHED Tehran in 1944 that Reza Pahlavi, the former Shah of Iran, had died in exile in South Africa, his son and successor was devastated. Many years later, he summed up his reaction simply: “My grief was immense.” Mohammed Reza Pahlavi had worshiped his father, the resolute and physically towering commander of the Persian Cossack brigade who had seized power and crowned himself Shah in the 1920s. Reza Shah had thereafter brought order to the fractious country, begun modernizing it at a pell-mell rate, and had subjugated the powerful mullahs, whom both father and son regarded as dangerous and deadly enemies from the Middle Ages.
But what made the son’s grief and guilt still worse was that, if not the actual usurper of his father’s throne, he was part of the agency of his father’s downfall. In August 1941, two months after the German invasion of the Soviet Union, the British and the Russians moved their forces into Iran in order to protect the refinery at Abadan and the supply line from the Persian Gulf to the Soviet Union. Alarmed by rapid German advances in Russia and North Africa, the Allies feared a pincer that would converge in Iran. They deposed Reza Shah, who had shown friendliness and sympathy toward the Nazis, and replaced him with his son, only twenty-one at the time.
After Reza Shah’s death, Mohammed Pahlavi would be dedicated to, and haunted by, the memory of his father. He would forever try to be worthy of Reza Shah, against whose standard he would be judged—by others and by himself. One day in 1948, the Shah himself even admitted to a visitor, “My sister Ashraf asked me yesterday whether I was a man or a mouse.” He had laughed about it, but he obviously didn’t think it funny. There was always the implication that he was weak, indecisive, and inadequate compared to his father. There would always be a way, too, in which the Shah was somehow an outsider. At age six, he was entrusted to a French governess; at age twelve, he was sent off to school in Switzerland. His education and experience engendered a certain distance from Iranian society. “It might, of course, be,” mused the American ambassador in 1950, “that he is a little too Westernized for an Oriental country.” That possibility would dog him for almost four decades.
Yet, whatever the Shah’s own anxieties, he had been plunged at a very young age into treacherous circumstances, which would have mightily challenged even the most self-assured and practiced of politicians. The legitimacy of his dynasty was problematic; the role of the monarchy in Iran, a totally unresolved question. He had to contend with chronic intervention by foreign powers, as well as direct Soviet pressure on the country’s territorial integrity and a highly visible British economic presence. He was forced to struggle to assert his authority in a political system riven by every kind of division—class, regional, religious, and modern versus traditional. On one side were the Islamic fundamentalists, led by the fiery Ayatollah Seyed Kashani, who were outraged by every intrusion of the modern world—be it the presence of foreign advisers or the fact that Reza Shah had allowed women to dispense with the veil. On the other side were the communists and the Tudeh, a well-organized leftist party tied to Moscow. In between were reformers and nationalists and republicans, all of whom wanted to remake the political system, as well as military officers who were itching to take power for themselves.
The political culture of Iran was itself chaotic and phantasmagoric, given to wild exaggeration and violent emotion. Graft and corruption were a way of life. The British chargé d’affaires summed up the rules of the game as it was played in the Majlis, the parliament in Tehran, with a straightforward maxim: “Deputies expect to be bribed.” Out in the countryside lived a multitude of tribes and clans, which hated their subordination to Tehran and the Pahlavis. Virtually no part of the Shah’s domain was immune to secessionist drives. And in the late 1940s the nation was gripped by grinding poverty and suffering from economic collapse. A pervasive hopelessness settled over the land.
Only one thing really united the country—hatred of foreigners and, in particular, the British. Never had so much malevolence been attributed to a so rapidly declining power. The English were regarded as almost supernatural devils, controlling and manipulating the entire nation. Every Iranian politician, wherever he might be in the political spectrum, was virtually obliged to accuse his enemies and opponents of being British agents. Even droughts, crop failures, and locust plagues were blamed on the evil designs of those clever Englishmen. But the detestation centered, in particular, on the largest industrial employer in Iran, the major source of the nation’s foreign earnings, and the all-too-tangible symbol of the intrusion of the modern foreign world—the Anglo-Iranian Oil Company.
Part of the hatred of Anglo-Iranian was fueled by the battle over the oil rents. Between 1945 and 1950, Anglo-Iranian registered a £250 million profit, compared to Iran’s £90 million royalties. The British government received more in taxes from Anglo-Iranian than Iran did in royalties. To aggravate matters still further, a substantial part of the company’s dividends went to its majority owner, the British government, and it was rumored that Anglo-Iranian sold oil to the British Navy at a substantial discount. But, in Iran, far more important than pounds and pence were the emotions and symbols. Those were what drove the politicians and the street mobs to frenzied excitement, and what turned the animosity against Anglo-Iranian into a national obsession. It was very handy to have such a foreign scapegoat when so much was wrong at home.1
The Last Chance
Through World War II, Iran was seen by Americans and British alike as London’s responsibility, primarily a “British show.” Thereafter, however, the development of the Cold War, combined with the growing worry about the security of Persian Gulf oil, shoved Iran toward the fore of American foreign policy concerns. Soviet troops were withdrawn from northern Iran in 1946, but by 1949, the Americans were fearful that Iran was in so advanced a state of economic and political decay that it would be easy prey for the Soviet Union.
Iran’s prospects were made still more uncertain, and the political scene more chaotic, by the endemic assassinations and assassination attempts. In February 1949 a Moslem fanatic, posing as a photographer, tried to kill the Shah as he arrived at Tehran University. Though firing a half-dozen shots at point-blank range, the would-be assassin only slightly wounded the Shah, who displayed courage and responded coolly. “The miraculous failure of this assassination attempt,” he said afterward, “once again proved to me that my life was protected.” It was a turning point in the Shah’s view of himself and his vision for his country. He used the incident to impose martial law and to begin a vigorous campaign to assert his personal authority. He ordered the body of his father—to whom he now posthumously gave the title “the Great”—to be exhumed in South Africa, brought back to Iran, and given a state funeral. In due course, huge equestrian statues of Reza Shah would rise up in different parts of his son’s domain.
The Shah’s drive to extend his political control was paralleled by efforts to readjust the financial ties between Iran and the Anglo-Iranian Oil Company, in parallel to what was happening in the other oil exporting countries. Washington, fearful of Soviet ambitions and with much less to lose than London, pushed the British government and Anglo-Iranian to increase the royalties paid to Iran. The point man for the Americans was George McGhee, the Assistant Secretary of State for Near Eastern and African Affairs who was at the same time brokering the new fifty-fifty deal between Aramco and the government of Saudi Arabia, and who thought the existing division of earnings between Anglo-Iranian and Iran was not reasonable. British officials, not surprisingly, greatly resented intervention and free advice from McGhee and other Americans. They took to calling McGhee, who was just thirty-seven in 1949, “that infant prodigy” and tended to see him, in particular, as a source of their troubles. They thought he was anti-British and anti–Anglo-Iranian. On that they were wrong. As a Rhodes Scholar at Oxford, McGhee had gotten to know the daughters of Sir John Cadman of Anglo-Iranian and had even visited the Cadman country house. In the course of earning a doctorate in geophysics at Oxford, he had shared his seismic research with Anglo-Iranian (in an area of Hampshire where the company was interested in drilling) and then, ironically, had been offered a job as a geophysicist in Iran. After seriously considering the offer, he turned it down, but only because he was homesick and wanted to get back to America. “I had, however,” he later said, “a kindly feeling toward AIOC at that time.”
Events showed that he had made the right choice. It was soon after his return from England, at the beginning of World War II, that McGhee discovered a sizeable oil field in Louisiana, which gave him the wealth, independence, and opportunity to devote the rest of his career to public service. He married the daughter of the eminent Everette DeGolyer, and was, until he entered the armed services, a partner in DeGolyer’s oil appraisal firm. McGhee was an unabashed Anglophile (and later in life was chairman of the English-Speaking Union). He just thought the British needed to be saved from themselves, especially when it came to their “nineteenth-century” attitude toward oil. McGhee also fairly reflected the view of his colleagues, which was summed up by Secretary of State Dean Acheson when he criticized “the unusual and persistent stupidity of the company and the British Government” on the subject of Iran.2
On the other hand, though the Americans never seemed to believe it, the British government was no less at odds with Anglo-Iranian. The British government was a 51 percent owner of Anglo-Iranian, but that did not mean there was any great affection or empathy between the two parties. On the contrary, there was suspicion and rancor, and some of their fiercest fights were with each other, in a classic case of what has been called the “battle between Minister and Manager.” Foreign Secretary Ernest Bevin had complained as early as 1946 that Anglo-Iranian “is virtually a private company with state capital and anything it does reacts upon the relationships between the British Government and Persia. As Foreign Secretary, I have no power or influence, in spite of this great holding by the Government, to do anything at all. As far as I know, no other Department has.”
To the company, of course, the entire situation looked quite different. It was the third-largest crude oil producer in the world, with most of that oil coming from Iran, and it thought the Iranians had a pretty good deal as things were. Under the 1933 agreement, Iran received not only a royalty, but also 20 percent of the company’s worldwide profits—which was better than the terms of any other oil producer. Beyond that, Anglo-Iranian had become one of the major international oil companies. The company was trying to carry on a complex, global business. It operated as a private firm—that had been the original intention in Churchill’s share acquisition in 1914—and its senior executives resented and resisted the intrusions and advice of the politicians and civil servants. They thought that the bureaucrats—whom Anglo-Iranian’s chairman, Sir William Fraser, dismissingly called “West End gentlemen”—simply did not understand the oil business, or indeed, what it was like to try to do any business at all in Iran. But the pressures were such that, by the summer of 1949, Anglo-Iranian was forced to negotiate with the Iranians a Supplemental Agreement—supplemental to the revised 1933 concession. The new proposal provided for a large hike in royalties, as well as a big lump-sum payment.
Although Anglo-Iranian and the Iranian government had come to agreement, the government, fearful of the Parliament’s opposition, held back from submitting the agreement to the Majlis for almost a year—until June of 1950. The oil committee of the Parliament responded by furiously denouncing the new agreement, calling for cancellation of the concession, and demanding the nationalization of Anglo-Iranian. A leading pro-British politician was assassinated, and the fearful Prime Minister, deciding that prudence was the better course, quickly resigned.
The Shah nominated General Ali Razmara, the Army’s Chief of Staff, as the new Prime Minister. A lean, young “soldier’s soldier,” a graduate of the French military academy at St. Cyr, ambitious and cold-blooded, Razmara was known to have done the unheard of—he had once returned a bribe. Razmara sought to distance himself from the Shah and to develop authority of his own. To the Americans and British, he looked like the last chance. Iran appeared ever more vulnerable to both communist subversion and direct Soviet expansion.
That same month, June of 1950, the North Koreans invaded South Korea, turning the Cold War into a hot one. There had already been border clashes between Soviet and Iranian forces, and in the State Department, George McGhee urgently directed the preparation of contingency plans for responding to a Soviet invasion of Iran. Moreover, in the midst of the Korean War, Iranian oil took on a new urgency; it accounted for 40 percent of total Middle Eastern production, and Anglo-Iranian’s refinery at Abadan was the major source of aviation fuel in the Eastern Hemisphere.3
With the stakes suddenly so much higher, the U.S. government urged the British government even more strongly to pressure Anglo-Iranian to make an offer that the Iranian government could swiftly accept. But Sir William Fraser would not easily budge. With many years’ experience dealing with the Iranians, he had little respect for their governmental system and counted on nothing but ingratitude, deception, backbiting, and new demands. He was hardly more kindly disposed toward the Americans. He would bitterly blame the troubles that would befall Anglo-Iranian on America’s political meddling in Tehran and on the activities of the American oil companies—Aramco in particular—in the Middle East.
Fraser, very definitely, was the man who determined Anglo-Iranian’s position. He was a formidable opponent under any circumstances. With none of John Cadman’s diplomatic skill, he was a tough, implacable autocrat who ran Anglo-Iranian one way—his way. Dissent was not tolerated. The chairman of Gulf, which was Anglo-Iranian’s partner in Kuwait, observed that Fraser’s domination was so total that Anglo-Iranian’s other directors “did not dare call their souls their own.” It was said of Fraser that he was a “Scotsman to his fingertips.” His father had been founder of the leading Scottish shale oil company, and then sold it to Anglo-Iranian—and, as was later said, “Willie came with the shale.” Said one who worked with Fraser, “Few, in an industry where tough bargaining is a way of life, were likely to get the better of him.”
The same was true when his adversary was the British government. A minister of state in the Foreign Office declared that Fraser appeared “to have all the contempt of a Glasgow accountant for anything which can not be shown on a balance sheet.” To another British official who dealt with him, Fraser was an “obstinate, narrow old skinflint.” Though many senior government officials felt that he should be removed, and his retirement was often under consideration, they seemed powerless to make it happen. One of Fraser’s great strengths against all opponents derived from the huge importance of Anglo-Iranian’s earnings to the British Treasury and the overall British economy.4
Fraser implacably resisted repeated entreaties from the British government to negotiate further with Iran, and he ignored the American. But then in the autumn of 1950, Fraser had an abrupt and uncharacteristic change of heart. He not only wanted to come up quickly with substantially more money for Iran, but also talked about subsidizing Iranian economic development and supporting Iranian education. What had happened? It was not that Fraser had experienced a sudden conversion to philanthropy. Rather, he had learned about what was known as the “McGhee Bombshell”—the imminent fifty-fifty deal in Saudi Arabia—and knew that he had to do something speedily. But time had already run out. In December, the announcement of the fifty-fifty deal with Aramco forced Premier Razmara to withdraw his support from the Supplemental Agreement, and that was its end.
At last, Anglo-Iranian came forward to offer its own fifty-fifty deal. It was no longer enough. The entire opposition in Iran now focused on the infamous Anglo-Iranian. The leader was an elderly firebrand, Mohammed Mossadegh, who was chairman of the oil committee in the Parliament. “The source of all the misfortunes of this tortured nation is only the oil company,” Mossadegh declared. Another deputy thundered that it would be better for the Iranian oil industry to be destroyed by an atomic bomb than remain in the hands of Anglo-Iranian. All were calling for nationalization of the industry and the ouster of Anglo-Iranian. Prime Minister Razmara did not know what to do. Finally, in a speech to Parliament in March 1951, he came out against nationalization. Four days later, as he was about to enter Tehran’s central mosque, he was assassinated by a young carpenter, who had been entrusted by Islamic terrorists with the “sacred mission” of killing the “British stooge.”
Razmara’s murder demoralized the proponents of compromise, weakened the Shah’s position, and emboldened the broad opposition. A week and a half later, the minister of education was also assassinated. The Majlis proceeded to pass a resolution nationalizing the oil industry, but it was not implemented immediately. Then, on April 28, 1951, the Majlis chose Mohammed Mossadegh, who was by now the number-one foe of Anglo-Iranian, as the new Prime Minister, with the specific and wildly popular mandate to execute the nationalization law. The Shah signed the law, and it went into effect on May 1. Anglo-Iranian’s days seemed finished in Iran, for in the nationalization decree it was designated as the “Former Company.” As the British ambassador reported, Anglo-Iranian, though in business around the world, “has been legally abolished” and Tehran “has taken the line it has no further existence.”
Mossadegh dispatched the governor of Khuzistan province to Anglo-Iranian’s headquarters at Khorramshahr. On arrival, the governor sacrificed a sheep in front of the building, and then announced to a delirious crowd that the concession was voided. Anglo-Iranian’s facilities in Iran, as well as the oil they produced, now belonged to the nation of Iran. Mossadegh’s son-in-law followed with an emotional speech in which he declared that the days of colonialism were over and those of prosperity at hand. He fainted from the excitement and had to be carried away. Directors of the newly established state oil company, led by Mehdi Bazargan, dean of the Tehran University engineering faculty, appeared at the refinery site at Abadan, carrying with them stationery, rubber stamps, and a large sign, all of which said “Iranian National Oil Company”—the sign to be nailed up on one of the office buildings. Scores more sheep were sacrificed to celebrate the great event, and the huge throng that had gathered to greet the directors went wild with exultation. But, though the sheep had been sacrificed, the deed was not yet done. And for the next five months, the status of Anglo-Iranian’s facilities in Iran remained clothed in uncertainty and indecision.5
About seventy years old and frail in appearance, with a completely bald head, a very long nose, and bright, buttonlike eyes, Mohammed Mossadegh would completely dominate the drama of the next two years. He would slyly outwit every-one—foreign oil companies, the American and British governments, the Shah, his own domestic rivals. He himself was a man of evident contradictions. Cosmopolitan, educated as a lawyer in France and Switzerland, he was fiercely nationalistic, antiforeigner, and obsessed by his opposition to the British. The son of a high bureaucrat and a great-grandson of a Shah from the preceding dynasty, Mossadegh was an aristocrat with extensive landholdings, including a 150-family village that belonged to him personally. Yet he took on the mantle of reform, republicanism and rabble rousing, appealing to and mobilizing the urban masses. One of the first professors at the Persian School of Political Science, he had become caught up in the constitutional revolution of 1906, which remained the lodestar for the rest of his career. He had gone to the Versailles Peace Conference after World War I, ordered a rubber stamp with the legend “Comité resistance des nations,” and sought to plead Persia’s case against foreign intervention, particularly that of the British. He had received no hearing, and returned home, feeling that his hopes and idealism had been betrayed by the colonial powers.
In the 1920s, Mossadegh occupied a number of ministerial posts and played a leading role in opposing Reza Shah’s moves to turn Persia into a dictatorship and make himself the absolute ruler. For these efforts, Mossadegh was rewarded with various spells in jail and under detention on his estate, where he busied himself with amateur medical studies and the investigation of homeopathic remedies. The expulsion of Reza Shah in 1941 by the British and Americans provided the signal for Mossadegh to burst back upon the political scene. He quickly amassed a following; his long years of dedicated opposition had firmly established him as the “pure” man, devoted to Iran and to cleansing it of foreign domination.
Mossadegh was both unpretentious and eccentric in his personal style; frequently, clothed in pajamas, he received Iranians and important foreigners while stretched out on his bed, where he spent much time because, some said, of dizzy spells. His bodyguards were always nearby; he lived, understandably, in perpetual fear of assassination. Mossadegh would say whatever suited his needs at the moment, no matter how exaggerated or fanciful. But in the next moment, there was no assertion, no matter how strongly expressed, that could not be remolded or changed or, with a joke or only a giggle, repudiated altogether if that was more convenient. All that mattered was that whatever he said contributed to his two overriding objectives: the maintenance of his own political position and the expulsion of the foreigner—the British, in particular. In pursuit of his goals, he proved to be a master at merging theatricality with politics. In public, he would burst into tears, he would moan; it was common for him to faint at the climax of a speech. Once he collapsed on the floor of the Majlis in the midst of an impassioned oration. A Parliamentary deputy, who was also a medical doctor, rushed up, and fearing that the old man might be in his last moments, grabbed for Mossadegh’s wrist to check the pulse. As he did so, Mossadegh opened one eye and winked at him.
American and British officials who dealt with Mossadegh took to calling him “Mossy.” Anthony Eden remarked that “Old Mossy,” with his pajamas and iron bedstead, was the “first real bit of meat to come the way of the cartoonists since the war.” Even some of those most exasperated by Mossadegh would ever after also remember how charmed they had been by him. The Americans tended, at first, to see Mossadegh as a rational, nationalistic leader, and one with whom business might be done. He could be a bulwark against the Soviet Union and an agent of reform; the alternative to Mossadegh was communism. And, throughout, Cold War considerations and fears shaped American policies and perceptions more than British. In any event, there were, as far as Washington was concerned, good enough grounds to be opposed to old-fashioned British imperialism. No less an authority than President Harry Truman said that Sir William Fraser of Anglo-Iranian looked like a “typical nineteenth-century colonial exploiter.” The Americans understood, better than the British, that Mossadegh’s great problem centered on his rivals within Iran; he was always constrained by the need to keep at bay those who were more nationalistic, more extreme, more fundamentalist, and more antiforeigner than he. In the meantime, he would improvise and play off the great powers and never quite compromise. Eventually, the Americans lost patience with him. When it was all over, Dean Acheson delivered a pungent judgment. Mossadegh, he said, “was a great actor and a great gambler.”
The British saw things differently, right from the beginning. They thought that the Americans failed to understand how hard it was to negotiate with Mossadegh; some British officials regarded the communist danger as much exaggerated. “Mossadegh was a Moslem, and in 1951 he would not have turned to the Russians,” said Peter Ramsbotham, secretary of the British Cabinet’s special Persia Committee. The real danger was to an existing interest in Iran and to established political and economic arrangements in the Middle East. Some of the British regarded Mossadegh as a “lunatic.” What could be done with such a man? Add to that the fact that Mossadegh, in the words of the British ambassador, Sir Francis Shepherd, had to be watched very carefully because he was “cunning and slippery and completely unscrupulous.” In the ambassador’s view, the Iranian Prime Minister looked “rather like a cab horse” and diffused a “slight reek of opium.” But in what was about to unfold, perhaps nothing galled the British so much as the fact that their national champion, Anglo-Iranian, and Great Britain itself would be outwitted by an old man in pajamas.6
In the immediate aftermath of the nationalization of Anglo-Iranian, and facing such a wily and untrustworthy opponent, the British hurriedly reviewed their options. There was strong feeling that something had to be done to save the country’s most valuable foreign asset, and its number-one source of petroleum. But what to do? The Cabinet gave consideration to Plan Y, a contingency proposal for military intervention. The inland oil fields were too remote to be easily secured, the Cabinet concluded, but the island of Abadan, site of the world’s largest refinery, was quite another thing; it made a much more reasonable target. With the advantage of surprise, Abadan could be taken. Perhaps a quick, strong show of force would be enough to restore a sufficient measure of respect and transform the situation.
But perhaps not. British lives would certainly be lost. Hostages would be taken. The United States government was pressing hard against armed intervention, for fear that such a British action in the south would legitimize a Russian move in the north and that Iran would end up behind the Iron Curtain. There were other obstacles to military action. India had just become independent, and there was no longer an Indian Army upon which to call. Britain could expect to be castigated all over the world for old-fashioned imperialism. Britain’s own might was sharply circumscribed; because of its grave balance-of-payments difficulties, it did not have staying power. How could it pay for an extended military involvement?
Yet, were Britain to cave in here, some argued in the Cabinet, its whole position in the Middle East would be undermined. “If Persia were allowed to get away with it, Egypt and other Middle Eastern countries would be encouraged to think they could try things on,” declared Defense Minister Emmanuel Shin-well. “The next thing might be an attempt to nationalize the Suez Canal.” Outside the Cabinet, the Leader of the Opposition and that venerable defender of empire, Winston Churchill, described himself to Attlee as “rather shocked at the attitude of the United States, who did not seem to appreciate fully the importance of the great area extending from the Caspian to the Persian Gulf: it was more important than Korea.” Churchill stressed “the importance of the balance of oil supplies as a factor in deterring the Russians from embarking on aggression.” Foreign Secretary Herbert Morrison, denouncing the policy of “scuttle and surrender,” discussed the use of force. Parachutists were moved into place in Cyprus in order to be able to protect, and if necessary, evacuate the large number of British workers and families in Abadan. Nevertheless, it looked to some as if Britain might be tempted to implement Plan Y and undertake a military test of its waning imperial power.7
Averell in Wonderland
The prospect of armed intervention set off alarm bells in Washington. The British might push Iran right into eager Soviet arms. Dean Acheson hurriedly arranged a meeting with the British ambassador and with Acheson’s old friend, Averell Harriman. Sitting on the veranda of Harriman’s house, overlooking the Potomac River on a June evening, Acheson made abundantly clear that he wanted to keep the British from doing what, in his eyes, would be silly—or dangerous. He suggested that Harriman might go out to mediate between Britain and Iran. All present thought it a very good idea—all, that is, except Harriman himself, who hardly wanted such an assignment. Nevertheless, he agreed to go.
A tall, austere man, Harriman was a multimillionaire who had given up private business for public service. He had handled many complex and delicate matters: He had been Roosevelt’s Special Representative in the early years of World War II, ambassador to Moscow and London, Secretary of Commerce, U.S. representative in Europe for the Marshall Plan. But never was he to be involved in so bizarre a negotiation. He arrived in Tehran in mid-July 1951. Accompanying him were a U.S. Army lieutenant colonel, Vernon Walters, who would serve as interpreter (Mossadegh wanted to conduct business in French), and Walter Levy, who had directed oil affairs in the Marshall Plan and had just set up his own consulting firm.
The British had grudgingly accepted Harriman’s efforts to play the honest broker. They were more worried about Levy, known to some American officials as “the real oracle of State” when it came to international petroleum matters. Levy made no secret of his view that Anglo-Iranian’s position had so degenerated that it could never go back in its existing form. He expressed what was already becoming a common idea on the American side. If the British wanted to regain their overall oil position, Levy said, they would have to “camouflage” the existence of Anglo-Iranian and “dilute” it within a new operating company, a consortium, that would be controlled by a number of companies, some of them American. The British were outraged at what was called a proposal for the disastrous “mongrelization” of a leading British company. They suspected that the real reason for the consortium proposal was that the American companies were eagerly waiting in the wings, anticipating their opportunity to come into Iran. British suspicions were further stirred when a junketing young Congressman, Representative John F. Kennedy, son of the former American ambassador to London, stopped in Tehran and suggested to the British ambassador that, if no settlement emerged, “it would be a good thing for American concerns to step into the breach.”
In Tehran, Harriman and his party were put up in a palace belonging to the Shah. The walls of the great reception room were covered with thousands of tiny mirrors, which gave the impression of shimmering jewels. It all seemed very novel and exotic at first. Harriman and his party hardly knew that they would spend much of the next two months there. After a while, they tired of the setting.
Harriman, accompanied by Walters, went to see Mossadegh at what, in contrast, was his unpretentious private home. They found the Prime Minister lying on a bed, the palms of his hands crossed directly below his neck. Two doors were blocked off with wardrobes to prevent easy access by would-be assassins. Mossadegh fluttered his hands weakly in greeting when Harriman and Walters entered, then wasted no time in telling Harriman exactly how he felt about the British. “You do not know how crafty they are,” said the Prime Minister. “You do not know how evil they are. You do not know how they sully everything they touch.”
Harriman disagreed. He knew them well; he had been ambassador there. “I assure you they are good and bad and most of all in between,” said Harriman.
Mossadegh leaned forward, took Harriman’s hand, and merely smiled. It was only in a later talk that Mossadegh happened to mention that his grandson, the apple of his eye, was away at school. “Where?” asked Harriman. “Why, in England, of course,” Mossadegh replied. “Where else?”
Soon they established the unusual physical pattern for their discussions: Mossadegh either sitting or stretched out on his bed, hands crossed just below his neck; Colonel Walters sitting at the foot of the bed, perhaps yogi style; and Harriman on a chair almost right up against the bed, midway between the two men. The arrangement helped mitigate Mossadegh’s poor hearing. Walter Levy would often join them as well. And here, in this incongruous scene, might hang the fate of the postwar petroleum order and the political orientation of the Middle East. So strong was the sense of constantly moving between reality and fantasy that Walters ordered from Washington a copy of Alice in Wonderland to serve as a kind of unofficial guidebook for what might lie ahead.
Day after day, Harriman, assisted by Levy, would try to educate Mossadegh about the realities of the oil business. “In his dream world,” Harriman cabled Truman and Acheson, “the simple passage of legislation nationalizing the oil industry creates profitable business and everyone is expected to help Iran on terms that he lays down.” Harriman and Levy sought to explain to Mossadegh about the need for marketing outlets, in order to sell oil, but to no avail. That the company was called “Anglo-Iranian,” they said, did not mean that all of its oil was produced in Iran. Revenues were also earned from refining and distribution in many countries. At one point, Mossadegh seemed to be demanding more revenue from a barrel of oil than the total selling price realized on all the different products derived from that barrel. “Dr. Mossadegh,” said Harriman, “if we are going to talk intelligently about these things, we have to agree on certain principles.”
Mossadegh peered at Harriman. “Such as what?”
“Such as: nothing can be larger than the sum of its parts.”
Mossadegh stared straight at Harriman and replied, in French, “That is false.”
Harriman, though he did not speak French, thought he had caught Mossadegh’s drift, but he couldn’t believe it. “What do you mean ‘false’?” he asked incredulously.
“Well, consider the fox,” said Mossadegh. “His tail is often much longer than he is.” With that salvo fired, the Prime Minister put the pillow over his head and rolled back and forth in the bed, laughing uproariously.
Yet there were a couple of times when, at the end of the day’s discussions, Mossadegh seemed to have agreed on the framework of a settlement. But the following morning, the Americans would come back, only to be told by Mossadegh that he could not carry through on the agreement. He would not survive. What mattered to Mossadegh, far more than the oil market or international politics, was how the whole affair would play in domestic politics and how his various rivals on both right and left, as well as the Shah’s supporters, would respond. He particularly feared the Moslem extremists, who opposed any truck with the foreign world. After all, it was only a few months since General Razmara had been assassinated by a Moslem fundamentalist.
Harriman, sensing how greatly this fear constrained Mossadegh, went to see the Ayatollah Kashani, the leader of the religious right, who had been imprisoned during World War II for his Axis sympathies. The mullah declared that, though he knew nothing about the British, the one thing he did know was that they were the most evil people in the world. In fact, all foreigners were evil, to be dealt with accordingly. The ayatollah then went on to tell the story of an American who had come to Iran some decades earlier and had involved himself in oil. He had been shot on the street in Tehran, and then rushed to a hospital. A mob, searching for the American, broke into the hospital and found him on the operating table, where they butchered him.
“Do you understand?” asked the ayatollah.
Harriman immediately recognized that he was being threatened. His lips tightening, he struggled to keep his anger under control. “Your Eminence,” he replied in a steely voice, “you must understand that I have been in many dangerous situations in my life and I do not frighten easily.”
“Well,” shrugged the ayatollah, “there was no harm in trying.”
In the course of the conversation, Ayatollah Kashani accused Mossadegh of the worst of sins—being pro-British. “If Mossadegh yields,” Kashani said, “his blood will flow like Razmara’s.” There could be no question but that Kashani was an implacable and dangerous opponent. But, as for Mossadegh, Harriman developed a certain affection for the Prime Minister. He was theatrical, entertaining, gracious in a way, and Harriman started calling him “Mossy,” though not to his face.8
Harriman also thought he saw a glimmer of a solution, a possible modus vivendi. He flew back to London, where he recommended that the British send out a special negotiator to follow up. The choice was a socialist millionaire, Richard Stokes, whom Harriman accompanied back to Tehran. Stokes, with some confidence, boldly announced his goal—to put before Mossadegh “a jolly good offer.”
On the return trip to Tehran with Stokes was Sir Donald Fergusson, the influential Permanent Undersecretary at the Ministry of Fuel and Power. Fergusson was a consistent critic of Anglo-Iranian and its chairman, Sir William Fraser, whom he regarded as narrow, dictatorial, and insensitive to larger political currents and considerations. But he was also skeptical of the possibility for any settlement, and he feared that a deal would threaten every other British foreign investment with expropriation by rapacious governments, against which there would be no effective sanction otherwise. “It was British enterprise, skill and effort,” he declared, “which discovered oil under the soil of Persia, which has got the oil out, which has built the refinery, which has developed markets for Persian oil in 30 or 40 countries, with wharves, storage tanks and pumps, road and rail tanks and other distribution facilities, and also an immense fleet of tankers.” For that reason, he thought the call, on moral grounds, for a fifty-fifty split—as the Moslem religious leader the Aga Khan had urged—was “bunk and ought to be shown to be bunk.”
In any event, Fergusson recognized that Mossadegh’s objective was “not better financial terms but to get rid of this foreign company with its predominating influence out of Persia.” And Mossadegh had no intention of allowing Anglo-Iranian back. Moreover, he was now the prisoner of the popular passions he had done so much to stir. Thus, in this second round of negotiations, there was no way to agree on the decisive issue of who, in the event of a settlement, would really run and control the oil industry in Iran. “An evening session of negotiations in the garden of the palace where we stayed was like the last act of Figaro,” recalled Peter Ramsbotham, who was a senior negotiator on the Stokes mission. “Unknown, dim figures lurked behind the rose bushes. Everybody was spying on everybody else. People were lurking all about. We never knew with whom we were dealing. Neither did Mossadegh.” Stokes decided to call it quits. His mission, and the much longer one of Harriman, had failed. “Mossadegh’s stock-in-trade was fighting with the British,” Harriman was to conclude. “Any settlement of the dispute would end his political power.” Still, on the plane out of Tehran, Harriman was forced to make a painful admission. “I am simply not used to failure,” he said. But then he had never before tried to do business with anybody like “Old Mossy.”9
“Stand Firm, You Cads!”—The Farewell to Abadan
Meanwhile, in the oil fields and at the refinery, operations were grinding to a stop. The British managed to mount an embargo by threatening tanker owners with legal action if they picked up “stolen oil.” In addition, Britain embargoed goods to Iran, and the Bank of England suspended financial and trade facilities that had been available to Iran. In short, the expropriation was being met with economic warfare.
The Majlis retaliated by passing a law that anybody found guilty of “sabotage or inattention” was liable to the death penalty. A letter was sent to Eric Drake, Anglo-Iranian’s general manager in Iran, accusing him of such “sabotage and inattention.” On the advice of the British ambassador, Drake hurriedly left the country, slipping out in a small plane. He thereafter ran the Iranian oil operations from an office in Basra in Iraq and then from a ship in the Gulf. After a meeting at Suez with the British chiefs of staff, he was flown back under a pseudonym to Britain, where he was abruptly summoned to a meeting of Attlee’s Cabinet. The invitation enraged the autocratic Sir William Fraser, who was not invited and who himself had been much too busy to see Drake; after all, Drake had been nothing more than Anglo-Iranian’s man on the spot. Despite Fraser’s anger, Drake went to the meeting, entering 10 Downing Street by a secret passage through the back garden in order to evade waiting reporters. Drake told the Cabinet that, if Britain did not do anything about Abadan, it would eventually lose much more, including the Suez Canal. He was then taken to meet the Leader of the Opposition, Winston Churchill, who, after quizzing him about his discussion with the Cabinet, suddenly growled, “You’ve got a pistol, Drake?” Drake explained that he had turned in his pistol to the Iranian authorities because of a new law that provided the death penalty for unauthorized possession of a gun. “Drake, you can finish a man with a pistol,” Churchill admonished him. “I know because I have.”
In the aftermath of the failure of Harriman’s and Stokes’s missions, the British government was once again debating the use of military force to seize the island of Abadan and its refinery. Secret military preparations were, in fact, so far advanced that by September 1951, an operation to seize Abadan Island could have been mounted in less than twelve hours. But what could be accomplished? Would not the whole of Iran then unite against the British? Would they not risk a break with the United States? In any event, the element of surprise had been lost. “It would be humiliating to this country if the remaining British staff at Abadan were expelled,” Attlee told his Cabinet. But the British government decided against using armed force to prevent it. In retrospect, some would see the public threat to use force in the first months of the crisis, and then not doing so, as the real beginning of the end of Britain’s credibility and position in the Middle East.
On September 25, 1951, Mossadegh gave the last remaining British employees at Abadan exactly one week to clear out. A few days later, Ayatollah Kashani declared a special national holiday—“a day of hatred against the British Government.” At the refinery complex at Abadan, the British oil men and the nurses from the infirmary put on an evening of songs and skits for their own entertainment; the revue was entitled “Stand Firm, You Cads!”
On the morning of October 4, the oil men and their families gathered in front of the Gymkhana Club, which had been their social center. They were carrying fishing rods and tennis rackets and golf clubs; a few had their dogs, though most of the pets had been destroyed. The group included not only the refinery men, but the indomitable lady who ran the guest house. Only three days earlier, she had used her umbrella to interdict an Iranian tank commander who had driven across her lawn. The parson joined the others in front of the club, having just locked the little church that housed the history of this island community—“the records of those who had been born, baptized, married or had died, in Abadan.”
Waiting for them all was the British cruiser Mauritius, which would carry them upriver to safe haven at Basra, in Iraq. The ship’s band, in a bizarre display of protocol, played the Iranian national anthem as the launches belonging to the Iranian Navy began to shuttle back and forth between ship and shore. By midday, all were aboard, and the Mauritius began to steam slowly upriver toward Basra. The band continued to play, but now it was “Colonel Bogey.” The passengers broke into song, a great chorus under the hot sun, singing the unpublished and more obscene versions of that venerable military march. With this musical burst of defiance, Britain bade good-bye to its largest single overseas enterprise, and the world’s largest refinery, which now had virtually ceased to operate. It was a particularly humiliating climax to Britain’s six postwar years of imperial retreat. The first of the great Middle Eastern oil concessions was also the first to be summarily canceled.10
“A Splutter of Musketry”
No oil was flowing out of Iran, owing to the effectiveness of the British embargo and, in particular, Anglo-Iranian’s vigilance in bringing legal action against refiners or distributors who took Iranian oil. But the embargo also had the result of removing a substantial amount of petroleum from world commerce at a critical time, during the Korean War. Rationing was put into effect in some parts of Asia; “unnecessary” air flights east of Suez were cut back. The United States Petroleum Administration for Defense came up with the chilling estimate that, without Iran, world oil demand would exceed available supply by the end of 1951.
The machinery was quickly put in place to manage the shortfall. As in World War II, it was based upon Anglo-American cooperation. In the United States, acting under the Defense Production Act of 1950 and with antitrust exemption, nineteen oil companies formed a Voluntary Committee to coordinate and pool supplies and facilities. It worked closely with a similar British committee, moving supplies around the world to eliminate bottlenecks and shortages. The companies themselves also strained to increase production in the United States and in Saudi Arabia, Kuwait, and Iraq. As it turned out, the momentum of the great postwar oil development supported the British embargo, against Iran, and the feared shortage never materialized. By 1952, Iranian production had plummeted to just 20,000 barrels per day, compared to 666,000 in 1950, while total world production had risen from 10.9 million barrels per day in 1950 to 13.0 million in 1952—an increase more than three times greater than Iran’s total output in 1950!11
British policy against Iran had stiffened in October 1951, when the Labour government was replaced by a new Conservative one, headed once again by Winston Churchill, now seventy-seven—and more than half a decade older than Mossadegh. Churchill was showing his age; he complained of “‘my old brain’ not working as it used to do.” But he had very firm ideas about the Iranian nationalization: The Labour government had been too indecisive and too weak. Had he been in office, he told Truman, “there might have been a splutter of musketry,” but Britain “would not have been kicked out of Iran.” There was a grand irony in all this. As First Lord of the Admiralty some thirty-seven years earlier, Churchill had purchased the government’s stake in Anglo-Persian, as it was then. Now, he had lived and remained in politics long enough to come back and head the government at the time of the company’s greatest crisis. He would defend the company to the limits of his ability.
His Foreign Secretary was Sir Anthony Eden, who had a different kind of affinity with the issue. At Oxford, after World War I, Eden’s subject had been Oriental languages, and he had been a star student of the Persian language and a devotee of the beauties of Persian literature. Eden kept up his Persian connections. As Undersecretary at the Foreign Office in 1933, he had played a key role in solving the crisis occasioned by Reza Shah’s expropriation of Anglo-Persian. Eight years later, in 1941, as Foreign Secretary, Eden had become very anxious about Reza Shah’s flirtation with the Nazis and took a major part in the decision to invade Iran and topple him. He was personally fascinated by the country, and had made many trips there. When he returned as Foreign Secretary in 1951, he was still able to call up proverbs in Persian. But a crisis of major proportions—the result of the nationalization and the expulsion from Abadan—awaited him. “Our authority throughout the Middle East had been violently shaken,” he said.
The crisis also posed a painful personal dilemma for Eden. A substantial part of his own financial assets were tied up in Anglo-Iranian stock, whose price had plummeted. After much deliberation, he decided that—despite the government’s own shareholding and the lack of any rule or convention that would so demand—it was not appropriate for him to own the shares. He sold them at the very bottom of their price. With that went his one chance to build up any substantial financial security, and that action ultimately cost him much, including his country house.
With the Conservatives back in power, the fundamental disagreement that divided London and Washington became more clear-cut. The Americans feared that, if Mossadegh fell, he would be succeeded by the communists, and it was better to try to work with him, as exasperating as it could be, than against him. The British, on the contrary, thought it likely that Mossadegh would be succeeded by, from their point of view, a more reasonable government—and the sooner, the better. Acquiescence in Iran—and Mossadegh’s ability to act with impunity—would inevitably and irresistibly tempt countries all over the world, leading to an epidemic of nationalization and expropriation. Britain could not afford risking the rest of its foreign assets. “We ought to tell the U.S.A. at the highest level,” said Sir Donald Fergusson of the Ministry of Fuel and Power, “that even supposing their view is right that Dr. Moussadeq has got to be maintained to save Persia from Communism, they have got to choose between saving Persia and ruining this country.” There was much frustrating argument within the British government over what to do and whom to blame—and also a great deal of impatience and anger with Anglo-Iranian and what seemed to officials to be its obscurantism. Eden himself complained that the company’s chairman, Sir William Fraser, was “in cloud cuckoo land.”12
In the autumn of 1951, a few weeks after the departure of the British from Abadan, Mossadegh went to the United States, to plead the cause of Iran at the United Nations. He also went to Washington to make his case to Truman and Acheson and to ask for economic aid. The American government wanted stability in Iran, but it was not prepared to bail out Mossadegh to get it. When Mossadegh began to explain to Truman and Acheson that he was “speaking for a very poor country—a country all desert—just sand,” Acheson interrupted, “Yes, and with your oil, rather like Texas!” The Prime Minister received only minimal economic assistance.
But Assistant Secretary George McGhee, after some eighty hours of talks with Mossadegh during the visit, believed he had come up, just barely, with an outline for a settlement. It included the acquisition of the Abadan refinery by Royal Dutch/Shell (on the premise that it was a Dutch—that is, non-British—company) and a special oil purchase contract for Anglo-Iranian that would have the effect of a fifty-fifty split. But Mossadegh insisted on an extra condition: that no British oil technicians could work in Iran. Acheson was to personally try out the proposal on Anthony Eden at a luncheon in Paris. When Acheson came over the phone from Paris to McGhee and others waiting eagerly in the State Department, however, he reported that Mossadegh’s extra condition had infuriated Eden, who regarded it as humiliating, and that Eden had peremptorily rejected the entire proposal. McGhee, whose hopes were very high, was stunned. His efforts to resolve the Iranian oil crisis had failed. “To me it was almost the end of the world,” he said. It was not clear that Mossadegh shared his distress—nor that he ever actually wanted an agreement. “Don’t you realize that, returning to Iran empty-handed,” Mossadegh told one American the night before leaving the United States, “I return in a much stronger position than if I returned with an agreement which I would have to sell to my fanatics?”
Still, the Truman Administration continued to hope for a settlement with “Mossy.” In the State Department, and indeed in the Foreign Office in London, there were proposals for a consortium of companies to assume management of the Iranian oil industry. There was also an ingenious plan under which the World Bank would take over oil operations in Iran as a sort of trustee until a final settlement could be negotiated. All foundered on Iran’s lack of interest in a compromise that mitigated the nationalization and its control, or provided a role for Anglo-Iranian.
As the crisis dragged on through the early months of 1952, Mossadegh’s government could not sell its oil, it was running out of money, economic conditions were deteriorating. But none of that seemed to count. The important thing was that he was the popular national leader who had achieved the historic objective of throwing the foreigners out and regaining the national heritage. He declared that, as far as he was concerned, the oil could remain in the ground for use by future generations. The U.S. ambassador to Tehran noted Mossadegh’s fundamental antipathy to the Shah, which he attributed to the “secret contempt” of a man of an old aristocratic family toward “the weakling son of an upstart tyrannical imposter.” But Mossadegh the constitutionalist was turning to extraconstitutional means to run the country, including the use of street mobs to manipulate politics. He was also assuming more dictatorial power. “I always considered this man to be unsuitable for high office,” one opposition leader said. “But I never imagined, even in my worst nightmares, that an old man of seventy would turn into a rabble rouser. A man who constantly surrounds the Majlis with thugs is nothing less than a public menace.” Mossadegh was also proving himself a notable political innovator; he was the first Middle Eastern leader to use the radio to arouse his followers. When he called, thousands and thousands—sometimes, it seemed, hundreds of thousands—would rush, frenzied, into the streets, chanting, intimidating, destroying the offices of opposition newspapers. The Shah felt powerless in the face of Mossadegh’s popularity. “What can I do?” he said to the American ambassador. “I am helpless.”13
“Luck Be a Lady Tonight”
Around this time, Acheson again met with Eden, who said that “at some stage it might be necessary…to impress on the Shah the need” to give Mossadegh a push from power.* But neither the United States nor Britain, by any means, had given up on diplomacy with Mossadegh. Truman implored Churchill to accept the validity of the Iranian nationalization law, “which seems to have become as sacred in Iranian eyes as the Koran…. If Iran goes down the communist drain, it will be little satisfaction to any of us that legal positions were defended to the last.” Churchill wanted to promote a joint appeal to Mossadegh, of whom he said, “We are dealing with a man at the very edge of bankruptcy, revolution and death but still I think a man. Our combined approach might convince him.”
Truman reluctantly agreed to a joint proposal for arbitration to determine compensation for the nationalized properties, but after much dodging and debating, Mossadegh finally rejected the proposal because, he said, it was a “trap” laid by the Anglo-Iranian Oil Company.
By the end of the Truman Administration, both the Americans and the British had about given up on Mossadegh. In late 1952, the British raised with the Americans the possibility of their working together to bring about a change in the Iranian government—in other words, a coup. The American reply was postponed until the Eisenhower Administration had taken over. A go-ahead for such consideration was given, with the support of Secretary of State John Foster Dulles and his brother Allen, the new head of the Central Intelligence Agency.
Still, in the final weeks of the Truman Administration and the first of the Eisenhower Administration, the United States launched yet another diplomatic effort to work out an oil settlement between Iran and Britain. After much frustrating discussion, Mossadegh once again said no. Meanwhile, conditions in Iran had deteriorated even further. Before nationalization, oil exports had generated two-thirds of the country’s foreign exchange and half of government revenues. But there had been no oil revenues for two years, inflation was rampant, and the economy was falling apart. The country was much worse off than before nationalization. Law and order were collapsing; the chief of police in Tehran was kidnaped and murdered. Moreover, Mossadegh showed little gift for governing. He conducted his Cabinet meetings from his bed. In the early months of 1953, he tried to bolster his weakening domestic position by taking more power in his own hands—extending martial law, governing by decree, seizing control of military appointments, intimidating and silencing opposition, abolishing the upper house of the parliament and dissolving the lower, and carrying out a Soviet-style plebiscite that gave him a 99 percent victory. Many nationalists and reformers, who had once supported Mossadegh, were antagonized by his efforts to monopolize power and his increasing reliance on “mobocracy” and the Tudeh party. The religious fundamentalists also turned against him as he sought to extend his power. They decided that he was an enemy of Islam. The fact that Time magazine had chosen him as “Man of the Year” was, in some eyes, proof that he was an American agent. It also appeared that Mossadegh was setting the stage to eliminate the Shah. And he was moving closer to the Soviet Union. As for the Shah himself, he seemed as helpless as ever.
Mossadegh’s tilt toward Moscow became even more ominous when a new Soviet ambassador came to Tehran—the same man who had presided as Soviet ambassador in Prague in 1948, when the communists there staged a coup and took power. Only the naive could believe that the Russians were not organizing to gain political control of Iran through their own agents and the Tudeh party. A long-desired objective of Russians—Romanovs and Bolsheviks alike—appeared, at last, to be at hand; after all, as part of the Nazi-Soviet Pact, the Kremlin had staked out Iran as the center of Soviet “aspirations.” The chicken was only waiting to be plucked.
In Washington at a somber meeting of the National Security Council, Secretary of State Dulles predicted that Iran would soon be a dictatorship under Mossadegh, which would be followed by a communist takeover. “Not only would the free world be deprived of the enormous assets represented by Iranian oil production and reserves,” Dulles said, “but the Russians would secure these assets and thus henceforth be free of any anxiety about their petroleum resources. Worse still…if Iran succumbed to the Communists there was little doubt that in short order the other areas of the Middle East, with some 60 percent of the world’s oil reserves, would fall into Communist control.”
“Was there any feasible course of action to save the situation?” asked President Eisenhower. There was.
On the British side, Foreign Secretary Eden had temporized. But he was ill, and in July 1953 was still convalescing. Churchill, taking direct charge of the Foreign Office, approved a plan to overthrow Mossadegh. So did the Americans. In Allen Dulles’s words, the operation went “active.” General Fazlollah Zahedi, loyal to the Shah, would take the lead in challenging Mossadegh. The two Western countries believed they were not supporting a coup—that was what Mossadegh was carrying out—but rather a countercoup by the Shah and Zahedi.14
Field control of what was called “Operation Ajax” was vested in the CIA’s Kermit Roosevelt, grandson of Theodore Roosevelt. Support was provided by MI6, British intelligence. In mid-July 1953, “Kim” Roosevelt entered Iran by motorcar from Iraq. But before Operation Ajax could begin, the suspicious Shah still had to be convinced that the plan was real and had a chance of success. He knew full well that the U.S. government had been trying to court Mossadegh. He also suspected that Mossadegh was a British agent, though perhaps a slightly errant one. In order to meet clandestinely with the Shah and assuage his doubts, Roosevelt slipped into the palace grounds late one night, hidden under a blanket on the floor of a car. He succeeded in persuading the Shah.
Operation Ajax unfolded over the middle of August 1953 with great suspense and high drama. There were code names for all the main actors. The Shah was the “Boy Scout”; Mossadegh, “the old bugger.” One of Roosevelt’s code names, owing to a border guard who misread his passport, was “Mr. Scar on Right Forehead.” Waiting nervously over several days in the home of one of his operatives in Tehran, Roosevelt took to playing and replaying the song “Luck Be a Lady Tonight,” from the musical Guys and Dolls, which was then a great hit on Broadway. It became the theme song for the operation.
But it looked like bad luck at the beginning. The operation was scheduled to start when the Shah issued an order dismissing Mossadegh, but delivery of the order was delayed three days, by which time Mossadegh had been tipped off, either by one of his supporters or by Soviet intelligence. He had the officer who carried the order arrested and launched his own effort to topple the Shah. General Zahedi went into hiding. Mossadegh’s supporters and the Tudeh party held the streets. They smashed and tore down the statues of the Shah’s father in the public squares of Tehran. The Shah himself took flight, first to Baghdad. As far as he was concerned, the countercoup had failed and he had little hope of ever returning to Tehran. He told the American ambassador in Baghdad there that “he would be looking for work shortly as he had a large family and very small means outside of Iran.”
The Shah’s next stop was Rome, where he and his wife took up residence in a borrowed suite in the Excelsior Hotel. They had virtually no clothes, no retainers, and no money. The Queen wandered through the shops without cash to buy anything. The Royal Couple was reduced to eating their meals in the hotel’s public dining rooms and getting their news secondhand from the encamped reporters. Altogether, it was an excruciatingly anxious and nervous time at the Excelsior.
On August 18, Undersecretary of State Walter Bedell Smith explained to Eisenhower that Operation Ajax had failed, adding gloomily, “We now have to take a whole new look at the Iranian situation and probably have to snuggle up to Mossadeq if we’re going to save anything there. I dare say this means a little added difficulty with the British.” But the next morning the tide turned in Tehran. General Zahedi held a press conference at which he handed out photo-stats of the Shah’s order dismissing Mossadegh. A small pro-Shah demonstration grew into a vast, shouting crowd, led by tumblers doing handsprings and wrestlers showing off their biceps and giant weightlifters twirling iron bars. Growing even larger, it swarmed out of the bazaars to the center of the city to proclaim its hatred of Mossadegh and its support for the Shah. Pictures of the Shah suddenly appeared to be plastered everywhere. Cars turned on their headlights to show support for the Shah. Though street fights broke out, the momentum was clearly with the pro-Shah forces. The Shah’s dismissal of Mossadegh and appointment of Zahedi as successor had become known. Key elements of the military rallied to the Shah, and soldiers and police dispatched to quell pro-Shah demonstrators instead joined them. Mossadegh fled over the back wall of his garden, and Tehran now belonged to the Shah’s supporters.
At the Excelsior in Rome, a wire service reporter rushed up to the Shah with the bulletin: “Teheran: Mossadeq overthrown. Imperial troops control Teheran.” The Queen burst into tears. The Shah turned white, then he spoke. “I knew that they loved me.” He returned in triumph to Tehran. The coup—or countercoup—was a very close thing, but it had worked. By the end of August 1953 the Shah was back on his throne, his new Prime Minister was in power, and Mossadegh was under arrest. And the statues of the Shah’s father toppled by Mossadegh supporters were being re-erected.15
In the years following, there would be much argument about the real significance of the American-British operation. Did it cost less than one hundred thousand dollars, or was it priced in the millions? Did the two Western powers create the countercoup, or did they only lubricate it? Mossadegh’s time was certainly running out; his base of support had greatly narrowed, and he would fall either to the left or to the right. What the CIA and MI6 did was to play the facilitating role, providing the financial and logistical aid, emboldening the opposition and making the critical connections, during uncertain and fluid times. Operation Ajax succeeded because it accorded with increasing popular support for the Shah and the existing regime and growing disillusionment with Mossadegh, who was trying to change the regime into one in which he, rather than the Shah, held final power, and which might, ultimately, come under Soviet control. In the words of one of the operation’s planners, Operation Ajax created “a situation and an atmosphere in Tehran that forced the people to choose between an established institution, the monarchy, and the unknown future offered by Mossadeq.” Even so, success had been by no means certain. On his return to Washington, Kermit Roosevelt reported directly to Eisenhower, who, with admiration, noted in his diary that Operation Ajax “seemed more like a dime novel than an historical fact.”16
“A Group of Companies”
With the Shah again in power, the stage was set to bring Iranian oil back into production and onto the world market. But how was this to be done? Anglo-Iranian, of course, was hamstrung. For it to take the lead would only reignite the nationalist fires in Iran. As for the British government, it was, in the words of an official at the Ministry of Fuel and Power, “completely stumped.”
Clearly, Washington would have to lead the way to an oil settlement. The State Department retained Herbert Hoover, Jr., as the special representative of Secretary of State Dulles to see if a new consortium of companies could be created to take up Anglo-Iranian’s interests. In addition to being the former President’s son, Hoover was an oil consultant of some note, who had helped devise the original fifty-fifty arrangement with Venezuela. He also gave every sign of disliking the British. The solution that Hoover would pursue had become the common American prescription and one the British government had considered: a consortium in which Anglo-Iranian was camouflaged in the midst of a number of companies, several of them American.
However, the American oil companies, at least the majors, were far from enthusiastic about involving themselves in Iran. Their production elsewhere in the Middle East was building up rapidly. The Arab producers, who were enjoying higher revenues, were not particularly keen to have their output or revenues reduced to make room for Iranian oil, and they might take out any displeasure on the oil companies. The four Aramco partners had more than enough petroleum in Saudi Arabia to meet their requirements for the foreseeable future; they were making large capital investments there. Why invest in Iran for oil they did not need?
Moreover, who needed the aggravation of dealing with the Iranians and their unstable domestic political situation? “There was no assurance whatever that we wouldn’t lose the whole thing within a few months again,” a Jersey official recalled. “It was touch and go as to whether or not,” he explained, “the country would last.” The political risks did not end with the nationalists and the religious fundamentalists. The continuing threat of Russian pressure on Iran created what a representative of Standard of California called an “ouchy” situation.
For their part, American officials did not find oil company executives the easiest people to deal with. In mid-1953, Richard Funkhouser, a senior oil strategist in the State Department, advised his colleagues, in a long analysis on Middle Eastern oil, that “it is of critical importance to the success of any approach that oil men be handled most carefully and diplomatically. Oil officials seem overly sensitive to any indication that the industry isn’t perfect…. Emotion, pride, loyalty, suspicion make it difficult to penetrate to reason.”
Thus, considerable diplomacy went into the effort to get the American oil men to do what they did not particularly want to do: go into Iran and help repair the situation. So did a great deal of brute persuasion from Washington, backed up by London. “If the U.S. and British governments hadn’t really beat us on the head, we wouldn’t have gone back,” Howard Page, Jersey’s Middle East coordinator, later said. In particular, the State Department harped on one theme: If Iranian oil did not move, the country would collapse economically, and it would fall, one way or another, into the Soviet camp. That would, in turn, threaten the rest of the Middle East—specifically, Saudi Arabia, Kuwait, and Iraq—and the concessions therein. It could also mean serious trouble in strictly commercial terms: The Russians might dump Iranian oil onto the world market. The communist threat to Iran warranted participation in the country and there would be one notable benefit. Participation would give the American companies an important vantage point, if not out-and-out control, over Iranian production rates, which would have to be balanced in any event against those in Kuwait and Saudi Arabia.
Herbert Hoover, Jr., stopped in London and told Sir William Fraser that there was no alternative and that Anglo-Iranian would have to take the initiative. “He who pays the fiddler gets to invite the guests to the ball,” said Hoover. And so, in December 1953, Fraser wrote to the chairmen of each of the American majors, inviting them to London to talk about setting up a consortium. To extend such an invitation was a humiliating admission of defeat for Fraser. Nor were the American companies thrilled to accept it. Writing to Secretary of State Dulles, a Jersey vice-president said, “From the strictly commercial viewpoint, our Company has no particular interest in entering such a group but we are very conscious of the large national security interests involved. We, therefore, are prepared to make all reasonable efforts.”17
But, before Jersey and the other companies would make such efforts, and indeed before anything further could be done, there was another obstacle to be surmounted. It was a most awkward matter: the U.S. government was bringing a giant antitrust case against the major oil companies—the very same companies that it was seeking to push into the new consortium to bolster Iran. The Justice Department once again was busily gearing up a criminal suit against those companies for belonging to an “international petroleum cartel” and for engaging in exactly the sort of business relationships that the State Department was now promoting for Iran. It was an altogether confusing state of affairs and not one likely to fill the companies with enthusiasm for joining a consortium.
The Oil Cartel Case
Two contradictory, even schizophrenic, strands of public policy toward the major oil companies have appeared and reappeared in the United States. On occasion, Washington would champion the companies and their expansion in order to promote America’s political and economic interests, protect its strategic objectives, and enhance the nation’s well-being. At other times, these same companies were subjected to populist assaults against “big oil” for their allegedly greedy, monopolistic ways and indeed for being arrogant and secretive. Never before, however, had those two policies come together in such sharp and potentially paralyzing collision, with an outcome that could have momentous economic and political consequences.
Antitrust lawyers in the Justice Department were very suspicious of any cooperation among the major oil companies. The system that had emerged under Harold Ickes to assure sufficient petroleum supplies during World War II, they said, was merely an “official rubber stamping” of a prewar cartel. They looked with abhorrence on Aramco and the other great oil deals of the late 1940s. They searched for the hidden hand of the Rockefellers and ignored other explanations for the Aramco joint venture: the economic and political risks, the very large capital requirements of developing the concession, constructing a pipeline, and building a refining and distribution system—and the less-than-gentle nudging from the U.S. government itself. Nor were the antitrust lawyers the only people in Washington whose suspicions were aroused. In 1949, the Federal Trade Commission used its power of subpoena to obtain company documents, and in due course it produced the most extensive, detailed historical analysis of the international relationships among the companies that had ever seen the light of day. It was a landmark study, used by students of the industry down to the present day.
It also had a decidedly pronounced point of view, as evidenced by the title—The International Petroleum Cartel. One of the top oil specialists in the State Department commented at the time on “its highly slanted and non-objective approach.” It generally interpreted complex events in such a way as to support its overriding thesis that international oil was indeed a cartel. In particular, it showed a fundamental blind spot; in the world of The International Petroleum Cartel, oil companies did not have to adapt and bend to the will and requirements of governments—the cartel-minded governments of the 1930s, dictatorships around the world, the British and French governments throughout the years, and the governments of oil-producing countries, which wanted higher revenues and could always cancel a concession.
Those concerned with foreign policy—in such agencies as the State Department, the Department of Defense, and the CIA—were appalled by the FTC report. It would provide immense fodder, they believed, to those trying to undermine the Western position in the Middle East and elsewhere. It would, in the words of the White House’s Intelligence Advisory Committee, “greatly assist Soviet propaganda” and “would further the achievement of Soviet objectives throughout the world.” It could hardly have come at a worse time; the United States was engaged in the Korean War and was also trying to bring about a solution to the Iranian crisis, and the same companies that were the targets of the FTC had been harnessed to assure sufficient petroleum for the war and to make up for the big gap in supplies that had resulted from the Iranian shutdown.
Fearing unfortunate repercussions, the Truman Administration had classified the report secret. But as word leaked out, political pressure mounted to release the report, especially as the 1952 Presidential election came into sight. Truman finally allowed a Senate subcommittee to publish it, though with some deletions. The report’s effect was far-reaching. It found careful readers from Riyadh to Caracas, and, not surprisingly, it became a subject of commentary even on Radio Baku’s broadcasts to the Middle East.
Months before its official publication, the FTC report had finally persuaded senior officials in the Justice Department to move ahead with a criminal antitrust suit against what it called the “As-Is conspiracy.” Justice’s own history of the “oil cartel” contained many errors and odd insinuations. For instance, the “spot market” was said to be “at highest prices in history.” Obviously, the report implied, that was the result only of the machinations of the “cartel” and had nothing to do with either the Iranian shutdown and loss of supplies or the Korean War and the economic boom. In the Justice Department’s version, there were no foreign governments making demands on the oil companies; there was not even the Texas Railroad Commission.
To the State Department, the FTC report was bad enough; a long, drawn-out criminal investigation would be far more dangerous. The very fact of a grand jury would seem to brand the companies as wrongdoers, and a Justice Department campaign would not only invite all other governments—particularly those in the Middle East—to go after the oil companies, but would sanctify such an assault. More specifically, such a prosecution would make it impossible to settle the Iranian crisis by bringing in the American companies. Nevertheless, in June 1952 President Truman authorized the Department of Justice to begin a criminal investigation, impanel a grand jury, and subpoena documents.
The Justice Department wanted to go after foreign companies, as well—Shell, Anglo-Iranian, and CFP, all of them members of the Iraq Petroleum Company. They were also served with subpoenas and ordered to produce documents. The British government was outraged; the Justice Department’s actions represented a violation of sovereignty, it believed, and constituted an unacceptable assertion of extraterritoriality. The case itself was plain stupid in London’s view, as it would not only further complicate any settlement of the Iranian crisis, but also disrupt the wide range of relations with the oil-producing countries and threaten basic Western strategic, political, and economic interests. At a Cabinet meeting in September 1952, Foreign Secretary Eden described the report as “stale bread,” and the work of “witch-hunters.” Even so, he added, FTC disclosures “could be extremely prejudicial to the national interest.” The British government very firmly ordered Anglo-Iranian and Shell not to cooperate in any way. The Netherlands government was recruited to give similar instructions to the Royal Dutch side of the Royal Dutch/Shell Group. Both governments, along with the French, protested vigorously to the State Department.
The Justice Department was proceeding under a new and expanded definition of antitrust. Even if the companies had indubitably engaged in cartel behavior outside the United States, that, in itself, did not constitute a violation of the Sherman Antitrust Act. But practices of American businesses outside the United States could be a violation of American antitrust laws, under new interpretations, if those practices had “effects” on domestic prices or other aspects of American commerce.18
Not surprisingly, the Justice Department’s assault made the oil companies more than a little shy in cooperating with the State Department’s efforts to pry them into the oil business in Iran. After all, Washington had blessed and even encouraged the “great oil deals”—the Aramco consortium, the Kuwait Oil Company, the reconstruction of the Iraq Petroleum Company, and long-term contracts involving Jersey, Socony, and Anglo-Iranian—on grounds that they would, in the words of a 1947 State Department memo, “serve the US national interest.” Now, the Justice Department was preparing to charge the companies with a criminal conspiracy for those very actions at exactly the same time the State Department was trying to persuade them to go into the Iranian consortium—no doubt risking the further fury of the Justice Department at some later date!
Dean Acheson, fearful of the consequences both in Iran and for overall American foreign policy objectives, threw as much muscle as he could into calling off Justice. Flanked by Defense Secretary Robert Lovett and General Omar Bradley, Chairman of the Joint Chiefs of Staff, he sought to persuade Attorney General James McGranery to back off. But to no avail. The decision whether to launch the suit would be President Truman’s. Time was very short. Eisenhower had been elected in November 1952, and the last weeks of the Truman Administration were rapidly dwindling away.
What would the President decide? Harry Truman knew something about oil. As a young man, he had been a partner in a company that was going to wildcat in several states. Back then, Truman had been motivated by the customary dream of a bonanza and great wealth, but it did not work out, and he lost his money. Paradoxically, a group that bought some of Truman’s leases soon discovered a very large field, and later in life, Truman would sometimes muse on what might have happened had he and his partners discovered the oil. Perhaps he would have ended up an oil millionaire, instead of President. Truman had remained skeptical and critical of Big Oil; he had chaired the Senate committee that had pilloried Jersey in 1942 for its prewar relations with I. G. Farben. But, whatever Truman’s populist bent, whatever his sense of what was right and wrong and what made good domestic politics, the risks, as he saw them, were far too large. Iran was a country he worried about. Once, in the middle of a discussion about the Korean War, Truman put his finger on Iran on a globe. “Here is where they will start trouble if we aren’t careful,” he told an aide. “If we just stand by, they’ll move into Iran and they’ll take over the whole Middle East.” And “they” were the Soviets.
On January 12, 1953, less than two weeks before the end of his Administration, Truman announced his decision. The criminal investigation was called off. It would be replaced by a civil action. The Eisenhower Administration filed the civil case in April 1953, charging the five American companies with participating “in an unlawful combination and conspiracy to restrain interstate and foreign commerce of the United States in petroleum and products.” The only reason that the Justice Department had not gone ahead with the criminal case was, as L. J. Emmerglick, a senior antitrust attorney, put it, “the considered judgment of two Presidents, two Secretaries of State or their principal representatives, two Secretaries of Defense, and in addition, the Chairman of the Joint Chiefs of Staff, the Central Intelligence Agency, and a number of present and former Cabinet members.”
To implement the new administration’s decision, the National Security Council issued a directive to the Attorney General that “the enforcement of the Antitrust laws of the United States against the Western oil companies operating in the Near East may be deemed secondary to the national security interest.” But it was absolutely clear that the oil companies would not go into the Iranian consortium unless they had a specific guarantee of nonprosecution that would survive from administration to administration. In January 1954 both the Attorney General and the National Security Council provided the explicit guarantee. The plan for the Iranian consortium, said Eisenhower’s Attorney General, Herbert Brownell, “would not violate the anti-trust laws of the United States.”19
Building the Consortium
Now the real effort began to create a new consortium of Western companies to operate in Iran. It would become a marvelous case of multidimensional diplomacy. In addition to Anglo-Iranian, the participating companies included the four Aramco partners—Jersey, Socony, Texaco, and Standard of California—plus Gulf, which was Anglo-Iranian’s partner in Kuwait; Shell, which was tied to Gulf in Kuwait; and the French company, CFP. The American and British governments were also intimately involved. What qualified those particular seven companies for membership was that they were members of the joint ventures that produced oil elsewhere in the Middle East, and along with Anglo-Iranian, were responsible for most of the oil production throughout the area. During the years that Iran had been out of the world oil market, production in neighboring countries had increased dramatically, and it was evident to all concerned that the surging output in the region would have to be reined in to make room for a resumption of Iranian exports. The only way to assure the acquiescence of all seven of the companies would be to give each of them a stake in the new consortium.
Even before the situation in Iran could be addressed, the other oil-producing countries had to be placated. The Aramco partners went to see the aged King Ibn Saud just prior to his death with the delicate mission of explaining why they would be taking Iranian oil, and thus reducing the growth in Saudi output. They were going into the Iranian consortium, they said, “solely on the basis that there might be chaos out in the area if we didn’t.” They were doing this not because they wanted more petroleum, because they didn’t, but “as a political matter at the request of our government.” Ibn Saud understood. The geopolitical considerations were clear: Iran might otherwise go communist, with all the dangers that would entail for Saudi Arabia. The Aramco partners should go ahead, the King said. But he had an important warning for them. “In no case should you lift more than you are obligated to lift to satisfy the requirements of doing that job.”
The companies sent a small team to Tehran to negotiate with the Iranians. Once again, it became one of those interminable Persian negotiations, in which the issues and definitions and objectives were forever shifting. Though Mossadegh was gone from power and Iranian officials were very keen to get oil exports going again, they could not allow themselves to be seen as compromising Iran’s sovereignty or its capture of economic rents. Moreover, the Shah and his negotiators had an altogether rational fear of another uprising and of being expelled from the country—or much worse. As a result, they were tough and insistent.
At one point, the companies’ negotiating team, discouraged and losing hope, prepared to return to London, though they left some members behind in Tehran as, they joked, “hostages.” Howard Page of Jersey led the negotiators back to Tehran in June 1954 for another try. Finally, on September 17, 1954, Page, who played a central role for the companies, and the Iranian Finance Minister initialed an agreement between the consortium and the National Iranian Oil Company. The Shah signed it on October 29, 1954. The day after—and three years after the British had been forced to make their ignominious retreat from the refinery at Abadan to the tune of “Colonel Bogey”—there was a different kind of ceremony at Abadan. While Page and the Iranian Finance Minister delivered speeches of celebration, oil began to flow to waiting tankers. The first one to pull away from the dock was the British Advocate, owned by Anglo-Iranian. Iran was back in the oil business.
The establishment of the consortium marked one of the great turning points for the oil industry. The concept of the concession owned by foreigners was for the first time replaced by negotiation and mutual agreement. The Mexican experience had been a dictated expropriation. But now, in Iran, all parties acknowledged, again for the first time, that the oil assets belonged, in principle, to Iran. Under this new deal, Iran’s National Iranian Oil Company would own the country’s oil resources and facilities. But, in practice, it could not tell the consortium what to do. The consortium would, as a contract agent, manage the Iranian industry and buy all the output, with each company in the consortium disposing of its share of the oil through its own independent marketing system. Though humbled, Anglo-Iranian was still the dominant partner, with 40 percent of the consortium. Shell had 14 percent, each of the five American majors had 8 percent initially, and CFP had 6 percent.
After a few months, the consortium took on a slightly different composition. By prearrangement with the American government, each of the American companies surrendered 1 percent to a new entity called Iricon—a sort of “little consortium” inside the larger one. It was composed of nine independent American oil companies, among them Phillips, Richfield, Standard of Ohio, and Ashland. Their entry had been insisted upon by the U.S. government for political and antitrust reasons. Without their participation, the consortium might not have survived domestic American politics. As Howard Page later joked, there was a feeling that “because people were always yacking about it, we had better put some independents in there.” The British were furious with the whole idea. “We didn’t know who the independents were,” recalled a British official who was central to the negotiations. “We didn’t think they were reputable marketers. We thought they would upset the apple cart around the Middle East in various ways, that they weren’t the sort of people to do business with.” But the British had no choice but to accede to the American insistence.
The “little consortium” was open to any American independent whose financial capability had been examined and approved by the accounting firm of Price Waterhouse. But, seeking to placate the angry British government, the State Department assured London that State itself had taken on “the responsibility for managing the introduction of the independents” and earnestly promised that “only good and reliable independents” would be let in.
With the establishment of the Iranian consortium, the United States was now the major player in the oil, and the volatile politics, of the Middle East. Even though the supply disruption resulting from the Iranian imbroglio had been far more easily solved than had been anticipated, there were still a few who worried about the implications of ever-growing dependence on Middle Eastern oil. Some months after the fall of Mossadegh and the return of the Shah, Loy Henderson, the American ambassador to Tehran and formerly the Assistant Secretary responsible for the Middle East, tried to gather his thoughts. He could not be confident that the mere disappearance of Mossadegh meant that longer-term risks were any less, in particular with regard to the security of oil supplies. “It seems almost inevitable that at some time in the future … the Middle Eastern countries… will come together and decide upon unified policies which might have disastrous effects upon the operations of the companies,” he predicted in 1953. “Continuation and enhancement of the dependence which the West now places upon Middle Eastern oil might eventually place European consumers at their mercy.”
The antitrust case against the oil companies continued to grind on. The Attorney General’s approval of the Iranian consortium had the effect of insulating other joint production arrangements in the upstream, such as Aramco, from antitrust attack. Thus, the case was narrowed to downstream—marketing and distribution facilities—and resulted in the early 1960s in the breakup of Stanvac, Jersey’s and Socony’s joint company in the Far East. Caltex’s downstream system in Europe, jointly owned by Socal and Texaco, was dissolved for commercial reasons. Even though more and more independents and national oil companies entered the world oil market, it was not until 1968 that the American government finally folded its tent on the case. By then, the consortium had been in business for almost a decade and a half in Iran.
For its part, the Anglo-Iranian Oil Company came out surprisingly well from the Iranian turmoil. All along, it had insisted that it had to be compensated for its nationalized properties, as part of any consortium arrangement. The un-giving and unrepentant Sir William Fraser was tenacious in his pursuit of compensation, to the point where he infuriated all the other participants, corporate and governmental, in the various negotiations. But Fraser was not willing to retreat—much. By sheer persistence, he finally won his compensation, though it came not from Iran, which even under the Shah insisted that it owed nothing, but from the other companies who joined the consortium. They paid Anglo-Iranian about $90 million up front for the 60 percent rights that the company was said to be giving up. In addition, Anglo-Iranian would receive a ten cent a barrel royalty on the entire production controlled by the consortium until another $500 million or so had been paid. Thus, despite the official acceptance of the nationalization and of the fact that Iran did indeed own its oil resources and industry, the other companies were paying Anglo-Iranian, and not the Iranian government, for rights to the oil. “It was a wonderful deal for Fraser, the best deal Willie Fraser ever made,” said John Loudon, the senior managing director of Royal Dutch/Shell. “After all, Anglo-Iranian actually had nothing to sell. It had already been nationalized.”20
The other irascible old man who played a major role in the Iranian crisis did not fare nearly as well. Mohammed Mossadegh was put on trial by the reinstated Shah, delivered impassioned speeches in his own defense, and spent three years in prison. He lived out the rest of his days under house arrest on his estate, continuing his experiments with homeopathic medicines, much as he had done, three decades earlier, when the Shah’s father put him under house arrest. Meanwhile, swelling oil revenues were transforming the insecurities of the young Shah, now firmly ensconced on the Peacock Throne of Iran, into the pretensions of an assertive monarch with global aspirations.