The Origins of the West’s Iran Crisis: Oil, Autocracy and Coup
Marc Martorell Junyent 04/12/2024
Review of David S. Painter and Gregory Brew, The Struggle for Iran: Oil, Autocracy, and the Cold War, 1951–1954. Chapel Hill: The University of North Carolina Press, 2023.
Munich (Special to Informed Comment; Feature) – The figure of Mohammad Mosaddeq, Prime Minister of Iran from 1951 to 1953, is an uncomfortable one for both sides of the US-Iran rivalry. For the US, Mosaddeq is a constant reminder that the dictatorial reign of Shah Mohammad Reza Pahlavi after 1953 came into being with a US intervention to overthrow the constitutionally elected Mosaddeq. The US would provide strong support for the Shah in the coming decades. Mosaddeq is someone who challenged Western powers to defend Iranian national interests. This alone should, a priori, afford him a place of honor in the Islamic Republic established by Ruhollah Khomeini after his return from exile in 1979. However, Mosaddeq’s nationalism was grounded on democratic secularist convictions that are at odds with the ideology of the Islamic Republic, which in recent years has shut down its already limited avenues of democratic participation within the system.
In their book “The Struggle for Iran: Oil, Autocracy, and the Cold War, 1951–1954”, David S. Painter and Gregory Brew revisit Mosaddeq’s nationalization of the Iranian oil industry, the ensuing tensions with the US and the UK, and the Western powers’ final decision to remove Mosaddeq. As the title of the book already suggests, the oil dispute was the obvious point of contention but the early 1950s events in Iran would not have unfolded as they did absent the weight of much larger conflicts.
Among them was the desire of many Third World nations to manage their natural resources. In the age of decolonization, newly independent countries found themselves in a paradoxical situation. For the first time, they enjoyed political sovereignty but were tied to their former metropoles by long-term contracts to exploit their natural resources. Iran was never formally colonized. Still, the original oil concession Britain obtained in 1901, with very disadvantageous terms for the Persian state, had much to do with Persia’s internal weakness at the time. This fragility had been exacerbated by imperial competition between Russia and Britain for influence over Persia.
The oil dispute in Iran in the early 1950s took place against the background of an increasingly intense Cold War between the US and the Soviet Union. In a time of strong ideological polarization, there was little place for a leader such as Mohammad Mosaddeq, who followed a policy he called “negative equilibrium” as he did not want to align Iran with either of the two blocs.
Mosaddeq became prime minister in 1951 after the Majles (the Iranian parliament) decided not to ratify the so-called Supplemental Agreement negotiated by the Iranian government and the Anglo-Iranian Oil Company (AIOC). The British company, founded in 1909, had been exploiting Iran’s oil for four decades. The Supplemental Agreement fell short of what most Iranians demanded. The Majlesappointed Mosaddeq as prime minister after his proposal to nationalize the Iranian oil industry was unanimously approved by the parliament.
When nationalization was implemented, British leaders became convinced that Mosaddeq would have to go for the oil dispute to be settled in terms favorable to London. In October 1951, after Iranian troops took over the Abadan oil refinery in southern Iran, the last AIOC personnel departed the country. Mossadegh had Iran’s oil infrastructure in his hands but faced the major challenge of keeping the oil industry running without foreign technicians. Finding export markets for the oil products was even more complicated as Britain imposed an oil boycott and sanctions on Iran.
Diverging from the British position at this point, Washington “sought a solution that would restart the oil industry and preserve Iran from communist control while not endangering U.S. interests in the region”, write Painter and Brew.[1] At the same time, the Shah did not dare make a move against Mosaddeq since both his political figure and the cause of nationalization were widely popular in Iran. US officials acted as mediators between Mosaddeq on the one hand, and the AIOC and Britain on the other. There was no common ground to be found, however. Mosaddeq argued that Iranian oil belonged to the country after nationalization. Consequently, he wanted international companies to buy Iranian oil at a price higher than that offered to other developing countries where Western companies controlled the oil industry.
Mosaddeq was open to international companies returning to Iran to help operate the oil infrastructure as long as it was under Iranian control. British diplomats in Tehran sought to destabilize the Mosaddeq government and have it replaced with a new one that would be more amenable to British interests. The crisis escalated in October 1952, when Mosaddeq ordered the British embassy to close and its citizens to leave the country.
By the end of 1952, the US presented to Mosaddeq the so-called ‘package proposal’, which would have recognized Iran’s ownership of the oil industry but still envisaged Iran selling most of its oil to a consortium of international oil companies. The thorniest issue was compensation payments to the AIOC for Iran’s oil nationalization. As the authors note, the US and the UK insisted that “payment could not be limited to physical assets but also had to cover lost future profits.”[2]Mosaddeq rejected the ‘package proposal’. The reason was not that the Iranian prime minister failed to understand the specifics of the oil trade, as it has often been suggested. Rather, Painter and Brew argue, Mosaddeq understood very well the risks of being trapped in continuous compensation payments to AIOC if it agreed to the terms of the deal. Iran would have been in nominal control of its oil industry but, in truth, once again dependent on the British company’s compensation wishes.
Painter and Brew situate the US decision to consider the forceful removal of Mosaddeq around April 1953. With the British forced out of the country, the US operatives in Iran stepped in to mobilize the Iranian clerical and political groups that opposed Mosaddeq as well as the military. Bribes were a common means to achieve the desired result. Although there was no love lost between the Shah and Mosaddeq, the monarch had to be talked into the coup by his Western backers as he feared a failed move against Mosaddeq could backfire. The Shah finally signed two firmans (royal decrees): one dismissing Mosaddeq and the other one appointing General Fazlollah Zahedi as the new prime minister. While street mobilizations headed by bribed local gang leaders took place in Tehran, significant sectors of the army carried out an operation against Mosaddeq on August 16, 1953.
The prime minister had been alerted of the impending coup and loyalist troops defended his residence and the army headquarters. After the failed coup attempt and the Shah’s departure from Iran, the Tudeh Party took to the streets and used the opportunity to call for a republic. The US ambassador to Iran convinced Mosaddeq to order the police and the army to repress the Tudeh protests. As Painter and Brew remark, “ironically, Mosaddeq’s decision to crack down on the Tudeh, which illustrated his anti-communism and his desire for U.S. support, helped seal his fate.”[3] On August 19, 1953, with the streets empty of Tudeh demonstrators, the army moved once again to overthrow Mosaddeq, who was not prepared for a second coup attempt. Soldiers took the ministerial offices and Radio Tehran, while Mosaddeq was finally captured. The former prime minister was later sentenced to three years of prison and would die under house arrest in 1967.
Although the Shah returned from his short exile and General Zahedi was installed as prime minister, the removal of Mosaddeq did not immediately solve the oil dispute. Nationalization was a popular cause in Iran, and Mosaddeq’s forced departure from the scene did not change this. Negotiations dragged on until late 1954 when the Iranian government agreed to pay limited compensations and retain a largely symbolic control of its oil industry. The US sweetened the deal with a military and economic aid package of $120 million.
“The Struggle for Iran” partly draws on documents about the US role in the coup first released in 2017 and is particularly strong in covering the economic dimension of the conflict. Painter and Brew’s work helps debunk some of the most common myths about the coup. Although anti-communism and opposition to nationalization were strongly connected, the authors explain Washington viewed nationalization as the biggest threat. Successful nationalization in Iran could have resulted in other Third World nations following the same path.
Painter and Brew also note that it is unfair to portray Mosaddeq as an irrational and stubborn leader who was unwilling to compromise. Orientalist tropes were rife in contemporary assessments of Mosaddeq by British and American leaders. Mosaddeq was described as “incapable of rational thought”, “dominated by emotions and prejudices,” or a “reckless fanatic”, among many other condescending and offensive remarks.
Painter and Brew argue that the British were never interested in finding a negotiated solution to the conflict and “used talks as a stalling tactic to buy time”[4] for Iran to experience the negative economic impact of Britain’s oil boycott and allow covert actions against Mosaddeq to run their course. In “The Struggle for Iran”, Painter and Brew importantly reflect how the tragedy of the coup was not only that the US and Britain removed a constitutional leader in a foreign country, but also that the intervention “halted the progress Iran had been making toward representative government. Autocracy was the outcome.”[5]
[1] David S. Painter and Gregory Brew, “The Struggle for Iran: Oil, Autocracy, and the Cold War, 1951–1954,” (Chapel Hill: The University of North Carolina Press, 2023), p. 64.
[2] Ibid., p. 129.
[3] Ibid., p. 170.
[4] Ibid., p. 208.
[5] Ibid, p. 212.