This meant reaching agreement over how to divide this crucial part of the world between Britain and the United States. A meeting between Halifax and President Roosevelt resolved the problem: as far as the US was concerned, the ‘oil in Persia was [British and] . . . we both had a share in Iraq and Kuwait and . . . Bahrein and Saudi Arabia were American’.54 It was like the agreements reached by Spain and Portugal in the late fifteenth and early sixteenth century, or the discussions held between the Allied leaders during and immediately after the Second World War, that divided the world neatly in two.
The Americans and the British set about dealing with this division in very different ways. From the US perspective, the key issue was that the price of oil had doubled between 1945 and 1948 – while the number of cars in the United States alone went up by more than 50 per cent and the value of motor-vehicle factory sales rose by seven times.55 In response, initially, the US took an approach to the situation that was reasoned to the point of enlightened: it was inevitable that countries that found themselves blessed with natural resources and being courted from all sides would seek to maximise their own positions. As such, it was sensible to renegotiate the terms of oil concessions – and to do so gracefully rather than under duress.
There were already rumblings and threats of nationalisation, which reflected the new world order. For one thing, new deals that were being made with oil-rich countries were increasingly generous and competitive – such as that struck with J. Paul Getty for a concession in the Neutral Zone between Saudi Arabia and Kuwait which paid almost double the royalties per barrel compared to what was being paid in other parts of the Middle East, and which created rivalry and antagonism in countries that had locked in to agreements at an earlier stage. This not only made them hotbeds for dissent over the way the resources were being expropriated, and prompted demands for nationalisation; it also made them vulnerable to Communist rhetoric and to overtures from Moscow.
A remarkable shift in revenues followed as the US softened its trading positions and renegotiated a raft of deals. In 1949, for example, the US Treasury collected $43 million in taxes from Aramco, a consortium of western oil companies, while Saudi Arabia received $39 million in revenues. Two years later, after changing the system of tax credits whereby businesses could offset their expenses, the business was paying $6 million in the US but $110 million to the Saudis.56 There was a domino effect as other concessions in Saudi, as well as in Kuwait, Iraq and elsewhere, reset their terms in favour of local rulers and governments.
Some historians have spoken of this moment of reworking the flows of currency as being as momentous as the transfer of power from London for India and Pakistan.57 But its impact was most similar to the discovery of the Americas and the redistribution of global wealth that followed. Western corporations that controlled concessions and whose distribution was largely concentrated on Europe and the United States began to funnel cash to the Middle East and, in doing so, started a shift in the world’s centre of gravity. The spider’s web of pipelines that criss-crossed the region and connected east with west marked a new chapter in the history of this region. This time, it was not spices or silks, slaves or silver that traversed the globe, but oil.
The British, however, who had failed to read the signs as clearly as their American counterparts, had other ideas. In Iran, Anglo-Iranian was a lightning rod for criticism. It was not hard to see why, given the huge imbalance in the amounts paid to the British exchequer compared with royalties disbursed to Iran.58 Although other countries in the region could also complain about the lack of benefits that were exchanged for their black gold, the scale of the unevenness in Iran made the situation look particularly bad. In 1950, although Ābādān was home to the refinery that was by now the largest in the world, the town itself had as much electricity as a single London street. Barely a tenth of the 25,000 children of school age were able to attend classes, such was the dearth of schools.59
As elsewhere, Britain was caught on the horns of a dilemma from which there was no escape: renegotiating the terms of the oil concession would be all but impossible, as the astute and well-connected US Secretary of State Dean Acheson observed. Anglo-Iranian was majority-owned by the British government and as such was seen as a direct extension of Britain and its foreign policy – not without reason. Like the East India Company, there were blurred lines between the interests of the business and those of the British government; and as with the EIC, Anglo-Iranian was so powerful that it too was effectively a ‘state within a state’, while its power ‘was in the end that of Britain’.60 If Anglo-Iranian caved in and gave Iran a better deal, concluded Acheson, then it would ‘destroy the last vestige of confidence in British power and in the pound’. Within months, he predicted, Britain would have no overseas assets left at all.61
London’s heavy reliance on the company’s revenues made the situation precarious, as Acheson recognised. ‘Britain stands on the verge of bankruptcy,’ he wrote in a cable; without her ‘important overseas interests and the invisible items in her balance of payments . . . she cannot survive’. This was why the British were using all the tricks of the diplomatic trade, issuing shrill reports that constantly emphasised the imminent threat of a Soviet invasion. Acheson, for one, was having none of it. ‘The cardinal purpose of British policy is not to prevent Iran going commie,’ despite Britain’s claims to the contrary; ‘the cardinal point is to preserve what they believe to be the last remaining bastion of Brit solvency.’62
Things turned nasty, then, when new terms were offered to Iraq in 1950 but were conspicuously withheld from Iran at the same time. The fact that the Iraqi Oil Company was part-owned by Anglo-Iranian rubbed salt in the wounds, and provoked a furious reaction in Iran. Nationalist politicians sprang up to proclaim the iniquity of Anglo-Iranian’s virtual monopoly, spicing their criticisms with comments that were intended to ruffle feathers. All corruption in Iran was the direct result of Anglo-Iranian, stated a member of the Majlis.63 If nothing was done, it would soon come about that ‘women’s chadors will be ripped from their heads’, claimed one demagogue.64 It would be better, said another, for the entire oil industry of Iran to be destroyed by an atomic bomb than to allow Anglo-Iranian to exploit the people and the country.65 Mossadegh put it less bluntly. If he became Prime Minister, he purportedly said, he would ‘have no intention of coming to terms with the British’. Instead, he went on, he would ‘seal the oil wells with mud’.66
Anti-British rhetoric had been bubbling for a generation; now, it entered mainstream consciousness: Britain was the architect of all Iran’s problems and could not be trusted. It considered only its own interests and was imperialist in the worst sense of the word. The elision of Iranian identity with anti-western sentiment took root. There were to be profound long-term implications.
Mossadegh seized the moment with both hands. Enough was enough, he declared. The time had come to ensure the prosperity of the Iranian nation and to ‘secure world peace’. The radical proposal was put forward at the end of 1950 that the proceeds should not be shared with Anglo-Iranian or with anyone else, but rather ‘that the oil industry of Iran be declared as nationalised throughout all regions of the country, without exception’.67 Ayatollah Kashani, a populist cleric who had only recently returned from exile and was already a well-known and vocal critic of the west, gave his wholehearted support to this call to action, urging his supporters to use every method they could to deliver change. Within days, the Prime Minister, Alī Razmārā, was assassinated; shortly afterwards, so too was the Minister of Education. Iran flirted with anarchy.
Britain’s worst fears were realised when Mossadegh himself was chosen as the new Prime Minister by the Majlis in the spring of 1951. He at once passed a law nationalising Anglo-Iranian with immediate effect. This was a disaster, as both the press in London and the British Cabinet realised. It was important, declared the Defence Minister, ‘to show that our tail [can]not be twisted interminably’. If Iran was ‘allowed to get away with it’, he
went on, ‘the next thing could be an attempt to nationalise the Suez canal’.68 Plans were drawn up to drop paratroopers into Iran to secure the refinery at Ābādān if necessary. These were the death throes of a great empire in retreat, desperately thrashing to hold on to its former glories.
Mossadegh turned the screw, giving British employees of Anglo-Iranian a week to pack and to get out of Iran in September 1951. To top it off, Ayatollah Kashani declared a national day of ‘hatred against the British government’. Britain had become a byword for all that was wrong in Iran, one that united a wide spectrum of political beliefs. ‘You don’t know how crafty [the British] are,’ Mossadegh told one high-ranking American envoy. ‘You don’t know how evil they are. You do not know how they sully everything they touch.’69 This sort of rhetoric made him wildly popular at home; it also made him famous abroad: in 1952, he was on the cover of Time magazine as its Man of the Year.70
Britain’s heavy-handed attempt to force the situation did not help. Faced with losing control not only of Anglo-Iranian but of the income it brought, the British government went into crisis mode, organising an embargo on all Iranian oil. The aim was to hurt Mossadegh and force him to capitulate. Starving Iran of funds would soon have the desired effect, opined Sir William Fraser, the British ambassador in Teheran: ‘when [the Iranians] need money, they will come crawling to us on their bellies’. Comments like these that appeared in the mainstream press were hardly likely to help Britain’s cause in the court of public opinion.71
Instead they simply strengthened resolve in Iran, to the point that by the end of 1952 the British were no longer so confident that the tactic of using sanctions would pay off. An approach was therefore made to the recently established Central Intelligence Agency to support a plan ‘of joint political action to remove [Iran’s] Prime Minister Mossadegh’ – in other words, to stage a coup. Not for the last time, regime change in this part of the world seemed the answer to the problem.
Officials in the United States responded favourably to British overtures. Operatives in the field in the Middle East had already been given free rein to explore creative solutions to problems with local rulers who were either not well enough disposed to the US or seemed eager to flirt with the Soviet Union. A group of young gung-ho agents from privileged east coast backgrounds had already been involved in a putsch that saw the overthrow of the leadership in Syria in 1949, and in the removal of the corpulent, corrupt and unreliable King of Egypt, Farouk, in an operation unofficially known as ‘Project FF’ (or Project Fat Fucker) three years later.72
The zeal of men like Miles Copeland and two of the sons of President Theodore Roosevelt – Archie and Kermit (Kim) – was reminiscent of that of the British agents in Central Asia a century earlier who felt they could shape the world, or even that of more modern counterparts who felt that passing secrets to the Soviet Union would likewise have positive effects. After the fall of the government in Syria, for example, the young Americans went off to tour ‘Crusader castles and off-the-beaten-path places’, admiring the architecture and atmosphere of Aleppo on the way.73 Decisions were made on the hoof. ‘What’s the difference’, Copeland asked the dour polymath Archie Roosevelt, ‘between my fabricating reports and your letting your agents do it? At least mine make sense.’74 The way these men in the field played hard and fast was picked up on in the US with one senior intelligence officer admonishing them by saying that ‘irresponsible free-wheeling will not be tolerated in the future’.75 Nevertheless, when it came to the question of Iran, their opinions were in high demand.
Things began to move after a routine meeting in Washington at the end of 1952 when British officials airing their anxieties about the economic impact of nationalisation struck a chord with American concerns about the possible future path of Iran. The CIA station in Teheran was anxious about Mossadegh and advised Washington separately that the US should ‘prefer a successor government’ in Iran. Planners quickly concluded that the Shah had to be brought into the plot to provide unity and calm and so that the removal of the Prime Minister could be ‘made to appear legal or quasi-legal’.76
Persuading the Shah was easier said than done. A nervous and vain man, he panicked when first told of the plan, codenamed Operation Ajax. The involvement of the British in particular worried him, according to one of the American architects of the plan, who noted that he had ‘a pathological fear of the “hidden hand” of the British’, and feared that the operation was a trap. He required cajoling, bullying and warning: key words were dropped into BBC broadcasts from London to reassure him that the operation had been sanctioned at the very highest level; a radio speech in which President Eisenhower explicitly promised US support for Iran also helped convince him; meanwhile he was told in person that if he did not lend his support Iran would become Communist – ‘a second Korea’, as Kim Roosevelt put it.77
In order to ensure that ‘public opinion . . . be fanned to fever pitch’ as a prelude to removing Mossadegh, funds were sent from Washington to cultivate key individuals and turn them against the Prime Minister. Roosevelt cultivated leading members of the Majlis, almost certainly by bribing them (the aim, he wrote euphemistically, was to ‘persuade’ them to withdraw their support of Mossadegh).78
Money was spent liberally elsewhere. According to one eyewitness, the flood of American currency into Teheran was so great that the value of the dollar relative to the rial fell by nearly 40 per cent during the summer of 1953. Some of these funds were spent paying for crowds to march on the streets of the capital, organised by the CIA’s two main local operatives. There were other notable recipients too – above all mullahs like Ayatollah Kashani, whose interests were judged to be mutually compatible with the aims of the plotters.79 Muslim scholars had concluded that the precepts and anti-religiosity of Communism made the doctrine anathema to the teaching of Islam. As such, there was an obvious overlap for the CIA to strike deals with clerics, who were emphatically warned of the dangers of a Communist Iran.80
After British and American planners had converged on Beirut in June 1953, a plan was devised that was approved personally by Winston Churchill, the British Prime Minister, at the start of July and then by President Eisenhower a few days later. Ideas were then refined by intelligence agents for the best way of communicating to what they referred to as ‘rather long-winded and often illogical Persians’ that regime change was wanted by the west, and should take place smoothly and without mishap.81
In the event, things went spectacularly wrong. Covers were blown and timings went awry as the situation descended into chaos. Spooked, the Shah flew out of the country without finding time to put on his socks. When he stopped in Baghdad on his way to Rome, he met with the US ambassador to Iraq, who took the opportunity to make a proposal: ‘I suggested for his prestige in Iran [that] he never indicate that any foreigner had had a part in recent events.’ This had nothing to do with the Shah’s prestige, and everything to do with keeping options open and, above all, preserving the US’s clean reputation. The Shah, ‘worn [out] from three sleepless nights [and] puzzled by the turn of events’, could hardly think straight. Nevertheless, reported the relieved ambassador back to Washington, ‘he agreed’.82
As the Shah made his way to exile in Italy, Iranian radio broadcasts disseminated vicious reports, while the press denounced him as a whore, a looter and a thief.83 The trauma was not lost on his young wife Soraya (many whispered she was younger than the reputed nineteen when she married): she recalled strolling down the Via Veneto in a red and white polka-dot dress, discussing the spiteful politics of Teheran and listening to her husband mournfully contemplate buying a small plot of land to start a new life – perhaps in the United States.84
Mistakes and misadventures worthy of a theatrical farce followed the Shah’s flight. Rumours abounded in the streets that Mossadegh was seeking to claim the throne for himself, and the tide turned. And then, in a matter of days – and against all the odds – the Shah was on his way home, stopping in Baghdad briefly t
o put on the uniform of the commander-in-chief of the air force. Returning in splendour and glory, he presented himself not as a coward who had fled in fear, but as a hero coming back to take control of the situation. Mossadegh was arrested, tried and sentenced to solitary confinement; this was followed by a lengthy period of exile until his death in 1967.85
Mossadegh paid a heavy price for articulating a vision for the Middle East in which the influence of the west was not just watered down but removed altogether. His misgivings about Anglo-Iranian had developed into a view of the west as a whole that was both negative and damaging. This made him a troublemaker of the first order in Iran, and enough for British and American policymakers to formulate plans to remove him from the stage altogether. His loud protestations came at a time when others too were becoming vocal critics of western control of the networks linking east and west; in Egypt, rising animosity saw anti-British rioting and demands for the evacuation of British troops based at Suez. A report to the Joint Chiefs of Staff by a US State Department visitor to Cairo was unequivocal about the situation. ‘The British are detested,’ he wrote. ‘The hatred against them is general and intense. It is shared by everyone in the country.’ An urgent solution was needed.86
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