Mossadegh and oil nationalization
From 1949 on, sentiment for nationalization of Iran's oil
industry grew. Politically conscious Iranians were aware
that the British government derived more revenue from
taxing the concessionaire, the Anglo-Iranian Oil Company
(AIOC - formerly the Anglo-Persian Oil Company), than the
Iranian government derived from royalties. In November
1950, the Majles committee concerned with oil matters,
headed by Dr. Mohammad Mossadegh, rejected a draft
agreement in which the AIOC had offered the government
slightly improved terms. These terms did not include the
fifty-fifty profit-sharing provision that was part of other
new Persian Gulf oil concessions.
Subsequent negotiations with the AIOC were unsuccessful,
partly because General Ali Razmara, who became prime
minister in June 1950, failed to persuade the oil
company of the strength of nationalist feeling in the
country and in the Majles. When the AIOC finally offered
fifty-fifty profit-sharing in February 1951, sentiment for
nationalization of the oil industry had become widespread.
Razmara advised against nationalization on technical
grounds and was assassinated in March 1951. On March 15,
the Majlis voted to nationalize the oil industry. In April
the Shah yielded to Majles pressure and demonstrations in
the streets by naming Mossadeq prime minister. <NOT
DEMOCRATICALLY ELECTED>
Oil production came to a virtual standstill as British
technicians left the country, and Britain imposed a
worldwide embargo on the purchase of Iranian oil. In
September 1951, Britain froze Iran's sterling assets and
banned export of goods to Iran. It challenged the legality
of the oil nationalization and took its case against Iran
to the International Court of Justice at The Hague. The
court found in Iran's favor, but the dispute between Iran
and the AIOC remained unsettled.
Mossadeq had come to office on the strength of support from
the National Front and other parties in the Majles and as a
result of his great popularity <NOT DEMOCRATICALLY
ELECTED>. His popularity, growing power, and intransigence
on the oil issue were creating friction between the prime
minister and the Shah. In the summer of 1952, the Shah
refused the prime minister's demand for the power to
appoint the minister of war (and, by implication, to
control the armed forces). Mossadegh resigned, three days
of pro-Mossadegh rioting followed, and the Shah was forced
to reappoint Mossadegh to head the government <NOT
DEMOCRATICALLY ELECTED>.
The administration of President Truman initially had been
sympathetic to Iran's nationalist aspirations. Under the
administration of President Eisenhower, however, the United
States came to accept the view of the British government
that no reasonable compromise with Mossadegh was possible
and that, by working with the Tudeh Party, Mossadegh was
making probable a communist-inspired takeover. Mossadegh's
intransigence and inclination to accept Tudeh support, the
Cold War atmosphere, and the fear of Soviet influence in
Iran also shaped United States thinking. In June 1953, the
Eisenhower administration approved a British proposal for a
joint Anglo-American operation, code-named Operation Ajax,
to overthrow Mossadeq. Kermit Roosevelt of the CIA traveled
secretly to Iran to coordinate plans with the Shah and the
Iranian military, which was led by General Fazlollah
Zahedi.
In accord with the plan, on August 13 the shah appointed
Zahedi prime minister to replace Mossadegh. Mossadegh
refused to step down and arrested the Shah's emissary. This
triggered the second stage of Operation Ajax, which called
for a military coup. The plan initially seemed to have
failed, the Shah fled the country, and Zahedi went into
hiding. After four days of rioting, however, the tide
turned. On August 19, pro-shah army units and street crowds
defeated Mossadegh's forces. The Shah returned to the
country <AND RESUMED POWER AS LEADER OF IRAN AGAIN>.
Mossadegh was sentenced to three years' imprisonment for
trying to overthrow the monarchy, but he was subsequently
allowed to remain under house arrest in his village outside
Tehran until his death in 1967. His minister of foreign
affairs, Hoseyn Fatemi, was sentenced to death and
executed. Hundreds of National Front leaders, Tudeh Party
officers, and political activists were arrested; several
Tudeh army officers were also sentenced to death.
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