Full text · 1974
The Battle for Iran: the CIA History Staff's account of the 1953 coup (c. 1974)
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THE BATTLE FOR TRAN
Contents
I. INTRODUCTION
TI. IRAN, ANCIENT ANDO MODERN
A, The Nation
1, Imperial Past
2, The People
3. The Economy
4. Politics and Sovernment
B. Between Russia and The Vest
Agyression from the North
2. The Oil Dispute, 1949-53
3. lran and U.S. Foreign Policy
{11. COVERT ACTION
A. The Genesis of TPAJAX
B, THe Planning Phase
C, Putting the Plan into Action
D, Involving the Shah
E, The First Attempt--and Failure
F. Turning Defeat Around
IV. THE AFTERMATH OF VICTORY
V. THE LONG VIEW OF THE COVERT ACTION IN IRAN
APPENDICES
A. Whose 0417) An Abbreviated History
of the Anglo-Iranian Oi] Dispute
B. Biographic Sketches
C. The Legend: The Iranian Ooeration.ijn the Press
D. The Plans for TPAJAX
E. Chronology
F. The Trial of Hosadeq and Riahi
G. Map of Tehran
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C01384460 ra ADMINISTRATIVE WORKING PAPER
Desens SECREL_
FOREWORG
This account of the role of the Central Intelligence Agency
in the political action operation that altered the course of
history in Iran was written with the enthusiastic cooperation
of hel ee cctorete of Operations. Yt ds
bulk of the correspondence and traffic dealing with the
operation was destroyed in 1962), on the draft history written
in 1954 by Dr. on personal interviews with a
number of active and retired Agency officers who participated
in the action, on Central Reference Service personality files,
and on a variaty of open sources. Unless otherwise noted,
major documentary sources were
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COQO1384
"YS InpRopuction
460 AOMINISTRALLVE WunALNG Fare
SECREF
THE BATTLE FOR IRAN
Iran in late 1952 was sliding toward economic and political chaos.
Its young ruler, Mohammad Reza Shah, was indecisive and vacillating in
the face of the crisis created by his fanatically nationalistic Premier,
the 72-year-old Mohammad Hosadeq.!
His country was involved in a bitter
dispute with Great Britain over the of] concession that the British had
since 1901 built into a lucrative industry. Iran's nationalists, personi-
fied by Mosedeq, had paralyzed this industry rather than allow Foreigners
to continue to direct its operations end benefit From their natural
resources, With the dispute at an impasse and with Mosadeq ruling by
decree, the country seemed headed for an economic collapse and political
anarchy whose final outcome could well have heen the establishment of a
saviet satellite in the Middle East. How the diplomatic and intelligence
servicesof the United States S”S*~*S~S~*sr Ke with Iranfans
loyal te the Shah to prevent the loss of Iran is the subject of this
history. Understanding of how and why this action was taken will be
clarrfied by an initial review of historical events and of Iran's people,
economy, and politics.
Ii. IRAN, ANCIENT AND MODERN
A. The Nation
1. Imperial Past
The first Persian” empire, that of the Achaemenid dynasty,
was founded by Cyrus the Great in the Sixth Century 8.C. through conquest
See Appendix B for a brief biography of Mosadeq.
Persia was derived through Greek from Persis, the name the Greeks
used for Parsa, the tribe and province of the Achaemenids. In 1935 Reza
Shah insisted that foreigners use Iran, the native usage which means "Land
of the Aryans," rather QBOR Eye.
Ye rmwmnie my mes oer Sits en ein te tS Se Ce Sci so Wes ah et ly
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CO1384460 sttottitt”
of ‘the “edes and other kingdoms of the region now generally known
as the Middle East. Cyrus’ grandson, Darius, further extended the
“empire, which he divided into 20 satraps or provinces connected by
a network of impertal roads. The Achaemenid empire endured for almost
200 years, until it was destroyed by Alexander the Great of Macedonia.
The Greeks were soon succeeded by the Parthian dynasty, which jn turn
Followed by the Sassanids, who ruled for 400 years from the third to
the Serene centuries A.O, and wha restored the glory of ancient Persia.
In 651, however, the Arab invasion swept across Persia, which for the
next nine centuries was ruled by a succession of foreign conquerors. A
native Persian dynasty rose again at the beginning of the 16th century
when the Safavids came to powers their rule lasted over 290 years and
reached its peak under Shah Abbas from 1587 to 1620, Invading Afghans
$2723
overthrew the Savavids in 1722 and were in turn driven out by Nadir Shah,
ans
eile
a Turkic-speaking tribesinan who launched a campaign of conquest that
included invasions of India and the Caucasus. The succeeding dynasty,
that of the Qajars, lasteuatil the early 1920's when Reza Khan? a colonel
in the lranian army's Cossack Division, seized power in a military coup,
He became Shah in 1925, deposing the Qajars and founding the
Pahlavi dynasty. Winen Iran was occupied in 1941 by British and
Soviet. troops in order to guarantee the aU UVEG supply route to the
Reza Shah
embattled Russians,/ abdicated and was succeeded by his son, Mohammad
St Yat
Reza Pahlavi, the present Shah.
2, ‘he people
Of Iran's population in 1952 of under 18 million, more
than 70 were ethnic Iranians of Indo-Europzan stock; Persians
See Appendix B for biographic details on Reza Shah.
Soe
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SHORET oo,
CO1384460
“so% of the total. The other ethnic Iranians included Kurdish, Gilani,
Mazandarani, Lur, Bakhtiari, and Baluchi tribesmen, many of whom were
nomadic or seminomadic peoples. ‘Another 224 or so of the population
were Turkic peoples, primarily the Azarbaijani of the northwestern
provinces but also including the Turkoman and Qashqai tribal groups.
Arabs made up about 54 of the population, and the remainder were
non-Muslims, including Armenians, Assyrians, and Jews. Persian (or
Farsi, as it is known in Iran) was the official language, spoken by
most ethnic Iranians, although Turkic and Arabic dialects were also
jn use,
Almost all Iranians are Shia Muslims, in contrast to the Sunnis
viho predominate in the Muslim world. Shiites believe that the true
succession to the leadership of Islam continued through the line of
‘Ali. (Nohamnad's son-in-law) in the series of the 12 Imams, in contrast
to the Sunnis who insist that the Caliphs succeeding ohammad were
selected by the consensus of the Muslim comnunity. Although there is
no organized Shia hierarachy, certain titles distinguish special meme
bers of the religious community. A cleric of limited theological
training is a 'mullah,'t while one who has studied at a higher insti-
tution is a'tmujtahid'! and qualified to adjudicate questions of
religious conduct, The most important Iranian religious leaders have
borne the honorary title of ‘Ayatollah," and the leader at the Shine
at the city of Gom may issue decrees which have the force of lato the
Faithful. A descendant of Mohammad may use the title "Sayyid" as part
of his name, but he is not necessarily a religious figure.
The social structure in the early 1950's included an elite composed
of the Shah, his court, and the 200 or more ruling families whose wealth
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CO1384460 SECRET
derived from agricultural landholdings. Below the elite was the upper
middie ¢lass that included government officials, professional men,
“Fmporters, bankers, and merchants. ‘The urban middle class consisted
mainly of small merchants, craftsmen, lower level clergy, and teachers
and as a group had not benefited greatly from the economic development
and educational opportunities of the previous two decades, The day
laborers, street vendors, and service workers were at the bottom of the
urban class structure, Most of the country's people were working
in the 1950 era .as tenants, bound to oe
their landlords by an almost feudal system, Outside the Iranian social
Structure were the tribes, whose social system in times of peace impeded
the progress and modernization of Iran and was a source of weakness. In
times of stress, however, the tribes were a source of strength. 3
Spin the 1941-45
period, they remained relatively untouched by the general collapse, but
internal nonetheless national
white retaining sone, scsbinity, the tribesacontributed toxconfuston
and disorder through their clannish narrow-mindedness, tribal rather than
national loyalties, and readiness to resort to violence.
As a people, Iranians have been described
national pride that has resulted from a fairly homogeneous stock and a
as having an intense
2,500-year history. In spite of this pride in the
achievements of past dynasties and the high level of intelligence among
those who have had the means to develop their potentials, the national
movement of the 1950's accomplished little.
noire missense
John Marlow in tran: A Short Political Guide, Frederick A. Praeger;
New York; 1953.
Ree wee em pe meme «oe
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Among the reasons accounting for
this are the fact that nationalistic feelings and native intelligence
“are often accompanied by ‘an individualism that inhibits “cooperation, “by
a cynicism that despises enthusiasm, by an impatience that derides
calculation, and by a volubility that abhors discretion. Their nationalism
thus has lackedan air of connon purpose, of willingness to sacrifice,
of the dedication that has given impetus to the national movements of
other, less well-endowed peoples.
3. The economy
In 1950 lran was still basically an agricultural nation
with a backward oo Se cet mene eta centr
“Farming, stock raising, forestry, and fisheries.
probably accounted for half the gross national product; wheat was the
major crop, followed by barley, rice, cotton, and tobacco. Manufacturing
was growing in importance, with pene eeeeccccen and wool--leading the
cement, match, and glass industries, although food processing was still
the most important non-oil activity.
Dil, of course, prior to 1951 when the effects of the dispute with
the British were severely felt, was contributing about a third of
budgetary revenue and nearly two-thirds of foreiyn exchange. Oi] revenues
sosatee ow
started to climb when the warended, going from=7.13 million in
1946 to —> £16.03 million in 1950; by
1952, they were onl ya3.3 million, 7 In 1950, 31,217,000 metric tons
of ofl were exported, but this fell to 9,158,000 metric tons in 195] and 7
to a pitiful 14,000 metric tons in 1952 when the British left.
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COLRSBRSE 4 60 SLORET AUSLU LSE AAEL eo eR ate kie de beer EN
4, Politics and government
Until the early years of the 20th century, Persia had either
been an absolute monarchy or had been under the rule of foreign invaders.
In July 1906, however, popular resentment against the excesses of Muzaffir
ad-Din, a Shah of the Cajar dynasty whose excursions to Europe were nearly
bankrupting his country's treasury, grew so strong that widespread demon~
strations and riots forced him to proclaim a constitution. This Pereeveny
liberal: document, supplement, in 1907 and amended in 1925, 1949, and 1957,
provided for a government of three branches. The power of the executive ~4
was vested in the cabinet and in government officials acting in the Shah's.
name, The judiciary was composed of a hierarchy of civil courts up through
the Supreme Court, while the legislative branch comprised the parliament,
or Majlis, of 136 members, elected by the people every 2 years, ang, after
ihe shat ver Senate, half of whose members were appointed by the Shah and
half elected,
Whatever power remained in the hands of the Qajar Shah vanished soon.
after World War I, in which Iran had maintained a slightly pro-Cerman
the forces of.'
neutrality that was violated SOSA Russia, and Britain. In February
1921, a young reformist politician, Seyyid Zia ed-Vin Tabatabai, and Col.
Reza Khan, commander of the Iranian Cossack Division? combined to overthrow
the government. Zia ed-Din became Premier and Reza Khan commander-~in-chief
of the army, but the two soon quarreled, and Zia ed-Yin fled into exile
poral
Gin Hay 1921. Reza Khan remained
? The Cossack Division, at that time the only well-organized and effective
unit in the army, came into being as a result of Nasr ed-Vin Shah's visit
to Russia in 1978. The Shah admired his Cossack escort and asked the Czar
to send him RKussian officers to organize a Cossack cavalry regiment in the
Iranian army. it grew to a brigade and then a division, and its White
Russian officers and noncoms were retained until October 1920, when Reza
Khan replaced Col. Starrosselsky as commander and other Iranians took over
for the remaining Russians SEORET
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CO1384460
.im power as Minister of War, devoting himself to the reorganization of
the army. Unifying the heterogeneous military units into a closely knit,
expel the Bolsheviks,
worn CBA LFalTy controlled army, he employed BORE Deck Oyeazaneat ai ate
quel} the rebellious tribes. Reza Khan took over as Premier in 1923, and
two years later he became Shah.
The two focal points of Reza Shah's dictatorial rule were nationalism
and “modernization, and in this he greatly resembled Kemal Ataturk in
Turkey, although his methods and goals were less radical. He improved
the status of women and checked the power of the Shia clergy, but he
stopped short of Ataturk's romanization of the national langquage--Farsi
retained tts Arabic script. As a nationalist, he was suspicious and
guarded toward the Soviet Union andchallenging toward the British,
oie
particularly as to the oil concession, which he felt did not sufficiently ne
benefit Iran, He brought in first American and then German economic Be:
advisers to reorganize the country s finances and to serve as a counter~_
weight to Soviet and British influence.
Reza Shah's dictatorial rule ended with the occupation of his
country by the Soviets and the British in August 1941--an episode that ae
will be discussed below--and a month later he abdicated in favor of his
She
son, Mohammad Reza SARIN ee who was proclaimed Shah by the Majlis. He ee
left Iran at once and eventually didd in exile in South Africa in 1944,
The Iranian government he left behind faced a difficult period, with a
“ussian eccupation jn the north and a British one in the south. Tehran
remained a neutral zone, but the Allies controlled the transportation
oceunonpenconinesonennnegnnie
Cis biography appears in “ppendix B.
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FAS Artanis
ANAINISTRATIVE WORKING PAPER
ByStem, and wartime shortages of food and consumer goods led to a
crippling inflation.
Suddenly brought to power in an occupied country, the young Shab,
partially
who had beenpecucated in Europe and who was believed to favor constitu-
tional government, was unable sit provide strong leadership
to his government, As a result the power of the Majlis increased, a
large number of transitory political parties and partisan newspapers
were started, the tribes again becamecefiant, the clergy became stronger,
and the Communists~~banned as a party in the 1920's~-returned in the
guise of the Tudeh Party. Tudeh, headed by leftists and former Communist
Party members, received funds and direction from Moscow and recruited
both members and sympathizers throughout Iran during the war years and
until dts overt apparatus was crushed in 1954,
Little more than a department of Reza Shah's government in the 1920's
and 1930's, the Majlis emerged from the years of occupation as a_revitalized
if irresponsible
Apolktcal force, It insisted on confirming the appointment of the
U.S, financial advisory mission in 1942, it imposed limits on the govern-
mant's right to negotiate of] concessions, and it took on the selection
of a new Premier as its privilege-~although the Shah retained the right
to approve or disapprove the choice. In its dealings with Premiers or
Shahs,’ the Majlis had a powerful weapon--the quonum veto. The constitution
stated that the Majlis could only be considered convened when two-thirds of
its 136 deputies had reached Tehran, and half of those present in the
capital constituted a quorum. Thus, if 91 deputies were in Tehran, the
absence of 46 of them could keep the assembly from functioning.
Political parties in the Western sense had never been strong in Iran,
and during the war years their number had multiplied. Only the Tudeh was
“SECRET
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COL384460 ADALNISTHATIVE WORKING PAPER
an effective political organization, and it was included among the
“minority parties, as opposed to.the "majority" grouping that tended...
to vote together on key national issues. In general, political forces
in postwar Iran had sorted themselves out into left, right, end center
groups. Tudeh and its sympathizers were on the left. The right was
more hetero jeneous and included Dr. Mohammad Mosadeq's National Front,/
the fanatical religious organizations Fedayan ‘slam and Mojahadin Istam,®
the several smal} fascist parties, most Tehran University students and
professors, ead many smal] merchants and businessmen. The center was
moderate and inclined to be more pro-Western; it included the Shah, most
army officers, the Democratic Party, and the wealthy merchants and land-
owners who favored the. status guo. Aided by landowner control over the
peasant vote, center candidates usually won the majority of Majlis seats,
but in the Tate 1940's and early 1950's, the nationalistic policies of
the right regularly won the voting support of the left and center,
8, Between Russia and the West
Aggression from the North
Iran lost wars and territory to Czarist Russia in 1813 and
again in 1323 and has lived in varying degrees of dread of its northern
neigh bor ever since. Great Britain was the counterbalance to Russian
power--the 8ritish goal was to keep Iran as a buffer between Russia and
pectin
For example, in the 16th Majlis, elected in 1950, the National Front
was composed of Mosadeq and eight followers who nonetheless were usually
able to carry a majority of deputies with them on key votes.
8 Fedayan Islam, numbering at most a few hundred members, carried out
terrorist acts in support of its goal of restablishing Islamic
law and practice to a dominant place in Iran. Mojahadin
Islam was more political; its religious spearhead in the Majlis included
multah Ayatollah Kashani and Shams Qanatabadi, two influential, politically
oriented religious leaders.
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Be ey Er clctatea eres eee ee of:
COL384460 CECH
Iadia--until 1907, when Britain and "ussia signed an agreement to
divide Iran into zones of influence. The British purpose was to
(gies ae pgs ahem scons So eens bap vee
secure Russia as an ally in Europe against the
“rena ns cower oF il ss
perial Germany, and the result was that northern and central Iran as
far south as Isfahan was open to “ussian economic and political influ-
ence, The British zone was southeastern Iran adjacent to Indian Baluchi-
stan until 1915, when in return for rights to the oil-rich southwestern
‘zone the Sritish recognized Xussian claims to control of the Turkish
Straits,
During Wortd War I, Iranian neutrality was violated by the Turks,
the Russians, and the British; the Russians entered northern Iran to
counter Turkish advances through Iran toward the Caucasus, while the
British sent in troops and organized Iranians into the British-officered i
South Persian Rifles to counter German attempts pose bversnen ainong the
tribes and sabotage of the oil pipeline. The Russian military collapse
in 1917 left a vacuum in northern Iran and the Caucasus that the Bolshe-
viks, Turks, Germans, and British attempted to fill. Britains anti- Bol-
shevik intervention in Russia and Iran ended in 1919, but a treaty was
concluded with Iran in August 1919 that would have made Iran a virtual
oritish protectorate, This treaty was never ratified by the Majlis,
however,. and when Reza Khan and Seyyid Zia ed.Din seized power in 1921,
Tran formally repudiated it.
From the start, Soviet Russia's official policy toward Iran was
KE.
Fricnd}y. In a January 1918 note, the Soviets renounced all Czarist
privileges contrary to the sovereignty of Iran and promised to aid the
Iranians in expelling British and Turkish occupying forces. Their note
end RA EI olla, Bd
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woe me me he ee oe ce
also declared that the 1907 treaty with Britain was no longer binding.
In an additional note of 26 June 1919, the Russians annulled all dranian
Discount Bank and al} railroads, harbors, and highways built by them.-
and declared the capi tulations (privileges and exemptions guaranteed to
“ussian citizens in Iran) null and void. The Soviet-Iranian’ Treaty of
Friendship of February 1921 formalized the provisions of the 1919 note,
renounced any interference in one another's internal affairs, gave Iran
the right to maintain naval forces in the Caspian Sea, and permitted
Russia to send troops into Iran if it should become a base for a
third-country threat to the Soviet Union. (This final provision, which
originally applied ta White “ussian forces, was subject
to Soviet interpretation of what constituted a threat. and was a
significant facter in restraining forceful British response to the tranian
takeover of the oil industry in 1951,)
Iranian relations with the Soviets in the 1920's concentrated on trade,
Which built up Significantly until 1926, when a sudden and Strict embargo
was placed on Iranian agricultural products, mainly from the northern pro.
vinces, The embargo forced tran to eaclude a comnercial treaty with the
Russians that introduced barter transactions and gave the Soviets exclusive
marketing privileges in Iran. This had several results: The Soviet share
of Iranian Foreign trade rose from 23% in 1926.27 to over 384 in 1928.29;
Iranian industrial development was deliberately discouraged by the arti-
ficially low prices the Soviets put on competitive manufactured goods;
and, Iran began to turn toward Germany as a foreign trade partner,
Germany, in addition to increasing its purchases of Iranian products,
also became involved in the Construction of the Trans-4ranijan Railway, one
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ADMINISTRATIVE WORKING PAPER
SECRET—
of Reza Shah's mast _Wmportant accomplishments. Germans ran Tran! s
internal airlines in the late 1920's and the 1930's, supplied railway
rolling stock and motor vehictes,” sand aided industrialization in
Iran by setting up foundries, coal mining equipment, a cement factory,
textile and paper mills, anda machinegun factory. A German Financial
adviser replaced the American Dr, Arthur Hil lspaugh in 1927, and the
Germans and Iranians signed a trade treaty in 1923 and a treaty of
friendship in 1929, As a result, Germany's share of tran's foreign
trade rose from 8% in 1932-33 to 45.5% in 1940-41, and by August 194]
the number of German advisers, technicians, and businessmen in Iran
reached 2,000,
The nature and extent of this German penetration into Iran became
very significant when German armed forces invaded Russia in 1941 and
rapidly moved deeply into the *oviet Union. Iran was the shortest and
most feasible route for badly needed war materials to be sent to Russia
by its new allies in the West, Further, the possibility of a German
takeover in lran was a risk the “ussians could not allow. On 19 July and.
16 August 1941 the British and Soviet diplomatic missions in Tehran pre-
sented notes demanding the expulsion of the Germans in Iran, but Iran
insisted it was neutral and that no danger existed. On 25 August, the
Final Allied demands were presented and the invasion began; the Soviets
entered Iran from the north in three columns, the British from the south
in two. Iranian armed resistance was negligible except for a sharp fight
in Khuzistan that cost 558ritish casualties. The Ali Mansur cabinet
resigned on 27 august, and the official surrender took place the next day.
-srelter
Pome nt Sees IARC UMgaNMIMOYRR NRE aE es Cota
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C01384460 Shope Ct ene
Under its‘terms, the Soviets were to occupy the five northern provinces
Ppa tan Sneaa tie ene oe wee provinces, Teaving central Tran and the
capital to the Iranians; all Germans were to be expelled or turned over
to the Allies; tran was to facilitate the transport of Allied supplies.
Reza Shah's position was made untenable by the poor performance of his
army and by the subsequent hostile Allied propaganda campaign, and he
abdicated in favor of his 22-year-old son on 16 September 1941. Although
most Germans were interned or sent back to Germany, a number of key agents
escaped and sought to stir up the tribes to sabotage and rebellion; Haj.
Holthaus yy Ge
Julius Schulze, worker among the Cashcdi, and Franz Mayr tried to stir up
the Kurds and sabotage the railroads. A number of prominent lranians were
Found to be listed among Moyr's actual or potential agents, and many of
them--including Maj. Gen, Fazlollah Zahedi, who in 1953 became the leading
Iranian military man in the coup that ousted Mosadeq and who succeeded
him as Premier _v-ewere arrested and sent to detention camps in Palestine.
aspses% heer
Treaty of Alliance signed by the °oviet Union, Britain, and Iran on 29 June
1942, In this treaty, the Allies promised to withdraw their forces from
tran not later than six months after hostilities with Germany and its
associates had ceased, Although the Iranians feared Russia and disliked
the british presence and methods employed in seizing and running the
transport system, they declared war on Germany in September 19433; presumably
te ensure being on the winning side. When Roosevelt, Churchill, and Stalin
met in Tehran in November 1943 (without ever officially consulting or
advising the tranian government), they signed the Deciaration on Iran, which
recojnized Iranian assistance to the war effort, promised economic aid,
and reaffirmed Jran's independence, sovereignty, and territorial integrity.
MO, Ce ae ee Recbiehe hte masin ureters pais ten ah
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COL384460 He BOE
Henetheless, when the war ended in 1945, there were difficulties
with the Soviets. In late 1944, they attempted to get Iranian approval
“for their exploitation of of] in Semman in the Soviet zone. The furor
over Iran's rejection of this offer, which was backed up by U.S, Ambassa-
dor Leland Morris' statement that the U.S, Government recognized the
soveréign right of Iran to refuse to grant oil concessions, led to the
resignation of Premier Sa'ed, With the new Premier under heavy Soviet
pressure, Mohamad Agsadeq introduced a bill into the Majlis making it
acrime for any cabinet minister to enter into negotiations with or to
grant-oil concessions to foreigners without the approval of the Majlis.
The bill was passed on 2 December 1944,
Frustrated in their attempts to obtain a solid claim to oil] in
northern Iran, the Soviets became reluctant to’ leave Azarbaijan. On 29
Novemter 1945, the United States proposed that all Allied troops be
evacuated by January 1946, but the Soviets insisted on the March 1946
date previously egreed to by the British. On 12 December, the ‘Autonomous
Republic of Azarbaijan" was proclaimed, a national assembly elected, and.
Jatafar Pishevari, a veteran Comintern agent, was named Premier, At the
same time a Kurdish uprising took place in western Azarbaijan, and a
was
Kurdish People’s ISU Tg eUCRIU with Qazi Mohammad as president;
it prompth allied itself with the “Autonomous Republic."
On 22 January 1946, the Shah asked Qavam as-Saltaneh to form a
new bovernment. After dismissing General Arfa, who had pro-British
tendencies as Chief of Staff, Qavam went to Moscow in February to
negotiate with the Sussians. The Soviets proposed that their troops
remain indefinitely in parts of Iran, that Iran recognize the internal
autonomy of Azarbaijan (whose premier would also be designated governor~
SEGREF
PPR TS CR IO LEO SRT EIT Ree RETA
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ADMINISTRATIVE WORKING PAPER
general), and that rather than a Soviet oi] concession a joint
Iranian-Russian stock company be set up, with 51% of the-shares to be
owned by Russia, 49% by Iran. Qavam rejected these demands and returned
to Tehran, where he faced a political crisis. The 14th Majlis was due
to end its two-year term on I] March 1946, and it had voted that no
elections for the next Majlis could be held while foreign troops were
still in the country (U.S. forces left Iran 1 January, the British on
2 March). The deputies! attempts to meet and vote to extend their
terms were frustrated by Tudeh demonstrators, who until after March
physically prevented a quorum from gathering. Qavam was thus left to.
alone. ecru va
rule the country,until the 15th Majlis could be elected... 00
Iran then brought the matter of the continuing Soviet occupation
before the new United Nations Security Counci), and under U.N. and
pressure, the Soviets on 4 April 1946 concluded an agreement with Iran
that called for evacuation of all Soviet troops within a month and a
half after 24 March 1946, the establishment of a joint stock oil com-
pany which would be approved by the Majlis within 7 months after 24
March, and arrangements for improvement ef relations between the
Iranian government and the people of Azarbaijan.
Accordingly, Qavam worked out an agreement with Pishevari that would
have conceded most Communist demands while leaving Azarbaijan under the
nominal authority of Tehran, The Soviets appeared to be gaining influence
in Iran, an impression that was reinforced when on 2 August 1946 Qavam
brought three Tudeh Party members and a Tudeh sympathizer into his
“popular front'' cabinet. In the meantime, Tudeh had provoked an oil
ee ap he ig cote
uaied ae lent aie Sele 8 aie en tana Bs
Page 18 (page 18 of the original)
ANT ROAAESr AUMINES ERATIVE 2m,
workers’ strike in Khuzistan that involved 109,000 workers
-violence and sabotage, comer Sang
he nee
The inclusion of Tudeh in the Qavam government brought
British reaction, British troops were moved from Indja to ll.
Iraq, with the Stated purpose of securing supplies of Iranic:.
Britain needed. Then, with encouragement from British consu!
military advisers jn their region, a coalition of Qashqai, 3
and other tribesmen was formed which in a demonstration of
Bushire, Abadeh, Kazerun, Bandar Amir, and besieged Shiraz.
was ultimately worked out in mid-October between the tribal
Khan Qashqai, and General Zahedi, then commanding the garri.
in which the government recognized the tribes' demands. On
Qavam resigned and took office again, and the new cabinet h:
not include the Tudehites; on 24 November Qavam ordered the
Azarbaigan to supervise the elections for the 15th Majlis.
chance to redeem itself for the failure in 1941, the army rv Ci
enthusiastically. There was little resistance from the Tighe
SD eect
Azarbaijan forces, and on 14 December the "autonomous" sh
i tly vee,
collapsed, The army also captured the Kurdish Stronghold oi
executing the leaders of that rebellion. In Tehran, Tudeh
were raided, and the way was opened for the elections to be
OF Magne
headers ms
‘When the 15th Majlis was Finally inaugurated in August “Sain en Rey.
opposition Ted by Or. Nosadeq began to fight the. ratificati. 1947, 7
oil agreement. In the face of Soviet pressure on the Irani: 954 of ex leeatt
U.S. Ambassador, Seorge V. Allen, in a speech on 11 Septembc:
“ans, theo
apa en
Irano-American Cultural Relations Society, made it clear th.
Seong eee oes
SME RON tM SN, cn Seen
ee ENN MEN CIN Ua lana emt ERS OR ae mR mraraing ies
Page 19 (page 19 of the original)
BALA Wc Onto
CO1L384460
free to accept or reject the Soviet offer, and that in any case Iran would
be supported by the United States against Soviet threats or prdssure.
soo ting American policy aimed at removing the fear of aggression anywhere
in the world, Allen satd:
The United States is firm in its Conviction thatany proposals
made by one soveréign government to another should not be accompanied
by threats or intimidation. When such methods are used in an effort to
obtain acceptance doubt is cast on the value of the proposals.
Our determination to follow this pplicy as regards Iran is as
Strong as anywhere else in the world. This Purpose can be achieved
to the extent that the Iranian people show a determination to defend
their own sovereignty. Patriotic Iranians, when considering matters
affecting their national interest, may therefore rest assured that the
American people will support fully their freedome to make their own
choice,
Iran's resources belong to Iran.
Iran can give them away free of
charge or refuse to dispose of them at
any price if it so desires.
Thus convinced of U.S, support, on 22 October 1947 the Majlis rejected
the Soviet of] agreement by a vote of 102 to 2 and instead passed a bil]
that forbade further of] concessions to foreign governments or partners
and called for negotiations with the Anglo-Iranian 07} Company for a j
greater share of the profits. This measure was to have. far-reaching effects
or Iran's relations with Great Britain and the United States.
2. The O71 Dispute, 1949-53
The involvement of Great Britain in Iranian of] went back
te the original D'Arcy concession of 1901, the first of a series of grants
that we
re renegotiated at various times to keep up with the growth of
the ofl industry and world demand for oil. The Anglo-Persian 01 Company
was founded in 1909, but it took on a new complexion in 1914 when the
British government became the major shareholder. The reason for this
nowt yoni
ers
toa Ale
Page 20 (page 20 of the original)
and
on ee MINISTRATIVE WORKING PAPER
“official investment was obvious; Winston Churchill became First Lord
for nearly a decade, to convert the Royal Navy from burning coal to
burning oil. On the brink of a major war, the navy had to be assured
of a source of ofl, which was both efficient and cheap. Anglo-Persian
(Anglo-Iranian, after 1935) 011 Company ce tee
oe Sons snued to extract oil under its
original concession for the next 30 or so years, building pipelines as
well as a large refinery at Abadan. The concession was rereptiiated in
1933 to give Iran a greater share of the net profits and to modify the
concession area. Managers and technicians continued to be either British
or Indian, with the Iranians providing unskilled or semiskilled labor.
Following the passage of the Majlis legislation of 1947 rejecting the
Soviet of] concession, the Iranian government presented to Anglo-lranian
a list of 25 points to be discussed. Chief among these were British taxation
on Iran's share of company profits, Iran's rights to the conpany's installa
tions at the end of the concession in 1993, a reduction in the number of
British employees, the royalty basis--that is, the price to be paid te
‘ran for each barrel extracted and sold through AI0C's marketing and
“transporting system, and Iranian tax and custom exemptions. After lengthy
discussions, the so-called "Supplemental Agreement" raising the royalty
payment from 4 to 6 shillings a ton and giving Iran 20% of distributed
profits and general reserve was sent to the Majlis on 19 July 1949,
Debate began shortly thereafter, but the term of the 15th Majlis
ended before a vote on ratification could be taken. Elections for the
l6éth Aajlis were Finally completed in March 1950, and Mosadeq and his
eight National Front colleaques led the balloting in Tehran. Ali Mansur
Ce eee ee er ee wh se Conn
en een aS
BE Cae Suet go ok te Bityeetne BS Celad Sani EIT Sr ne netatinln Bebb, wt Sap”
Page 21 (page 21 of the original)
eee
willing to agree to a 50-50 profit sharing similar to the agreement that
1384460 ADMINISiRATIVE WORKING PAPER
CECREP
was named Premier, and the proposed Supplemental Agreement was turned
-over to the Majlis Special Oi} Commission for study in June 1950, the
same month in which Gen. Ali Razmara, a former Chief of Staff, became
Premier, — the commission's report to the Majlis stated that the
agreement did not adequately secure Iran's rights and should not be
ratified, Razmara's Minister of Finance then withdrew the agreement
and reopened negotiations with the Al0C, which by February 1951 was
Aramco had worked out with Saudi Arabia. Razmara, however, had asked a
group of experts to study the feasibility of nationalization of the oi]
industry; their view was that Iran lacked sufficient technical expertise.
to run the industry, that the concession could not legally be cancelled,
that heavy compensation would be due Britain, and that both foreign
exchange and prestige would be lost by hasty nationalization. When
Razgmara opposed imnediate nationalization as impractical under the
circumstances, he was assassinated on ee
7 Warch 1951 by a mamber of Fedayan Islam, the rightist religious
terrorist group. Hosein Ala briefly succeeded Razmara as Premier, and
the Majlis approved the principle of nationalizing oil. When Ala resigned
in April, the Majlis voted to recommend Mosadeq to the Shah as Premier,
and he was appointed to the post on 29 April. Acting swiftly, the Majlis
approved on May a nine-point nationalization law. This act began a
sumer of hectic but fruitless bargaining that culminated in impasse and
the departure in October 1951 of British managers and technicians.
Because the true issue in the dispute was political, in that the
li,
iranians had come to identify oil with their own
resurgent nationalism, the two governments were never able to understand
Page 22 (page 22 of the original)
CQ1384460
problem in economic terms, believed that the Iranians, had to sell their
leasing ttankers they could operate the oi] industry on their own. To
ADMINISTRATIVE WORKING PAPER
SECRET
one another's position. The British, attempting to deal with a political
oil or go broke and that the best approach was to wait them out, at
first for workable terms and later--after national ization--for adequate
compensation. The Iranians, assuming that the West could hot do without
their ofl, were convinced that by hiring non-British technicians and
the British, the Iranians seemed irrational and wasteful; to the Iranians,
the British appeared overconfident and condescending. As a result, their
negotiations were so unproductive and mutually frustrating that the
British even considered military intervention to seize Abadan, although
the strong possibility that the Soviet Union would invoke its 192] treaty
with Iran to oppose such a British move served as an effective deterrent,
The legalistic approach. of the British government, which as the major
stockholder jin the AlOC regarded the oil concession as atreaty or, at
the very least, an agreement between nations, was to take the matter first
before the International Court of Justice and then to the Security Council
of the United Nations. In the end, the Security touncil deferred to the
decision of the ICJ as to its own jurisdiction, and when in June 1952 the
court ruled that the concession was not a treaty and hence not’a proper
matter for it to consider, all legal approaches were exhausted. The
dispute was at an impasse’, and by October 1952 diplomatic relations
between the two countries were broken off.
3. Iran and U.S. Foreign Policy
United States foreign policy under President Harry Truman has
10 ow more detailed but still necessarily brief description of the oil
dispute is included as Appendix B to this history.
Page 23 (page 23 of the original)
“been generally characterized as the "containment" of Communist aggressions
Whatever its name, the policy evolved in 1947 when the British Government
informed the United States that it could no Jonger afford to support
Greece and Turkey--militarily and financial ly--against the very real
threat of Soviet aggression and subversion. In assuming this burden,
Truman said in a message delivered before Congress in March 1947:
believe that it must be the policy of the United States to
support free peoples who are resisting attempted subjugation by armed
minorities or. by outside pressures.
I believe that we must assist free peoples to work out their
own destinies in their own way.
I believe that our help should be primarily through economic Le
and financial aid which is essential to economic stability and orderly a
political processes.
The world is not static, and the status quo is not sacred,
But we cannot allow changes in the status quo in violation of the
Charter of the United Nations by such methods as coercion, or by
such subterfuges as political infiltration. In helping free and
independent nations to maintain their freedom, the United States
will be giving effect to the principles of the Charterees
Should we fail to aid Greece and Turkey in this fateful hour, 14
the effect will be far-reaching to the West as well as to the East.ee-
Usually credited with originating the containment theary behind the
Truman doctrine is George F. Kennan, who in February 1946 as counselor of
the U. S. Embassy in Moscow sent the Department of State a long telegram
in which he analyzed Soviet postwar policy aims. His telegram struck
responsive chords in Washington; James Forrestal, then Secretary of the
Navy and later the first Secretary of Defense, gave the telegram wide
circulation within the national security bureaucracy. When Kennan
returned from his tour of duty in Russia, Forrestal sponsored him for
the post of director of the National War ‘ollege, where he stayed for
ine
less than a year before becoming head of State's new Policy Planning Staff.
Gay Ri mi
1) public Papers of the Presidents of the United States: Harry S. Truman,
eae nets ae
gh]. UTST Government Frinting Office; Washington, 1963; pp.173-9
Page 24 (page 24 of the original)
AUMINISTRATIVE WORKING PAPER
SECRET
Kennan's article "The Sources of Soviet Conduct,'' which appeared
“in Foreign Affairs for July 1947 and which js credited with the initial
statement of the containment policy, was an amplification of his Moscow
telegram. It was originally written for Forrestal in response to a
paper on Marxism and Soviet power prepared by a Forrestal staffer and
sent to Kennan for comment,
In January 1947, Kennan addressed the Counci]
on Foreign Relations in New York on his views on the Soviet Union, and
Foreign Affairs editor Hamilton Fish Armstrong asked him for a paper along
the lines of the talk for publication in that journal. Rather than write
another paper, Kennan asked Forrestal's permission to publish the one he
had done earljer, and when this was forthcoming, sent it to Armstrong
with the request that it be signed '"'X",
In the "X" paper's description of the exercise of Soviet power,
Kennan noted the innate antagonism between capitalism and socialism that
was deeply imbedded in the minds of Soviet leaders. Moscow invariably
assumed that the aims of the capitalist world were antagonistic to
Soviet interests, and that, said Kennan, ''means that we are going to
continue for a long time to find the Russians difficult to deal with."
Thus, he continued, "...the main element of any U.S. policy toward the
Soviet Union must be that of a long-term, patient but firm and vigilant
containment of Russian expansive tendencies.'' These could be contained
"by enfosra and vigilant application of counter-force at a series
of constantly shifting geographical and political points, cérresponding
to the shifts and manoeuvers of Soviet policy, but which cannot be
sence oct
120 Much of this background is taken from John C, Donovan, The Cold
Warriors; 0,C, Heath & Co., Lexington, Aass., Toronto, and London; 1974.
torte yal begin. am be
we Rac na Tak
wah
Page 25 (page 25 of the original)
ADMINISTRATIVE WORKING PAPER
SECRET
charmed or talked out of existence," 13
Sturn ne HOWeVer, in Kennan's view and in that of former Secretary of State”
Dean Acheson, he was not the author of a containment policy or doctrine;
he merely described what was happening. That he did it well, in a way
that met the approval of a number of key policymakers of the time is
obvious, but it was continued Soviet intransigence in pursuing openly
North
aggressive policies that led to the U.S. reattion to the/Korean invasion
in 1950, and the Korean War in turn institutionalized I a set of
operational premises along these lines:
A, The Soviet Union would resort to military expansionism if
it were not checked by visible countervailing military power;
8, Local imbalances of military power which favored the
Soviets or a Soviet satellite would Jead to further "Koreas";
C, The most appetizing local. imbdance to the Soviets was
in Central Europe;
BD, The global balance of power would shift in favor of the
Soviets if they were able to swallow the rest of Central Europe, i
West Germany and Austria; only the Greco-Turkish flanks had such a
critical function for the balance of power (Japan was next most
critical);
Local imbalances in secondary and tertiary areas must not
be neglected; the Capability and clearly communicated will to defend
whatever areas the Communists chose to attack was necessary to prevent
them from picking and chosing easy targets for blackmai] and aggression. §
A number of small territorial grabs could add up to a critical altera-
tion of the global balance, and our failure to defend one area would
demoralize nationals jn other such localities in their will to
resist the Communists.
weeny
It was against this background of U.S, policy and planning that
the status of Iran in late 1952 was considered, and although Owight po,
‘Soren SRS HE,
In later years, writing in his Memoirs--1925-50, Kennan said that
the X article's most serious defect was "the failure to make clear that
what I was talking about when I mentioned the containment of Soviet power
was hot the containment by military means of a military threat but the
political containment of a political threat," Whatever such hindsight
is worth, Kennan's words were generally taken to mean political and
military containment on a universal Scale,
In ""hree Comments on the Article," by Averell Harriman,
Arthur Krock, and Dean Acheson, Foreign Policy, No. 7, Summer 1972.
'5 In the view of Seyon Brown in The Faces of Power; Constancy and
Change in U.S. Foreign Policy from Truman to Johnson; Columbia University
Press; NéW York & Landon Ree
hip ie Sipciice ebm. Se, op Be
neoger
SH ae tot neo
ra fone rR
Page 26 (page 26 of the original)
Eisenhower succeeded Truman as President on 20 January 1953 and John
Foster Dulles became his Secretary of State with the avowed intention
‘to go beyond containment toward “dynamic liberation," US. policy vom ee
in Iran continued to stress the need to contain Soviet power there as
elsewhere,
The U.S. involvement in Iran's of] problems was admittedly
reluctant; we had backed the Iranian government jn 1947 when it resisted
the off concasation the Russians were seeking to arrange in the north.
Our statements at that time probably did much to Beeeensecarne Iranian
mood to challenge the British concession as well, and,that chal lenge
grew into a bitter dispute, the United States found itself caught in
the middle of an argument between its chief European ally and an
underdeveloped Middle Eastern country to which it was providing military
and economic aid. As aresult, the U.S. role became not so much one of
mediator but rather as an honest broker attempting to bring two clients
into an agreement for their mutual benefit. Truman's Secretary of
State, Dean Acheson, had proposed!® in July 1951 that the President
send Averell] Harriman, his foreign policy adviser, to Tehran to reopen
negotiations. Uespite violent anti-American rioting by Tudeh the day
he arrived, Harriman did get the two sides talking again, but to little
avail. When the British brought the case before the Security Council
jn October 1951, Mosadeq argued Iran's position before the Council;
afterward, he visited Washington and met with Truman and Acheson, but
their talks came no closer to reaching a basis for settlement.
nen
16 As recounted in Acheson's story of his years at State, Present at
the Creation, W.W, Norton & Co.3 New York; 1969; pp. 499-511 and 680-685.
Se Pe ae eee er ree
‘wun? mae ie at
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With the British out of Iran, the United States continued to look d
for solutions, and Proposals involving both the International Bank for
Reconstruction and ‘Development and the American oi] industry were put
forth, without success. By the end of 1951 the Conservatives, under
bhurchill, were back in power in Britain and less willing than Labor es
to be frustrated by Iran, and Mosadeq's position, increasingly dependent ch
on Tudeh support, grew more precariouSe OO
ee en NEE ee at ows
SESE
eames RHE
semen er me pa rs
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a awa ate ae ad ee
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TIT. COVERT ACTION
A, The Genesis of TPAJAX
The many chroniclers of Central Intelligence Agency misdeeds,
whether in their books, magazine articles, or newspaper columns, have -long
placed the August 1953 coup that overthrew Pramier Mosadeq near the top
of their list of infamous Agency acts. Complete secrecy about the operation
that was-known under the cryptonym of TPAJAX has been impossible to enforce
under existing laws, and enough talkative people, including many Iranians,
were privy to segrenis of the operation to make it relatively easy for
journalists te reconstruct the coup in varied but generally inaccurate
accounts. The point that the majority of these accounts miss is a key
one: the military coup that overthrew Mosadeq and his National Front
cabinet was carried out under CIA direction as an act of UiS. foreign
policy, conceived and approved at the highest levels of government. It
was not an aggressively simplistic solution, clandestinely arrived at, but
vos instead an officta sinission snes wenn ns pies ts ety
oe normal, -rationai methods of international communication and
commerce had failed. TPAJAX was entered into as a last resort.
The target of this policy of desperation, Mohammad Mosadeq, was
neither a madman nor an emotional bundle of senility as he was so often
pictured in the Foreign press; however, he had become so committed to the
ideals of nationalism that he did things that could not have conceivably
helped his people even in the best and most altruistic of worlds. In
refusing to bargain--except on his own uncompromising terms--with the
eoongiounenanmgenannsisnaisdnengiin dada
'7 A number of these are included in Appendix CL
SREREE
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Anglo-Iranian 011 Company, he was in fact defying the professional poli-
ticians of the British government. ‘These leaders believed, with good
reason, that cheap oi] for Britain and high profits for the company were
vital to their national interests, There had been little in their experience
to make them respect Iranians, whom company managers and Foreign Office
representatives saw as inefficient, corrupt, and self-serving. That the
British misjudged their adversaries badly is obvious; they were convinced
that when Iran felt the financial pinch, its resolve would crumble, and an
oe toa ot tm res
agreemant couta be worked out tao the sattefaction of both sides,
“in fact, of course, the hose ot oil revenue did not iving the Trontane
to their knees; it merely forced them to take the risky steps that increasing-
ly endangered their country's future, It was the potential of those risks
to leave Iran open to Soviet aggression--at a time when the Cold War was
at its height and when the United States was involved in an undeclared war
in Korea against forces supported by the U.S.S.R. and China--that compelled
the United States en planning and
executing. TPAJAX.
How real were the risks im what Mosadeq was doing? Had the Sritish
sent in the paratroops and warships, as they were to do a few years later
Sgainst the Egyptians at Suez, it was almost certain that the Soviet Union
fn his article in the 5 January 1952 Saturday Evening Post, entitled
"What went Wrong in Iran?"
—sREREE
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wae by eo
would have occupied the northern portion of Iran by invoking the Soviet.
lranian Treaty of Friendship of 1921, It was also quite probable that the
Soviet army would have moved south to drive British forces out on behalf
of their Iranian "allies." Then not onty would Iran's of] have been
irretrievably lost to the West, but the defense chain around the Soviet
Union which was part of U.S. foreign policy would have been breached,
had
The Soviets would have /Ahe opportunity toe achieve the ancient Russian
_dream of a port on the Persian Gulf and to drive a wedge between Turkey
ond India. Under such circumstances, the danger of a third world war
seemed very real. When it became apparent that many elements in Iran did
not approve of Mosadeq's continuing gamble or the direction in which he
was pushing their country, the execution of a U.S.~assisted coup dletat
seemed a more desirable risk than letting matters run their unpredictable
Course, ilosadeq was already openly threatening to turn to other sources
for economic help--the Soviets--if Britain did not meet his demands or if
the United States did not come forth with massive aid to replace his lost
oil revenue. Peacefully or in war, the Soviet Union appeared to be the
only potential beneficiary of Mosadeq's policies.
eg,
ang
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very closely held in Washington is borne out by a memorandum of 10 June
1953 from the Office of Greek, Turkish, and Iranian Affairs (GTI) to the
Assistant Secretary of State for Near Eastern, South Asian, and African
Affairs recommending policies more supportive of ‘Hosadeq. It reasoned
in Iran
that since condi tions( were deteriorating almost to the point of no return
and since an attempt to remove Mosadeg would risk a civil war and would,
even if successful, alienate the Iranian people, we Should increase our
Financial and technical assistance to Iran in the hope that Mosadeq would
be able to muddle through, The desk officers! position paper recognized
that increased U.S. aid would, of course, frustrate British policy, which
was to undermine Mosadeq's position, By late June, however, State was
aware of the planned operation, and a further position paper that stipu-
lated certain condi tions to be met by the British was prepared on 25
June, as described in the discussion of planning, below.
B, The Planning Phase
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£6 13596 3.3(b)(1)>25Yrs
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A.
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Lat
Rn eee
Sut APPENDIX A.
In 1372, the then Shah of Persia, Naser ad-Oin, in return for iuch-
neaded cash, gave to Baron Paul Julius de Reuter a concession to exploit
all his country's minerals (except for yold, silver, and precious stones),
al] its Forests and uncul tivated land, and all canals and irrigation
works, aS wel] as a monopoly to construct railways and tramways. Although
the resulting uproar,-essscially from neighboring Russiaf caused this
sweeping concession to be cancelled, de Reuter, who was a German Jew with
British citizenship, persisted and by 1889 regained two parts of his
original concession--the operation of a bank and the working of Persia's
mines. Under the latter grant, de Reuter's men explored for of! without
great success, and the concession expired in 1399, the year the Baron died.'
Persian of] right $fhen passed to a British speculator, William Knox
D'Arcy, whose first Fortune had beon inade in Australian gold mines. The
purchase price of the concession was about 50,000 pounds, and in 1903
the enterprise began to sell shares in "The First Exploitation Company."
Exploratory drilling proceeded, and by 1904, two producing wells were in,
Shortly thereafter, jinverest in of was sharply stimulated by the efforts
of Admiral Sir John Fisher, First Lord of the Admiralty, to convert the
Royal Navy. from burning coal to ofl. As a result, the Burmah 011 Company
Soujnt to become involved in "ersian of] and, joining with D'ircy and Lord
Strathcona, Formed the new Concessions Syndicate, Lee, which endured until
1907 when Purmah Oi] bought D'Arcy out for 200,900 pounds cash and 500,000
pounds in shares. S8urmah's first gusher came in a 1,190 feet in May 1908,
near Masjed Soleyman, and a year later, after some complicated financial
SP ae. Rem 88 eH et Se OEY te HE
EC eet
Page 81 (page 81 of the original)
SANA AP OM TMI A Rang aig ERE om ARSC UES SA CIERA SRe oom ee
SECRET APPENDIX A
ealings in London, the Anglo-Persian O11 Company (APOC) was born,
incorporating the shares and rights of the earlier concessionaires,
The cohpany chose Abadan as the site of its refinery and made local
os Po Png
arrangements” for its, security with both the Shiekh of Mohaimerah and
the Bakhtiari tribal khans; the former was paid an annual rental and was
promised continued autonomy froin Tehran, wnile the latter were to
receive 34 of net oil revenues (to be paid out of the Persian government's
share of 16%).
When Winston Churchill became First Lord of the Admiralty in 1911,
his persistent prodding changed the Royal Navy over to oi]. To ensure
asource of cheap ofl, the 8ritish government became a major, sharehol der
in the APOC in 1914, adding 2 million pounds in capitalization and signing’
a 30-year contract for Fuel of] at cut rates (Churchill wrote in 1923 that
this contract had saved Britain no less than$7.5 million- -on its
wartime oil purchases).
Differences as ts how profits were to be shared between the Persian
byorld Ww
government and the APOC began after ase The company claimed that
Persia's share of the profits applied toe the carnings of the three sub-
sidiaries actually operating in Persia (based on Article 1 of the Dl arcy
concession, which defined its limits as "throughout the whole extent of
the country!) Persia claimed itwas entitled to a share of the profits from
all operations, including extracting, producing, refining, and marketing
its oil, wherever these operations might take place. fhere were also
problems over British claims for wartime damaye to pipelines by Bakhtiaris
incited by Ger-aan and Turkish agents. The British attempt to negotiate a
settlement calling for new profit-sharing arrangements fell through in
1920, and the relationship tottered along under the old agreement until 1933.
SFCRET—
Page 82 (page 82 of the original)
460
SECRET APPENDIX A
buwordi®s Daves rs
In 1921, Reza Khan, a cotone] GF the Iranian cossacks—(fexcmod.
in. 1276 by Russiss_offiecrsoasad hy tha Crarspemhose £0 ssaCrncscorts
Yasar ad OiaShabtradauntPred on werhedt), seized power by deposing the
overnmrrint of the
ast “ajar Shah. He visited Abadan after becoming Shah himself in 1925,
and his account of the trip gave warnings of things to come, He noted
that of the 29,000 employses in the oilfields and refinery, 6,000 were.
foreigners, and he expressed concern that so few Persians were being
trained for higher level posts. He also saw that the Sritish staff
enjoyed an obviously higher standard of living than the others, and that
while the refinery area appeared prosperous, the surrounding districts
had not felt any positive impact from this major industry in their area.
Finally, he was disturbed by a manager's description of cutting down pro-
duction in order not to upset world markets--but at a loss to Parsia.
So, Persian dissatisfaction continued to build up until November 1932,
when the government notified the company that the D'Arcy concession, signed
under the Gajar regime, was annulled and a new concession would be granted
on the basis of equity and justic. “This mew concession was not casily
arrived at--the British government referred the annulment to the League of
Nations, whose Council sent Or. Eduard Benes of Czechoslovakia to reconcile
the two sides. Two legal points were thus established that were to affect >
the later dispute jo 1951: the right to annul the concession was recog.
nized, and the League accepted the viewpoint of the Sritish that such a4
case could be brought to the Counctl under Article 15 of the Covenant (which
provided for a hearing on disputes between members that were likely to lead
to a rupture in diplomatic relations and for the solution of which no legal
recourse existed). The two parties finally worked out a new concession
tind Pe
agreemtnt that was ratified by the Majlis (the hye:
rsian
Page 83 (page 83 of the original)
AEP oa A
SECRET
parlfament) sand siyned by Reza Shah on 23 May 1933; it extended the life
of the concession to 1993 and set up a new royalty basis. By its terms
Persia would receive 4& shillings on every ton of of] sold in Persia or
exported, plus 20% of the dividends over$671,250 distributed to
sharcholders, with a minimum dividend of £750,000 jper year. To
avoid Persian taxation, the company agreed to pay a smal] additional
royalty on tonnage, and it would continue to pay British taxes out of
gross profits.
It was the of] business as usual until the summer of 1941 when
Sermany invaded the Soviet Union. Because German influence in Iran (as
Persia was renamed in 1935 by Reza Shah) had grown significantly and
because the country was the best route for Allied supplies going to the
beleaguered Soviets, the Allies determined to send in occupation forces.
La Goryost
Afussian troops took over the Five northern provinces, 3ritish forces
went into the south, and the area around Tehran was neutralized. Following
aretr on oryny te [lapsed Deel
three cays of futile and desultory resistance, the, Shah abdicated in fFaver
of his young son, Mohammad Reza Pahlavi> aj Tran was an occupied country
until 1946, Abadan continued to produce petroleum products for the Allies,
but the Soviets took advantage of the situation and attempted te obtain an
ol] cancession in the north. In late 1944, the Soviets were alvised by
Presajer Saled that the cabinet had ruled out the granting of further
concessions until after the war, When pressure was applied throuyh the
leftwing parties, Sated resigned, at which point the Majlis passed a bill
introduced by Dr, Mohammad Mosadeq forbidding any discussion of or signing
agreements for an off concession with any foreign representatives. The
bill passed, desnite Communist opposition, thereby blocking a Russian con~
cession, but in the course of the cebate the possibility of revoking the
fdett
Page 84 (page 84 of the original)
ALDG concession was seriously raised, Despite the law, Premier Qavam
in April 1946 signed an agreement giving the U.S.$.R. an oi] concession
in northern Tran, The Majlis refused to ratify the concession, and in
the bill rejecting it, the legislators declared that it was forbidden to
grant any concession to export of] to foreigners; further, they instructed
the government te look into possible violation of the rights of the people
in connection with the southern of] concession held by the AIUC,
With the war time occupation over, the British ofl managers beyan
1.
a ers #29 re o8 ae
tu have labor troubles. Ne 1946 yeneral strike was settia
Cc.
2.
tlh & pay
raise, but this was only the start, In 1947 the Iranian Ministry of
Finance sent a delegation to London to discuss money due the Iranian
government, various employee grievances, reduction of foreign staff, ex-
pansion of local distri bution facilities, and the AlOC policy of concen-
trating refining activities outside Iran. To these complaints, the
company, obviously feeling secure in the legality of its concession,
was relatively unresponsive,
Trance
The law of 22 October 1947 instructed the, government to open dis-
cussions with the AIOC to secure the nation's rights to its of] resources,
These discussions’! started more than 5 years of bargaining and debating,
proposal and counterproposal, charge and countercharge, until they eventually
reached the Security Council of the United Nations. The Iranians led off
in August 1943 with a 50-page memorandum that listed 25 points that were
to be discussed with the company in implementing the 1947 law. The main
items on this list included British taxation of Iran's share of of] profits,
Iran's ultimate rights to AlOC installations outside the country at the end
of the concession (it had already been promised those in Iran), reduction
ftir duyston
athe heat of the concession (by 1993,
SECRET
in the number of foreign employees,
Page 85 (page 85 of the original)
CO1384460
einem ites on we
SECRET
AEE Qe ba PA”
the lranians felt, they would have little oi] left in the yround), the
royalty basis, and tax and custom exemotions. Negotiations with company
representatives began the following month, continuing intermittently
thereafter, Shortly before the 16 January 1949 attempt by a Tudeh Party
member to assassinate the Shah at Tehran University, Premier Salted fdonti-
Fied higher profits and more Iranian employees as his main goals in these
Giscussions; he pointed out that Iran's of] royalties for 1947 were just
overs] million \y whereas the ATOC had paid sonsdls million ‘in
British income taxes,’ Specifically, Iran wanted control of the company's
operations as well as a 50-50 split of the net profits, On 5 Nay 1949,
ALOC chairman Sir William Fraser came to Tehran with a draft of the
“Supplemental Agreeinent,"
and this draft was basically the agreement signed
by the government and company on 17 July. The royalty payment was increased
From & to 6 shillings per ton, and Iran was to get 20% of the distributed
profits (with a minimum of k2.5 million and general reserve, terms
dhe forwevican execvt ives PE canumene ane OER
well short of the 50-50 sharing Iran wanted and which Aramco wee"Tn the
process of agreeing to give Saudi Arabia. The agreement was sent to the
“Majlis on 19 July, and debate began on 23 July, lasting 4 days before the
15th Majlis formally went out of existence, The oi] agreenent bill as well
as the new election bill were left over to the next Majlis.
Elections for the 14th Hajlis began in the fall of 1949 and were
ations] Front
Finally completed in March 1950, with Dr. Nosadeg and his eight, followers
leading in the balloting in Tehran. Ali Mansur became Premier, and in June
fox stud 4
the ofl agreement was turned over, to the [3-nan special ofl coamission that
included Mosadeq and Five other members of the National Front. Six days
later, the Shah dismissed Mansur and appointed General Ald Razmara, Former
Chie€ of Staff, as Premier. The comnission reported back to the dujlis
Page 86 (page 86 of the original)
APPENDIX A
Seywntee that the agreement wes not adequate to secure the rights of Tran
and that it was opposed to its ratification. The Minister of Finance then
withdrew the agreament, announcing that negotiations for increased royalties
would be reopened with the AlTOC,
1951
In Februaryy! the AIOC offered Iran an agreement similar to Aramco's,
including the 50-50 profit sharing, but it was too late; the National Front
was Intent on nationalizing oil and it dominated the Majlis. The oil
comnissfon indicated it too,yfavored that courss, despite the report from
the experts appointed by Razmara to study the feasiblity of nationalization.
The experts had pointed nut Iran's lack of technical and financial expertise,
plus the Facts that the concession could not legally be cancelled, that Iran
would be liable for up tof500 million jin compensation, that heavy:
losses in foreign exchange and prestige would result, and that it would be
unwise to antagonize 8ritain. On 7 March General Razmara was shot and
Killed by a member of Fedayan Tslam, a rightist terrorist group, and
Hosein Ala succeeded him as premier.
When the Majlis in mid-March unanimously accepted the principle of
nationalizaTtion, the Sritish Foreign Office notified the Premier that an
atct of nationalization would not legally terminate the of] company's
operations. Shortly thereafter, strikes broke out in the south as a result
of the company's cutting a hardship allowance for tranian workers in certain
area®plus other gievances. Hartial lawwas declared on 26 March, and in
sarly April rioting began in Abadan that did not end until troops Fired
into the crowd; 6 were killed and 30 wounded, and two British of] workers
and a sailor were also killed.
As members of the National Front were presenting their draft of an
oi] nationalization law to the special of] committee, Premicr Ala resi
Page 87 (page 87 of the original)
coed
13844
SRCRER— APPENDIX A
xe Majlis approved the law and at the same time voted to recomend ta
the Shah the appointment of Mosadeq as Premier; the Sendte followed suit,
The Shah acceded, appointing Hosadeq on 29 April; two days later he signed
the nins-point law that in broad terms ordered the government takeover from
the ANC. The company's response was to hold up the May monthly advance
payment of R2 million and to ask that entire of problem be submitted
to arbitration, a request that Iran did not acknowledge. On 25 May the
Sritish government brought the matter Before the International Court of
Justice, the same day it despatehed the 14th Independent Parachute Op{-
yace Group to Cyprus; two Royal Navy crufsers and three frigates were
already im the Persian Gulf area. In addition to the ‘government’ request,
the AIOC asked the ICJ to appoint an arbitrator, as provided in the 1933
concession agreement. The Iranian view of these appeals to The Hague was
sirmple: ‘Tran cid not recognize the competence of the court to deal with
the matter, which concerned Iran's internal affairs.
The United States became seriously involved in these discussions for
the first time in mid-May 1951. A State Department statemant ef 139 May urged
both sides to try to find an agreeable compromise solution; it noted that
the United States recognized the Sovereign right of tran to control its
resources and industries but said that the technical knowledye, capital,
and trensport and marketing facilities were all controlled by the AIOCc.
It further stated that U.S. ofl companies had indicated that they would
not, in the face of unilateral Irantan action against the AIC, be willing
to undertake operations in Iran or provide technicians to work there... The
note pleased neither Iran nor Britain, which was the object of U.S. pressure
to accept the nationalization concept and work toward a compromise. At
President Truman's urging, conveyed through Ambassador Grady in Tehran and
Page 88 (page 88 of the original)
CO1384460
SECRER~ APPERSIY A
by letiers to Prime Minister Atlee and Premier Mosadeg, the British
agreed to send a delegation and the lranians agreed to accept it,
‘Talks got underway on 14 June, with the Iranjans auacnding that
the ALOC hand over 75% of net of] revenues since 20 March and put the a
bac
other 25.4 inte a bank, presumably to be eventually paid,as compensation,
The Sritish, 5 days later, Proposed that a new company be established
by the AIOC to operate the of] industry on behalf of Iran; the profit
Split would bs 50-50. No Compromise between these two points of view
Sppsared possible, and on 2] June the Sritish went back to the If3 with
a request for an injunction to halt the nationalization process until]
the court had ruled on the original U.K. application. Sines Iran had
already refused to recognize the court's jurisdiction, it was not repre-
sented when the court issued an order to maintain the Status quo as of
May 1951, with a Board of Supervision consisting of two Iranians, two
Sritons, and one individual of another nationality empowered to run the
industry,
Iran ignored this order and prepared to move the managers of the
National Iranian 341 Coinpany (NIDC) into Abadan, while the aAlOC began to
slow down the output of the refinery and prepare for evacuation, Expert
of ni] stopped, and in the face of an antissbotage law introduced in the
Majlis, the British staff résiyned, Mosadeq wrote to President Truman on
27 June, complaining about the 3ritish attitude and the actions of the
British technicians, whom he wished to retain a™s contract employees to
run the oi] jadustry. Truman's reply on 9 July stressed the U.S. desire
for a peaceful settlement anc urged Mosadeq to yo along with the ied
order; he also offered to send his foreign policy adviser, Averel]
Harriman, to Iran to help work out a solution, Nosadeq ayreed to accept
SECRET
Page 89 (page 89 of the original)
SECRET
APOCHOLE A
Haorrdinan as a isdiator, provided that any scheme he suggested would
be consistent with the nationalization law. Harriman's arrival in Tehran
on 15 July was hardly auspicious; in the course of a massive demonstration
against the United States, Tudeh mobs fought with the National Front and
other elements; the police and then the army intervened, and 15 people
were killed, over 200 wounded (the Minister of Interior, General Zahedi,
resigned as a result of the criticism he received over the handling of
the demonstration).
Seeking to find sume common ground for agreement, Harrigan persuaded
Nosadegq to enter into further discussions on how to implement the law,
contingent on the British accepting the principle of nationalization, He
flew to London to arrange for a new British mission to Iran but found the
Labor cabinet insistent on an improvement in conditions in the of1 rea,
including "an end to provocation of Sritish staff." Compromise versions
of the messages between the two governments were worked out by Harriman,
and Prime Minister Atlee and Foreign Secretary Morrison agreed to send
Richard Stokes, Lord Privy Seal, as the head of a high-level deleyation
to Tehran, Stokes! proposal, after preliminary meetings with the Aloc
staff in Abadan, was very similar to the carlier British suggestion that
an A1OC purchasing organization, with Iranian representation, handle the,
marketing of the oil as a monopoly, with profits evenly divided. Tran,
of course, Would not give up the idea of nationalization and said it
would discuss only three points--the purchase of of! for British needs,
AIQC claims for compensation, and conditions required for continued em-
ployment of British technicians. At a private meeting of Harrtisan,
Mosadeq, ond Stokes, the latter suggested that a Eritish general manager
be appointed, to act under direction of the NIQC, The Iranians would not
[ae OA ae ee ANE Ol
fo Owen ae an 10
Page 90 (page 90 of the original)
CO1384460
APPENDIX A
accept this, proposing instead a board of management composed of experts
from countries "with no speéial political interest" in Iran, Stokes
1951
would not even discuss this point and returned to London on 23 August
U.S, Ambassador Srady was replaced im Tehran on 11 September by Ambassador
Loy Henderson, and Mosadeg was advised by Harriman from Washington that
his proposals. were not workable since they did not conform to the practical
and comnercial”aspects of the international of] industry. Iran told the
sal] British staff still in Abadan that it must leave the country within
week fr
sate gon be
We Roy,
and on & Gctober the fast of the AIOC persoried
bad
duly left Iran,
In the meantime, the British government asked that the case be
considered by the U.N. Security Council as a potential threat to world
peace, and on October the Council! agreed to put the question of inter-
vention on its agenda. Mosadeq flew to New York to present Iren'ts case,
The Security Council listened to both sides, debated the British resolution
from 1S to 19 October, and Finally decided to adjourn the question until
after the ICJ had ruled on its own jurisdiction, In the Sritish general
elections shor'tly thereafter, the Conservatives wore returned to power,
with Winston Churchill as Prime Minister and Anthony Eden as Foreign
Secretary; im a speech in Commons, Eden declared there were three elements”
that would be involved in a satisfactory solution to the probleo--first,
the Iranian economy depended on efficient operation of the of] industry;
second, the benefits must be shared between lran and the Gevelopers of the
oll resources; and Finally, fair compansation wust be paid for the act of
nationalization.
ne 1CJ met on 9 June 1952, and the legal arguments eventually were
reduced to the interpretation of the Iranian declaration of 2 Sctober 1930
AAT
Page 91 (page 91 of the original)
APPEYDIX A
vECRET
rrcognizing the Jurisdfetion of the Permanent Court of Jnternstional
Justice (predecessor to the ICJ) tn disputes "arising after the ratification
of the present declaration with regard to situations or Fact relating
directly or indirectly to the application of treaties or conventions
subsequent to the ratification of this declaration." The legal points
at issue were whether the Gispute related to a treaty or convention and,
if so, was it a treaty or convention covered by the ceclaration? The
court Finally ruled that the word "subsequent" referred to "treaties" and
not "situations! and that since the of] concession was not a treaty, it
did not have jurisdiction, The British thus Tost their ICJ case and with
it their chunce to have the Security Council pass on their resolution.
The matter nonetheless remained at an finpasse., While the nations:
involved waited nearly 8 months for the ICJ ruling, other comproini se
solutions were sought. In November 1951, of Fictals of the International
Bank for Reconstruction and Development (18RD) proposed that the bank
Finance, as trustee, the production and refining of Iran's of] and then
sel] it to the AICC at current Persian Gulf oil prices, Iran to receive
payment at those prices, less an agreed ciscount wich would go to the
ATCC, The British were Willing to go along with this if AICC technicians
would be employed, but Iran would not agree to either the technicians or
the discount. The 15RD tried again, proposing a neutral board of manages
ment responsible to the bank which would arrange a bulk export contract
For the sale of of] through established distribution channels; the profits
would be divided three WayS--on2 share to Iran, one to the bulk purchaser,
and one to be held tn reserve by the bank, Nowzver, on the gqusstion of
non-Jranian management, the use of British technicians, und the selling
price of the of], the negotiations ultimately broks down, The 189
Page 92 (page 92 of the original)
|COL384460- meer ee
“APPENDIX A
SECRET
mission returned to New York on 23 Murch 1952. At about the saine time,
President Truman notified Mosadeq that the United States would not give
Iran a loan of $120 inillion at a time when the country had an opportunity
to get “adequate revenue!" from its ofl resources; he thus none too subtly
pressed Mosadeq to sattie the ofl] dispute.
Relations between the Iranian and Sritish governments deteriorated
steadily. Iran “attsapted to sail the of] stored jn the tanks at Abadan
to Italian and Japanese firms, but AIQC action in the courts plus the
cooperation of the international oil industry with the British Him ted
the amounts of oil that could be delivered. In January 1952, Hosadeg
had ordered al] British consulates closed; he Followed that by closing all
forsign information ond cultural centers in Iran, He inade some a ttrmpt
to reach agreement with the British on compensation, but his’ proposals
jncluded large offsetting wmounts for unpaid royalties and other payments
stopped by the cessation of of] production in 1951. Mhen the Uritish in
October 1952 described his final proposals as “unressonable and unacceptable,”
Mosadeq broke of F diplomatic relations with the United Kingdom,
The premicr in the meantime had scored internal political victories
of his own. Reelected by the new Majlis in July 1962, he asked for six
months of emergency powers to rule by decree in order to deal with the
critical economic situation. When the Shah refused, Mosadeq resigned,
and Gavam was appointed in his place; the result was four days of rioting
by both Tudsh and the hetional Front, gavan, rest sped, and on 23 July
Mosadeg again became pranters his political al iy and one of Tehran's best
known religious figures, the mullah Ayatollah. Nashani, was mamed Speaker
of the itajlis, which then voted osadeq decree powers for one year, The
Senate and the Shah concurred, and the stage was set for the anti-Shah
SE CRET
aes
ing
Page 93 (page 93 of the original)
[01384460
fak Yankee ka’ APPEHOIN A
political mancuvering of early 1953, curing which Hossieg permitted the
Tuceh Party and its front ¢eraups considerable freedom, perhaps with the
igea of pressuring the United States to come to Iran's aid, Implied
threats to turn to the Comaunists were contained in a Mosadeq letter of
23 Nay 1953 to President Eisenhower requesting a large loan, and the
Ey seahower reply, as a matter of policy, was cold in its rejection of
this threat and its accompanying bid for help. Cisenhower's Jetter
concluded:
I fully understand that the Government of Iran must determine
For itself which foreign and donestic policies are likely to be most
advantagzous to Iran and the Iranian people. In what I have written,
Iam not trying to aidvise the Iranian Government on its best interests.
IT amanersly trying to explain why, in the circumstances, the Government
of the United States is not presently in a position to extend more aid
to lran or to purchase Iranian ofl.
In case Iran should so desire, the United States Sovernment
nopes to be able to continue to extend technics! assistance and military
aid on a basis couparable to that given during the pest year.
IT note the concern reflected in your Jetter at the present dangerous
situation in Iran and sincerely hope that before it is too late the
Sovernment of lran will take such steps as gre in its power to prevent
a further ceterioration of that situation.
Following the August 1953 coup that overthrew Nosadeq, the of]
cispute was settled along the lines that had been proposed to Mosadsq--
the oil incustry was nationalized, but its operations were directed by a
group of Foreign oil companies. ‘The details of this arrangement were
worked out by a series of conferences, but Herbert Hoover Jr., as special
oi] aleviser to the Secretary of State, had an fisportant role in convincing
the Iranians of the wisdom of dealing with a "consartium.’ Between Hoover's
initial visit to Tehran in dctober 1953 and the announcensnt of a new
agreement in *dgust 1954, Britain and Iran resumed diplomatic relations.
Under the terms of the agreemmt, the National Iranian 011 Coinpany Gele~
gated basic operations in 199,090 squara miles of southwestern Iran to an
international consortium known as Iranian O11 Participants, Ltd., until
ee eoretss PONS,
See atleched map of Tv
Page 94 (page 94 of the original)
(COLES 4460
1975, with an option of extension to 1994. British Petroleun, the.
new name of the AIOC, owned 4, Royal Dutch-Shell 14%, Compagnie
Francaise des Pstroles 6%, and U.S. of] co:npanies 40% (7% each to Standard
O11 Company of New Jersey, Standard di1 Company of Cal ijfornia, Socony
Mobil O41 Company, The Texas Company, and Gulf di1 Corporation, and 5%
to Iricon Agency, Ltd., comprised of nine small U.S. of] companies).
Since 1954 the N1OC has carried out a number of operations of its own,
and, after the passage of a new of] law in 1957, has allowed Italian,
U.S., and Canadian companies to explore for oi] and conduct operations
outside the consortiumals territory. The consortiuin has produced 90% of
Iran's ofl, however, and the rate of production has been the highest in the
world, increasing at an annual rate of almost 14% in the 1960's and
reaching 1.7 million barrels in 1971, whichwas 10% of world output and
hate or
second largest production in the Middle East. Price increases levied by
Tran and other Persian Gulf members of the Organization of Petroleum
Exporting Conpanies in 1971 and 1972 resulted in an estimated 214 billion
For those years, and the Middle East oflcrisis of late 1973 raised prices
even higher. Iran is currently very concerned about its estimated reserves,
which at current rates of extraction may barely last until 1994, 9i1-
accounts for 23% of Iran's GNP, including some 85% of its foreiyn exchange
earnings and 60% of its budyetary revenues,
SEGRE.
Page 95 (page 95 of the original)
Bibliography
Cottam, Richard. Nattonalism in Iran.
Pyttsburgh, Pa.; 1964
Ford, Alan W. The Anglo-lIronian Oj1 Dispute of 1951-1952
of California Press; Berkeley and Los Angeles; 1954
University of Pittsburgh Press;
Universi ty
Heravi, Ashei. Trantan-American Diplomacy.
Crooklyn, 1969
(Asriove, John. Arab Nationalism and Sritish Imperialism
Press; London; 195]
Theo. Gous' Sons, Inc.;
The Cresset
Iran--A Short Political Guide. Frederick A. Praeger;
Elwel}-Sutton, Lawrence P. Persian Gil--A Study in Power Politics.
Lawrence and Wishart Ltd.; Loncon; 1955.
\“WLonezowski, George. Sil and State in the Middle East.
University: Press; Ithacag N.Y.5 1 1960.
Cornel]
AAT
Page 96 (page 96 of the original)
CO1384460
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Map, Appendix Ay
oes
Batty” + td BOVAOARY RSPR ERENTATOON Te ae
em ty ROT KEGESEAMILY AUTHONTT ATIVE
owoctink
U.S.
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Bandare Pahlavi
Maghnad
afghanistan:
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APPENDIX G
_Riographic Ber
MOHAMMAD MOSADEQ? i
The bare bones of ‘the life of the man who was Premier of Iran from
ye oe, these:
23 April 1951 to 19 August 1953 and who was the target of TPAUAX serine
He was bern about
1331 (1873 or 1379 are probably more accurate dates, but 1331 was always
poaxi many
given as his official birth year because of the restrictions on the alge
of Majlis deputies) in Tehran, his mothenbeing a member of the ruling
Qajar dynasty and his father the Minister of Finance for some 36 yoors.
His Family background was thus the elite, wealthy, landowning class.
His secondary education beret complete, Hosadeq was sent to Khorasan
as the Shah's financial agent while barely out of his wilddlte tsens.
In 1906, Forced into exile because of his role in the Constitutional
Revelution that year, he went to Europe to study law at Paris, Liege,
ang Heuchatel, earning his LL.D. From the last institution in 1914,
Returning to Iran, he was elected to the Majlis in 1915, serving on its
Financial comaittee., As Under Secretary of Finance in 1917, he resigned
after only a few months in of fics because he was prevented from carrying
out reforms in ths notoriously padded payroll system, He becaine governor
of Fars Province in 1921, but his criticism of Reza Shah led to arrest
ia 1930 and exile to the villages. He was again arrested in 1941 but was
released in the general political amnesty after Reza Shah's abdication,
Hosadeq was again elected to the Majlis in 1944, where in 1947 he organized
the National Front, a small, tightly knit, and highly influcatial Groups
AS a member of the ofl commission, he gained in influence not onty in the
Aajlis but ainong the people, and his foril 1951 appointment as Pranier
vas at the Sajlis! request. Fron then until his removal from office in
August 19593, he concentrated his energies on expropriating the aritish-owned
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APPENOIX OD
oil inuvustry in defiance of Wostern attempts to negotiate a settlemmnt
that stopped short of complete nationalizetion. Sentenced to three
years in prison in a post-coup trial, he was eventually pardoned by the
Shah in August 1956, but he was forced to remain in his village of
Ahnadabad under virtual house arrest for the 11 years until his death
in Harch 1367. He had suffered from cancer of the jaw and finally
succumbed to internal bleeding after two operations in Tehran.
often biaarre
The above facts ido little to explain his/ behavior as a
politicisn, wy
“most of his actions, even his most cinotional and
“apparently irrational ones, were probably well calculated. The popular
world jinagt of him as an enfeebled old man, given to hysterical weeping
and fainting spells, served his own purposes and gave him tremendous
leverace among his people. He used the accepted belfef that he: was
iil and weak to avoid things or people he did not want to Face, and
his apparent physical debility added to the drama of his personality,
even
wnich in public speeches was capable of moving Sis opponents.
iosacceq's power rose from his consummate ability to appeal to
national aspirations and emotions, By attempting to deal with a heated
political problem in logical, rational terms based on econamnic facts,
the Oritish wore unable to achieve anything in the of] dispute but do
unify the people of Iran, f8eza Shah had held power for 20 yeurs by
appeal, to latent Iranian nationalism; Mosadeq used this awakaned nationalism
aid the desire for independence to keep himself in power ana to defy
Britain. His speeches and programs appealed to social discontent,
xenophobia, religious fanaticism, and national pride im past glories.
Nis enormous cganble on the ofl issue, based on his belief that Sritain
SEGRE.
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APPENDIX B
und the United States would not let Iran go Communist, was part vanity,
part Islamic fatalism. He utilized foremost the technique of opposition»
his «nine-man National Front opposed every government in power, whe ther
under Salted, Mansur, Razmara, or Ala--and then, once Premier, his single
plank wes opposition to the British over the of] question.
Mosadeq was antagonistic to the Shah for many reasons: his nother
was a Nafar, whose Family was over thrown by the Shah's father, the same
man that had exiled and then imprisoned him; in addition, he had Teng
believed in constitutional reform to reduce the power of the monarchy.
Me opposed the army because it had brought Reza. Shah to power und was
the main source of support for Mohammad Reza Shah; by retiring senior
officers and putting in his own Chief of Stuff, the young, French-trained
Brig.%an. Taqi Riahi, he had obtained a deyree of controlfover the army.
But, by so doing, he sat the stage for the officer corps to turn @cainst
him. His own extrems nationalism, fantasies of oanipotence, ond jack
of conscitace--in manipulating Tudeh, at the risk of it getting out of
control as it did in the streets of Tehran on 18 August, were the
seeds of his own eventual downfall, 8ut he was a inost unusual man,
one whose character caught the world's Fancy, even as he drove his country-
men toward disaster, At any time in 1951 or 1982 he could have had the
Same compromise through which his successors guined a nationalized oi]
industry efficiently run by foreign experts to yive Iran the revenue
that financed the Shah's White Revolution. He chose to gamble on total
victory over Orituin, the United States, and the international of]
incustry--and he lost,
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APPENDIX 8
SECRET—-
MAJ. GEN, FAZLOLLAH ZAHEDI
Born in 1897 in Hamadan, Zahedj graduated from the Hi litary School
in Tehran and served during the years of World War I and the postwar
period under Reza Khan, then a colonel in the Cossack Brigade® As a
combat officer, he was decorated for action against assorted bandits
and insurgents, including rebellious Kurds, Lurs, and Turkomans. He
had become a division commander by 1942, after service as head of the
Gendarmerie and the Tehran Police, but he was arrested by the British
that year for pro-German activity (his name was found in the papers of
Franz Mayer, a principal Nazi agent in Tehran, as an officer who would
protect German agents) and deported to Palestine, where he was held
until 1945. Despite his arrest and subsequent three years in a detention:
camp, he did not become fanatically anti-British as did many xenophédbic
Iranians. Returning to Tehran after the war in 1945, he was given ad
command of the Fars Division and promoted to major general, In 1948,
as Inspector General of the army, he was. severely injured in a tank
accident, losing four ribs, and after 7 months of medical treatment jn
Germany, some of it by U.S. Army doctors, he was retired in May 1949,
The Shah made him his honorary adjutant, and in November 1949 appointed
him Director General of the Tehran Police. In April 1951 Zahedi became
Minister of Interior in the Ala cabinet and was retained in that post
by Mosadeq when he became Premier. He resigned in August 1951, Following
adn
There was a SosSack Brigade in the Persian Army solely because Nasr-~
ed-Ojn Shah visited Russia in 1878 and was provided with a Cossack
escort by the Czar. The Shah was so impressed by the Cossacks that he
asked the Czar to send him Xussian officers to organize such a unit in
his own army. The Brigade retained Russian senior officers and noncoms
until 1920, and as long as it was in existence, it was the best trained
and most professional unit in the army
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the anti-U.S. riots in Tehran on 15 July in which the mob got out of
hand and the army had to be called in to fire on them, with the result
that many died and hundreds were wounded, on both sides. He was a prime
suspect of the Mosadeq government as a potential coup leader and was
briefly arrested in February 1953.
ARDESHIR ZAHEDI
Born in Gecember 1927, General Zahedi's son, Ardeshir, was educated
at the American University in Beirut and at Utah State University where
he earned a BS degree in 1950. Because of his training and language
ability, he served with the Rural Improvement Commi sston which was
administering U.S. technical assistance until he was forced to resign
in 1952 by Mosadeq. During the planning and operational phases of
the coup, he acted as the communications channel to his father and
performed very well under difficult circumstances, He was married
for a time to the Shah's daughter by Queen Fawzia and has newer
remarried singe his divorce. He has retained the Shah's-fa\or and,
in fact, introduced the Shah to Farah in May 1959, the girl who later
becams Queen and mother of the Shah's sons. Ardeshir was the Iranjan
Ambassador to the United States in 1960-62 and returned again in April
1973 to the pest In the interim, he was Ambassador to the United
Kingdom, 1962-67, and Minister of Foreign Affairs, 1967-71.
MAJ, GEN, NADR BATMANGELICH
General Batmangelich (also spelled Batmanqilich or Batmangelij) was
born in Tehran about 1905 and educated in Germany, the Iranian Military
School, and the German Staff College, He fought in the Luristan and
Fars tribal campaigns and was interned by the Allies fran August 1943
Bo§ Poa
Arr enix Bp oe
Page 102 (page 102 of the original)
to June 1945. He visited the United States on a purchasing mission in
1950 and was put on the retired list in 1952 by Mosadeq. Named Chief
of Staff of the army immediately after the 1953 coup, he retained
that post despite Friction with Premier Zahedi until December 1955
when he was made Ambassador to Pakistan to ease him out of the army
command, Clashes with General Hedayet, Chief of the new Supreme Staff,
were the probabl@ cause of his reassignment. He then became Ainbassador
to Iraq in January 1957, was Minister of Interior in 1958-59, and became
Adjutant to the Shah gn 1555,
of Khorasan, 1965-68, he retired to privete life. He had ser ved as
Permanent Iranian Delegate to the CENTS Military Committee before
retiring from the army 1965.
Batmangelich never lived down his behavior on the night of 15
August, details of which were known only to few insiders in the Zahedi
coup group. He failed to take his objective, the Staff Headquarters,
and breaking down, he either turned himself in or was arrested by troops
loyal to Mosadeq. There was reason to believe he talked Breely to
interrogators, providing them with a list of other officers inwolsved in
the coup.
8.6
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APPENDIX B
MOHAMMAD REZA SHAH PAHLAVI
When Mohammad Reza became Shah jn 1941 at the age of 22 following
his father's abdication, Iran was occupied by foreign troops--Soviet,
British, and American--and its army was demoralized. He had no selid
power base and no political machine, and as a result he spent the first
10 years of his reign in conflict with the traditional political power
Structure bent on regaining the influence it had lost to Reza Shah, The
military coup that ousted Mosadeq in August 1953 was thus a major mile-
StTaene on t were por 63co
whe
wie
bolife
Mohammad Reza was born on 26 October 1919; he studied 6 years as a
cadet at the Military School of Tehran and then went to Switzer} and in
1931 for his secondary education. Returning in 1936, he attended the >
Iranian Military College, from which he graduated 2 years later as a
second lieutenant. His first marriage, in 1939, was to Princess Fawaia
of Egypt, sister of King Farug, and a daughter, Shanaz,was the only child
of this marriage. Divorcing Fawzia, he married Sorya Esfandiari, a half-
German, hal f-Bakhtiard beauty to whom he was very devoted, but the marriage
was childless and the throne needed an heir. After the inevitable diverce,
he married Farah Diba in 1959, and Crown Prince Reza was born jn 1960,
Followed by two daughters and Prince Ali Reza, securing the succession
of the Pahlavi line.
Although various sources lcriticized the young Shah as suspicious
and indecisive to the point of permanent instability, others saw his
Strengtas., An OSS report in 1943 said:
Kohammad Shah is a man of much stronger purpose than is
generally realized, He stands almost alone, distrusts most
advisers, is honest in his efforts to secure a democratic form
of government for Iran, He is not easily influenced and cannot
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SECRET
be shaken, Installed as a figurehead during the 1941 crisis,
he may yet surprise the factions in his country and the outside
powers. He thinks along Western lines, and he is inalienably
attached to his Iranian army. The military budget is half the
national expenditure just now. Yet, of course, the army is
almost his only backing within Iran.
In 1951, also on the positive side, the U.S. Embassy in Tehran
noted:
It is important to observe that the Shah, in ten years of
political wavering, has nver turned against the intellectual
interests, sports, and hobbies which he learned from European
sources. His mind remains alert and his principles, although
often betrayed, retain great similarity to Christian ethics
and philosophy. The tragedy in the conflict of this healthy
intellect against the vicious Persian scene curries some
triumph since the Shah, so far, has not become corrupted.
lhe Shah took the successful coup of 1953 as a popular mandate to
seize control of his country from the political factions and the ambitious
generals; he has never since allowed them to threaten his position or
his program. His hasty flight to Baghdad and Rome was either forgiven
or forgotten in the triumph of the moment, and although General Zahedi
was often angered by the Shah’ s vacillation and lack of decisiveness,
those very characteristics enabled him to frustrate the volatile Zahedi
and eventually bring about his resignstion and voluntary exile. Given
confidence by the popular support he saw during the coup, he pressed
ahead to consolidate his power, carefully controlling political activity,
which he has said can be permitted to function freely only after economic
and social development have taught the people to act responsibly, His
reforms launched in 1962 as the "White Revolution’ have accomplished much;
without the power and prestige of. the throne coupled with the Shah's
authoritarianism and determination, the reforms and development probably
could not have taken place.
The rapid escalation of of] prices in 1973-74 has enhanced the Shah's
prestige as spdkesman for the more extreme oil-producing countries, and he
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SETRET
has been quick to resent criticism of the view that oil is the main»
resource of those countries, aresource that cannot be replaced and
that, must be conserved, if only by the pressure of cost. The situation
has clearly made the Shah a man whom the world listens to, and he
has made the most of it.
SEGRE
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