Carroll Quigley - Tragedy and Hope - A History of the World in Our Time

As soon as Britain lost its case in the International Court of Justice and it became clear that Iran would go ahead with its nationalization, Britain put into effect a series of reprisals against Iran which rapidly crippled the country. Iranian funds in Britain were blocked; its purchases in British-controlled markets were interrupted; and its efforts to sell oil abroad were frustrated by a combination of the British Navy and the world oil cartel (which closed its sales and distribution facilities to Iranian oil). These cut off a substantial portion of the Iranian government’s revenues and forced a drastic curtailment of government expenditures.

To deal with this situation, especially to cut the military budget, Mossadegh, in July 1952, asked for full powers from the Assembly. He was refused and resigned, but the Ahmad Ghavam government which replaced him lasted only six days, resigning under pressure of pro-Mossadegh street riots. Back in office, Mossadegh obtained dictatorial power for six months. He broke off diplomatic relations with the British, closed down nine British consular offices, deported various British economic and cultural groups, and dismissed both the Senate and the Iranian Supreme Court, which were beginning to question his actions.

By that time (summer, 1953) almost irresistible forces were building up against Mossadegh, since lack of Soviet interference gave the West full freedom of action. The British, the AIOC, the world petroleum cartel, the American government, and the older Iranian elite led by the shah combined to crush Mossadegh. The chief effort came from the American super secret intelligence agency (CIA) under the personal direction of its director, Allen W. Dulles, brother of the secretary of state. Dulles, as a former director of the Schroeder Bank in New York, was an old associate of Frank C. Tiarks, a partner in the Schroeder Bank in London since 1902, and a director of the Bank of England in 1912-1945, as well as Lazard Brothers Bank, and the AIOC. It will be recalled that the Schroeder Bank in Cologne helped to arrange Hitler’s accession to power as chancellor in January 1933.

Managing Mossadegh’s fall in August, 1953, was considerably easier, since he left his defense wide open by an attack on the prerogatives of the Iranian Army, apparently in the belief that the army would be prevented from moving against him by his influence over the mobs in the streets of Tehran. But throughout the Near East, street mobs are easily roused and directed by those who are willing to pay, and Dulles had the unlimited secret funds of the CIA. From these he gave $10 million to Colonel H. Norman Schwartzkopf, former head of the New Jersey State Police, who was in charge of training the Imperial Iranian Gendarmerie, and this was judiciously applied in ways which changed the mobs’ tune considerably from July to August 1953. The whole operation was directed by Dulles himself from Switzerland where he was visited by Schwartzkopf, the American ambassador to Tehran, Loy Henderson, and messengers from the shah in the second week of August 1953.

Mossadegh purged the army of opposition elements without complete success in the spring of 1953, going so far as to arrest the chief of staff on March 1st. In July he sought to bypass the Assembly and demonstrate his irresistible popular support by having all his supporters resign from the Majlis (thus paralyzing its operations), and held a plebiscite in August to approve his policies. The official vote in the plebiscite was about two million approvals against twelve hundred disapprovals, but Mossadegh’s days were numbered. On August 13th the shah precipitated the planned anti-Mossadegh coup by naming General Fazlollah Zahedi as prime minister, and sent a messenger dismissing Mossadegh. The latter refused to yield, and called his supporters into the streets, where they rioted against the shah, who fled with his family to Rome. Two days later, and-Mossadegh mobs, supported by the army, defeated Mossadegh’s supporters in Tehran, killing several hundred. Mossadegh was forced out of office and replaced by General Zahedi. The shah returned from Italy on August 22nd.

The fall of Mossadegh ended the period of confusions which had ensued since the forced abdication of Reza Shah in 1941. From 1953 on, the shah and the army, backed by the conservative elite, controlled the country and the docile Majlis. Two weeks after the shah’s counter-coup, the United States gave Iran an emergency grant of $45 million, increased its annual economic aid payment to $23 million, and began to pay $5 million a month in Mutual Security Funds. These payments reached a total of a quarter of a billion dollars over five years. In return Iran became a firm member of the Western bloc, joined the Baghdad Pact (Central Treaty Organization) in 1955, and provided a close base for surreptitious actions (such as U-2 overflights) against the Soviet Union. The Communist-controlled Tudeh Party, the only political party in Iran with the established doctrine and organized structure of such a party in the Western sense, had been officially banned in 1949 but had supported Mossadegh from underground, where it was relentlessly pursued after 1953.

By 1960 the shah felt his position sufficiently strong to try to pursue a policy of his own, and began to shift his alignment from the older elite group of landlords and army toward the more progressive groups of urban middle-class professional peoples which had supported Mossadegh. The chief evidence of this was an effort to adopt, more or less as his personal policy, a program of agrarian reform which sought to restrict each landlord’s holdings to a single village, taking all excess lands over for government payments spread over ten years and granting the lands to the peasants who worked them in return for payments spread over fifteen years. The shah’s own estates were among the first to be distributed, but by the end of 1962 over five thousand other villages had also been granted to their peasants.

In the meantime the oil dispute was settled by a compromise in October 1954. The exploitation and marketing of Iran’s oil was taken over by a consortium of existing petroleum companies from the world cartel and some American “independents,” with a 40 percent interest held by AIOC itself. The previous disputes were compromised without too much difficulty once it was recognized that both sides had a common interest in preserving the world structure of managed oil prices in order to ensure substantial incomes to both. The incomes to Iran were considerably increased, averaging about $250 million or more a year.

THE NEAR EAST

The oil crisis in Iran was limited in scope and duration. Neither of these can be said of the great and continuing crisis experienced by the Arabic Near East in the twentieth century. The crisis of these countries was a crisis of the system itself, the collapse of Islamic civilization culminating in the disappearance of the Ottoman Empire which ruled over it in its later stages. The Near East today is the wreckage of that civilization, and as such presents problems far greater than the simple one of inadequate natural resources. Rather, the problem is a triple one of resources, of creating a workable and viable social organization, and of developing patterns of belief, outlook, and feelings which have some constructive value for human survival.

In this colossal problem the influence of the Soviet Union, or of the Western Powers, or even of the Cold War conflict itself are relatively minor matters which could be reduced to much less significance if the peoples of the area could get themselves organized, both externally and internally, into some viable arrangement of living patterns. The same problem is being faced throughout the broad band of countries from Indonesia and Japan, across China and India, throughout Africa, to Latin America; but almost nowhere is the problem more acute, and apparently more hopeless, than in the Near East. This arises from the area’s strategic importance between Asia, Africa, and Europe, its nearness to the Soviet Union, its central position in the air routes and the water communications of the world (symbolized by the Suez Canal), and its great significance in the world’s petroleum supplies.