History of Iran U.S. Relations: 1953 Iranian coup d'état, 1979 Iran Hostage Crisis, Iran-Contra Affair, and More

 This is a college history paper I did last year for my International Relations class. Its about United State Iran relations in the 20th century. This was my final exam assignment instead of a test. I passed the class with an A on the assignment and an A in my class. This is a good thing to use for anyone doing a paper on Iran.

20th Century Iran U.S. Relations

The first major conflict with the United States and Iran happened on August 19, 1953. The Prime Minister of Iran Mohammed Mossadegh, a nationalist, was ousted in a US-sponsored coup in Iran. The overthrow of Mossadegh was another one of the many covert operations in the Cold War. The CIA was to orchestrate the overthrow of the Prime Minister who was planning to nationalize his oil fields. After World War II, U.S. oil companies had gained a large share of the Middle East’s oil. They had produced about 50 percent of the Middle East’s oil also providing Europe with almost 90 percent of its oil. The largest oil firm in Iran was the Anglo-Iranian Oil Company [AIOC], which was already owned by the British.

The nationalists of Iran saw AIOC as a symbol of western imperialism. Mossadegh created the anti-AIOC coalition called the National Front. The Front demanded new rules for the British-owned oil company because it was exploiting Iranian resources and taking huge profits out of the country. In 1950, AIOC’s profits were 200 million pounds but Iran received only about 8 percent. AIOC did not even allow Iranian officials to examine their financial books. In late 1949, the Britain had tried to make up with the Supplemental Agreement, to raise royalty payments from 22 to 33 cents per barrel. The Iranians were not impressed, particularly since the United States had come to an arrangement with Saudi Arabia to provide a fifty-fifty split on its oil.  Mossadegh had then officially called for the nationalization of the AIOC fields. Britain failed to compromise. British and Americans were determined to remove him from power. Since 1946 the U.S. had considered Iran to be a vital interest in the Mid-East, citing its resources, strategic location, proximity to the USSR, and exposure to political subversion.

By the early 1950s, as the oil nationalization progressed the U.S. became more involved. In late 1951, AIOC had turned to the British Secret Intelligence Service [SIS] on overthrowing the Mossadegh. The SIS lobbied the CIA for support of a coup. Mossadegh was falling under increasing pressure, from the British, the Americans, and at home. Just, after Eisenhower was inaugurated as president the CIA started it’s destabilization campaign in Iran, paying opposing groups to demonstrate against Mossadegh. Eisenhower told the National Security Council that the U.S. had to take action in Iran, citing a Soviet threat, which was virtually non-existent in Iran, as the justification. "" If I had $500,000,000 of money to spend in secret,"" the president said, ""I would get $100,000,000 of it to Iran right now."" The Prime Minister wrote to Eisenhower asking the United States to stop opposing his government, and accused the U.S. of having "given financial aid to the British Government while withholding it from Iran and it seems to us it has given at least some degree of support to the endeavors of the British to strangle Iran with a financial and economic blockade." Iran, therefore, ""had no choice"" but to nationalize oil and remove the AIOC operating there.  By summer 1953, the pressure against the government was mounting, and the CIA used a series of psychological operations similar to those it would use in Guatemala, successfully isolating Mossadegh. 

On August 19th, Mossadegh was overthrown; rather than call out troops to suppress the uprising against him and harm Iranians, he left office. The Shah of Iran was then placed into power. Over time, with significant amounts of American money and a U.S.-backed security apparatus, the Shah would repress his own people and create a favorable climate for American corporate interests. Iran and other nationalist governments had learned hard lessons about challenging the U.S. role in the world economy. (Byrne 2004)

In Iran throughout the late 1970’s Shah Reza Pahlavi remained in power. In 1977 he passed censorship laws which caused a massive poor in of demonstrations and dissents throughout the country.  There were calls for a new regime along with human rights, more freedom, and more democracy. Within the Iranian revolution there were two distinct movements. The first was the religious movement headed by the ulama ; calling for the return to a society based on the Shari'ah and headed by an ulama administration. The second was a liberalization movement calling for Westernization along with greater democracy, economic freedom, and human rights. As the revolution proceeded, these two groups gradually merged to form a unified front.

An influential leader within the Muslim faith was Ayatollah Khomeini, an exile who no longer lived in Iran.  With cassette tapes of his sermons, his message was spread encouraging Iranians to fight for a Muslim republic. The spark that got the U.S. to take more of stand on the Shah staying in power was a protest in Qumm on January 9, 1978. Students were protesting the visit of President Jimmy Carter and the government keeping Ayatollah Khumayni in exile. They demanded that Khumayni be allowed to return to the country. The Shah launched an attack on the protesters in response. His police opened fire on the students and killed seventy. The Shah was losing control. Another massacre "Black Friday," happened on a Tehran demonstration killing several hundred people. The Shah declared martial law and imprisoned as many opposition leaders as he could lay hands on. Secretary of State Syrus Vance and President Carter agreed that the Shah had to go and had hand-picked successor would take his place.  While the U.S. was trying to solve this conflict, the Shah fell ill of cancer. Jimmy Carter reluctantly allowed the Shah into the United States to undergo surgical treatment at a New York Medical Hospital. On January 16, 1979, the Shah left Iran for good. On February 1, Khumayni returned to Iran to a welcoming crowd of several million people. The Revolution was over and Khumayni declared a new Islamic Republic. (Moaddel, 1994)

When the Shah came to the United States to receive cancer treatment, a protest on the U.S. embassy in Iran was taking place. In November of 1979 under the encouragement of Khomeini student protestors took sixty-nine American hostages. This is what became known as the Iranian Hostage Crisis. Military action was too risky, so Carter tried to put pressure on Iran by economic sanctions, and froze its assets in the U.S. throughout his term. Carters’ approval ratings dived for he was facing the waterloo of his presidency.

Finally, in September of 1980, Khomeini's government decided to end this matter. There was no more advantage to be gained from further ongoing sanctions, making it harder to straighten out an already chaotic economy. There were rumors that Carter might pull out an "October Surprise" and get the hostages home before the election but he was not able to. (Houghton, 2001)

In 1981, Ronald Regan took office.  Minutes after the inauguration, the hostages were released in exchange for the unfreezing of Iranian assets, which Carter had frozen after the embassy raid.  The Reagan administration was the most anti-Communist administration since Harry S. Truman.  While American relations with the Soviet Union were improving, Communism was still affecting El Salvador, Grenada, and Guatemala. Reagan grew concerned at their rise because they were disrupting neighboring countries. The situation in Central America was seen by many in the administration as another Vietnam or Cuba. With Reagan’s disgust for Communism and its potential to reach as close to the U.S. as Central America, Reagan felt it was time to act. 

            At this time, two groups of anti-communist forces began forming.  In Costa Rica, 2,000 National Guard members began recruiting farmers to join the cause along with an opposition group in Honduras.  Both groups were referred to as Contra forces.   From 1985 to 1990, the Reagan administration had created and funded these anti-Communist forces with weapons sales to Iran known as the Iran Contra Scandal.

In 1986, U.S. National Security Council staff members planned using Iran in order to send funds to the Contras. Iran asked the U.S to sell them weapons. The Reagan administration complied and agreed to send the profits to the Contras. National Security Advisor, Robert McFarlane saw it as a way to improve relations with Iran and Lebanon. Reagan’s motive for selling the weapons was to push for the release of American hostages held in Lebanon by Iranian terrorists. Iran agreed to release them in exchange for the weapons.  Secretary of Defense Caspar Weinberger and Secretary of State George Shultz opposed the exchange. CIA Director William Casey was in favor. 

This scandal came to light when McFarlane reported to a Lebanese newspaper that he traveled to Tehran to negotiate the release of hostages being held in Iran to escape to Lebanon.  This article resulted in exposing all the details of the deals. The public and congressional outcry and it was clear that they had to stop the dealings. Attorney General Edwin Meese found that the Iranians paid $30 million, but only $12 million reached government officials. Poindexter was the official responsible for the allocation of money from Iran to Nicaragua and purposely withheld that information from the President.

No one was sure what Regan’s role exactly was.  Reagan denied knowing anything concerning the sales but conceded that “mistakes had been made”. The entire negotiation was designed in such a way to keep the President or Vice President George H. W. Bush in the dark as much as possible to sustain plausible deniability, meaning that if they came under question, they would not be able to give any details while remaining honest.

In November 1986, Reagan went on national television and denied there was such a deal. One week later, he retracted his statements and insisted that the agreement was not an exchange of weapons for hostages.  Reagan’s reputation suffered as a result, polls showed that fourteen percent of Americans believed the president’s statements. 

Several influential members of the White House in this scandal were charged and indicted on charges of lying to Congress, perjury, and violating constitutional amendments.  Lieutenant Colonel Oliver North explained that part of the profits had gone to the Contra forces with explicit approval from National Security Advisor Admiral John Poindexter and assumed approval from President Reagan, who came under harsh questioning from the press.  North was later found guilty of lying to Congress.  President Reagan himself was questioned.  Even though questioning never made his exact role in the ordeal completely clear, the Tower Commission Report that investigated the scandal placed much of the responsibility on the President. (Hamilton, 1987)

When President Clinton took office in 1993, the United States had no direct diplomatic relations with Iran. Any prospect of improvement was complicated by sanctions dating back to the 1979 U.S. Embassy takeover and an American public intensely distrustful of the Islamic Nation’s policies. Iran was also the major sponsor of Lebanon's Hezbollah, which actively opposed the Middle East peace process and engaged in regular clashes with Israeli forces in Lebanon. It no longer held American hostages, however, and it suspended direct anti-American terrorist attacks.

Shortly after Clinton’s inauguration, his administration announced that its policy toward Tehran would be part of a larger "dual containment" in the Gulf, to limit the threats posed by both Iraq and Iran to U.S. interests and allies. Containment was based on the premise that both Iraq and Iran were hostile powers and that the balance of power in the Gulf was inherently unstable. In the 1980s, the United States had tried to play the two countries off against each other. But Iraq emerged from the 1980-1988 war with Iran as the more powerful country, unchecked by any of its neighbors. The imbalance allowed Baghdad to invade Kuwait in 1990 and claim the oil-rich city-state.

The new containment strategy acknowledged the many substantive differences between the threats from Iran and Iraq; it recommended diverse tactics to deal with each. Iran would be contained by a military deterrent based in the Gulf states, targeted economic sanctions to discourage foreign investment in Iran, and diplomacy to discourage Iranian support for terrorism and pursuit of a nuclear capability. But Clinton left on the table the Bush administration's offer to engage in direct government-to-government talks without preconditions.

Throughout both his terms, Clinton faced several crises in Lebanon between Israel and the Iranian-backed Hezbollah. Hezbollah seemed determined to undermine Israel's separate negotiations with the Palestinians and Syria, one of Clinton's highest foreign policy priorities. Tensions repeatedly heated up in Lebanon at critical junctures. Washington suspected the Iranian Revolutionary Guards, who had been deployed in Lebanon since 1982, of fomenting trouble, although Israeli actions occasionally into Hezbollah's hands. The White House often had to rely on Syria, Iran's ally, to defuse crises in Lebanon. This specter of Iranian-backed terror grew worse at the end of Clinton's first term.

On June 25, 1996, a truck bomb exploded at the U.S. Air Force facility in Khobar, Saudi Arabia, killing 19 Americans and wounding over 350 Americans, Saudis, and other nationals. Intelligence indicated the bombing was the work of Hezbollah al Hijaz, a Saudi Shia group with close links to Iran's Revolutionary Guards and Lebanon's Hezbollah. But the intelligence was uncertain about the Iranian senior leadership's involvement. The Clinton administration prepared to conduct military retaliation against Iran, but quickly recognized any operations could escalate and even trigger full-scale war.

The White House instead sought additional intelligence on Iran's role, while warning Iran to desist from further attacks, hardening American installations in the Gulf, and deploying U.S. warplanes to a remote air base in the Saudi desert. The administration also took targeted actions against the Revolutionary Guards and Iranian intelligence personnel around the world. In early 1997, the CIA's Operation Sapphire identified Iranian intelligence officers in numerous countries and disrupted their activities. Iran never acknowledged its role in Khobar, but the Hezbollah al Hijaz organization was dismantled in the late 1990s. In 2001, the Justice Department charged that several members of the group were involved. The indictment noted the support of Iran's Revolutionary Guards and Lebanon's Hezbollah in the attack.

The surprise victory of Mohammad Khatami in the 1997 presidential elections offered the second Clinton administration an opportunity to restore U.S.-Iran relations. Khatami signaled early in his term that he was open to a new relationship and wanted to bring down the "wall of mistrust" with the American people. President Clinton and his national security team were eager to take advantage of this possible opening peace talk.

Over the next three years, Clinton sent a series of public messages affirming his interest in improving people-to-people relations. His messages at Nowruz (the Iranian new year) and Eid al Fitr (end of Ramadan feast) expressed appreciation for Iranian culture. On the Eid, in January 1998, Clinton said in a videotaped message that the United States "regrets the estrangement of our two nations...and I hope that the day will soon come when we can enjoy once again good relations with Iran." U.S.-Iran sports exchanges received high-level attention at the White House; an American wrestling team that traveled to Iran was photographed with the president in the Oval Office. Sanctions on imports of various Iranian goods, including carpets and pistachio nuts, were also gradually eased.

Clinton wanted to go further and open direct diplomatic relations with Tehran. Several efforts were made during his second term. The administration sent one message through the Swiss Embassy in Tehran, which hosted the U.S. Interest Section, in October 1997. It invited Iran to meet with three U.S. officials -- Undersecretary Thomas Pickering, Special Assistant to the President Bruce Riedel, and Deputy Assistant Secretary of State David Welch -- without preconditions at a venue chosen by Iran. The message was leaked to the press in the United States; Iran did not respond with a positive answer.

Another attempt was made via Saudi Arabia. During a May 1998 visit to the kingdom, Vice President Al Gore asked Saudi Crown Prince Abdullah to broker direct dialogue between Washington and Tehran. Again the Iranians deferred and stressed that people-to-people dialogue needed to precede official talks. (Brzezinski 2004)

The United States and Iran did talk directly in multilateral forums. The most active discussions centered on Afghanistan at the United Nations. The so-called 6-plus-2 dialogue brought together Afghanistan's six regional neighbors with the United States and Russia. Secretary of State Madeleine Albright attended one meeting after the United Nations pledged to persuade her Iranian counterpart to attend, thus encouraging a high-level dialogue. But he did not show up for the meeting.

The Clinton administration was frustrated by Khatami's preference for people-to-people rapprochement, a limitation produced by an internal power struggle with Iranian hardliners who opposed an official dialogue. When further evidence developed of Iranian involvement in the Khobar bombing, Clinton faced mounting pressure to get Iran to take action against the Revolutionary Guard elements involved in the attack.

In June 1999 Clinton sent Bruce Riedel and Martin Indyk to Fontaine-le-Port, France to carry written and oral messages to Khatami to be delivered by Oman. They met with Sultan Qaboos at his chateau and asked him to send his Foreign Minister Yusuf bin Alawi to Tehran to deliver the messages. The written message -- which has been declassified -- said the United States had evidence Revolutionary Guard members were "directly involved in the planning and execution" of the Khobar bombing, activity unacceptable to the United States. The Guards' involvement in ongoing terrorist activity was a "cause of deep concern." While Washington sought better relations with Iran, it could not allow the murder of American citizens to pass unaddressed. Clinton asked for assurances that Iran would cease involvement in terrorist attacks and that those responsible for Khobar would be brought to justice. Alawi delivered the message to Khatami in July 1999.

Khatami told Alawi he appreciated Clinton's efforts to improve relations; he promised to look at the Khobar issue. The Islamic Republic did not formally respond for six weeks. In September 1999, Iran told the Omanis that it had conducted a "reliable investigation and serious scrutiny" of the Khobar attack and concluded that U.S. allegations about the Revolutionary Guards were "inaccurate" and "fabricated." Iran also accused the United States of failing to take action against the crew of the USS Vincennes for its 1988 attack on an Iran Air passenger plane. Tehran charged the American warship had deliberately shot down the airbus, killing all 290 passengers and crew on board. (Brzezinski 2004)

The Iranian message also said Iran "bears no hostile intentions" toward America and posed "no threat" to U.S. interests. Once again, a U.S. initiative to set up a direct dialogue with Khatami failed. Nonetheless, the Khobar attack was not repeated and the Saudi Hezbollah al Hijaz group was eventually dismantled.

Despite the rebuffs, Khatami and Clinton continued to make public statements about the need to reconcile Iran and the United States. Clinton took the unusual step of staying in the U.N. General Assembly after his own speech in September 2000 to listen to Khatami speak, a gesture to signal a continued interest in direct dialogue. But Khatami's domestic political problems ultimately prevented any tangible progress.

By the end of the second Clinton term, the United States and Iran had moved from the precipice of armed conflict in 1996, after the Khobar attack, to an indirect dialogue. The climate had improved, but policy differences remained wide. Tensions over Iran's role in terrorism, its ties to Hezbollah, and its pursuit of nuclear technology were the most serious differences. But a new effort to defuse tensions between Washington and Tehran had just begun.

In a major speech on March 17, 2000, former Secretary of State Madeline Albright apologized for the CIA's role in the 1953 coup that overthrew Prime Minister Mohammad Mossadegh's government and restored the monarchy, a major Iranian demand for years. She also announced the lifting of sanctions on imports of Iranian food and carpets and approval for export of spare parts for Iran's aging Boeing aircraft. She also offered to settle outstanding legal claims on Iranian assets frozen in U.S. bank accounts since the 1979 U.S. Embassy seizure. A few days later, Iranian Supreme Leader Ayatollah Ali Khamenei dismissed Albright's remarks as worthless. He also accused the United States of backing Iraq in the Iran-Iraq War, and refused any official dialogue with America. (Brzezinski 2004)

Looking back on the history of relations between the United States and Iran, its not easy when dealing with them today.  We both have conflicts we wish not to look back to.

Work Cited

Brzezinski, Z. (2004). Iran: time for a new approach. New York City, New York: Council on Foreign Relations.

Byrne, M. (2004). Mohammad mosaddeq and the 1953 coup in iran. Syracuse: Syracuse University Press.

Hamilton, L.H. (1987). Report of the congressional committees investigating the iran/contra affair. Washington: DIANE Publishing.

Houghton, D.P. (2001). Us foreign policy and the iran hostage crisis. Cambridge: Cambridge University Press.

Moaddel, M. (1994). Class, politics, and ideology in the Iranian revolution. Columbia,      New York: Columbia University Press.

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