5/22/2003 - Political - Article Ref: TI0305-1977
By: Donald L. Barlett and James B. Steele
For more than a half-century,
American foreign policy dealing with oil has typically been manipulative and
misguided, often both at the same time. The pattern of intrigue has ranged
from U.S. officials' secretly writing tax laws in the 1950s (so the Saudi
royal family could collect more money from the sale of its oil and American
companies could write off the added payments on their tax returns) to
overthrowing a government that showed too much independence in handling its
oil sales. To illustrate the dark side of American oil policy, we offer two
tales, stitched together from declassified government documents and
oil-industry memos, involving a pair of Iraq's
neighbors, Iran and Afghanistan.
The first one begins with the rise of
a member of Iran's
parliament, Mohammed Mossadegh, an impassioned
speaker and popular politician who had long chafed at British domination over
his country's oil. The Anglo-Iranian Oil Co., partly owned by the British
government and a predecessor of today's British Petroleum, held the
concession for all of Iran.
It set production rates and prices as well as Iran's token share of the
proceeds. Mossadegh sought a fifty-fifty sharing
agreement, which was then becoming the common arrangement between other
oil-producing countries and U.S.
companies. The British refused. In 1951 Mossadegh
successfully pushed to nationalize Anglo-Iranian, became Iran's
Premier and established the National Iranian Oil Co.
The British boycotted Iranian oil, and the U.S. joined them. No
international oil company would buy Iran's oil. The Iranians had no
independent system for delivering it. They had no technical skills to produce
it, since the British had long relegated Iranian workers to menial jobs. Even
when Mossadegh threatened to flood the world with
half-price oil, he was able to deliver only a trickle because of the economic
blockade. As the Iranian government withered, the Eisenhower Administration
cut off foreign aid. Unrest followed, and angry citizens took to the streets.
This prompted suggestions that the communists were coming, even though Mossadegh was as anti-Soviet as he was anti-British. On
Aug. 19, 1953, after the deaths of about 300 people in street riots, the
71-year-old Premier was overthrown. He was replaced by a retired army
general, Fazollah Zahedi.
The American-friendly Shah, Mohammed Reza Pahlavi,
who had earlier fled the country, returned triumphantly, resumed the throne
and reasserted his control.
Media accounts of the coup were
seemingly straightforward. The Washington Post
reported that Iran
had been saved from falling into communist hands and that the communists were
blaming Brigadier General H. Norman Schwarzkopf "for alleged complicity
in the coup." The paper said Schwarzkopf, whose namesake son would lead U.S. forces nearly a half-century later as
they drove the Iraqi military out of Kuwait,
had visited Iran
"but only to see friends, the State Department said." TIME
reported: "This was no military coup, but a spontaneous popular
It was anything but. When Mossadegh delayed settling with Anglo-Iranian on the
takeover of the company, the British approached the CIA with a plan to remove
the Premier and get Britain's
oil back. The British could not do it alone, since they had left Iran. Allen
Dulles, the CIA director, and his brother John Foster Dulles, the Secretary
of State, agreed. The Dulles brothers assigned the task of overseeing the
clandestine venture to Kermit Roosevelt, a longtime intelligence operative
and the grandson of President Theodore Roosevelt.
In the months leading up to the coup,
Roosevelt spent much of his time in Tehran,
coordinating efforts of CIA agents and Iranian sympathizers. To ensure the
cooperation of a then indecisive Shah, the CIA turned to one of his old
friends, General Schwarzkopf, who in 1942-48 worked with an internal-security
force under palace command that helped the Shah maintain rule.
Dr. Mohammed Mossadegh
The CIA's fingerprints were
everywhere. Operatives paid off Iranian newspaper editors to print pro-Shah
and anti-Mossadegh stories. They produced their own
stories and editorial cartoons and published fabricated interviews. They
secured the cooperation of the Iranian military. They spread antigovernment
rumors. They prepared phony documents to show secret agreements between Mossadegh and the local Communist Party. They masqueraded
as communists, threatened conservative Muslim clerics and even staged a sham
fire-bombing of the home of a religious leader. They incited rioters to set
fire to a pro-Mossadegh newspaper. They
stage-managed the appearance of Mossadegh's
successor, General Zahedi, whose personal bank
account they fattened.
gone, British Petroleum returned to the Iranian oil fields. Some newcomers
tagged along. They included five American companies, the ancestors of today's
ExxonMobil and ChevronTexaco.
Meanwhile, the U.S.
government opened the foreign-aid spigot. Over the next 25 years, more than
$20 billion in U.S. taxpayers' money would pour into a decidedly undemocratic
Iran, most of it military aid and subsidized weapons sales for the Shah's
armed forces and SAVAK, his secret police. As for American oil companies,
they would extract 2 billion bbl. of oil from their new Iranian fields. But
the access came with a stiff price tag in U.S. government dollars and
Iranian lives. And the Shah's oppression led to the establishment of the
first American-hating Islamic republic, when the Shi'ite
Muslim clerics duped by the CIA overthrow of Mossadegh
masterminded their own takeover in 1979, installing the Ayatullah
Ruhollah Khomeini. For two decades and counting,
American oil companies have been barred by the U.S.
government from doing business with Iran. Now the Shi'ites
are seeking to turn Iraq into an Islamic