American eyes have been riveted on North Africa and the Middle East these past months. The popular protests that rocked Tunis, Cairo, and Tripoli, and so many other cities during the "Arab Spring" of 2011 evoked memories of the violent confrontation between Iranian dissidents and President Mahmoud Ahmadinejad's Islamist regime in the streets of Tehran eighteen months earlier.

As in Tunisia and Egypt, Facebook and Twitter helped spread the word in June 2009 that Iran was teetering on the brink of revolution, and as in Libya, the ruling elite cracked down instinctively with brutal force. Unlike Libya's Muammar Qaddafi, however, Ahmadinejad stopped short of unleashing the Iranian air force against his opponents.

Yet, some Americans nevertheless expected that Iran's recent quest for nuclear weapons, its support for Islamic radicals like Lebanon's Hezbollah, and its destabilizing influence on the geopolitics of the Persian Gulf would eventually require U.S. military intervention.

Speaking off the record, one of President Barack Obama's top advisers recently confirmed that the Tomahawk missiles that the U.S. Sixth Fleet launched against Libya were also intended to send a message to Iran.

In fact, relations between the United States and Iran have been complicated and edgy as long as anyone can remember.

America's initial diplomatic encounter with Iran, or Persia, as it was called a century ago, did not go well.

On 9 March 1904, Kurdish bandits robbed and murdered Benjamin Labaree, a 38-year-old American missionary, not far from Mount Ararat in the no man's land just inside Iran's border with Ottoman Turkey.

Outraged by what the U.S. ambassador labeled an act of "religious and race hatred," the State Department demanded that Shah Mozaffar al-Din arrest the killers, pay Labaree's family an indemnity of $50,000 in gold, and assure "the civilized world" that Iran would prevent such atrocities in the future. Although the Shah of Iran was insulted by Uncle Sam's impertinence, he had little choice but to accept the U.S. demands.

Over the following decades, time and again a constantly shifting cast of Iranian and American leaders would butt heads over issues as diverse as oil wells, religion, and atomic bombs.

Much has changed over the years, of course, but to a very great degree, the United States and Iran today still frame their mutual antagonism as a clash between civilization and barbarism, much as they did when Benjamin Labaree was gunned down in a mountain pass 500 miles northwest of Tehran in 1904.

Oil and the Fate of Modern Iran

At the dawn of the twentieth century, Americans would have recognized Iran as an important imperial buffer between Russia and India, twice the size of Texas and famous mainly for exporting Persian rugs.

Then in 1901, the British-owned Anglo-Persian Oil Company secured an exclusive concession from Shah Mozaffar al-Din and his Qajar dynasty. Seven years later, the firm discovered a huge pool of petroleum at Masjid al-Suleiman in southwestern Iran, and the future of that country was transformed.

After World War I erupted in 1914, Anglo-Persian would satisfy the Royal Navy's rapidly expanding appetite for diesel fuel by pumping oil from the world's largest refinery at Abadan, near the headwaters of the Persian Gulf.

Mozaffar al-Din's successors accepted the small but steady stream of royalties that flowed into their coffers until 1925, when Reza Khan, an Iranian cavalry officer, overthrew the Qajars, proclaimed himself Shah, and established the Pahlavi dynasty.

A hard-headed nationalist, Reza Shah tried unsuccessfully to seize control of the oilfields from the recently rechristened Anglo-Iranian Oil Company (AIOC) in 1932 and flirted with Nazi Germany later that decade in an ill-advised effort to counterbalance Britain's influence. Troubled by the specter of a Berlin-Tehran axis, Winston Churchill and Josef Stalin secretly agreed to depose Reza Shah in August 1941, replacing him with his 20-year-old son Mohammed Reza Pahlavi. They also announced that their two nations would jointly occupy Iran for the duration of World War II—Britain in the south and Russia in the north.

 

Fearing that Iran might be carved up into permanent spheres of influence, Washington quickly secured pledges that both London and Moscow would withdraw their troops six months after the war ended. Meanwhile, America's stock rose in the eyes of many Iranians as U.S. advisers helped the young Shah plan the economic infrastructure essential for postwar modernization and development.

British forces pulled out of Iran on schedule, but when the Soviets refused to honor the March 1946 deadline, President Harry S. Truman decided, as Secretary of State James Byrnes put it, "to give it to them with both barrels," censuring the Kremlin at the United Nations and making thinly veiled nuclear threats. Stalin finally withdrew the Red Army two months later, but only after receiving assurances from Iranian Prime Minister Ahmed Qavam that the Soviet Union would have access to oil fields in northern Iran.

The Spoils of Oil: the U.S., Mossadegh, and the Cold War

As the Cold War heated up during the late 1940s, the Truman administration embraced Mohammed Reza Pahlavi as an important partner in the informal anti-Soviet alliance emerging in the Middle East. This partnership was complicated, however, by mounting Iranian resentment against Britain and AIOC, which exported millions of barrels of oil and made huge profits while paying Iran next to nothing.

In October 1949, Mohammed Mossadegh, a long-time critic of the Pahlavi dynasty who insisted that Iran had a right to control its own oil industry, founded the National Front, a broad coalition that included both middle-class moderates as well as firebrands from the left-wing Tudeh or "Workers" Party.

Mossadegh and his supporters soon held the balance of power in the Majlis, the Iranian parliament, where they called for AIOC to split its profits with Iran on a 50-50 basis, as other multinational oil firms operating in Venezuela and Saudi Arabia had recently agreed to do. Backed by the British government, AIOC refused even to consider such an option. On 15 March 1951, the Majlis responded with legislation nationalizing the Iranian petroleum industry.

Six weeks later, Mossadegh became prime minister and announced plans to wrest control of Iran's oil fields and refineries from Britain as soon as possible. American officials, who had urged the British to accept a last-minute profit-sharing compromise, were appalled. "Never have so few lost so much so stupidly and so fast," Dean Acheson, Truman's secretary of state, recalled long afterward.

When Mossadegh moved forward with the nationalization of AIOC, the British government pressed the Shah to overrule his prime minister, sought American support for an international embargo on Iranian oil, and secretly began to plan a coup d'état in Tehran.

The MI6, Britain's overseas intelligence service, had developed a covert network of contacts among Iranian politicians and military officers and was quite confident that Mossadegh could be deposed with little bloodshed, provided the United States had no objection.

The Central Intelligence Agency (CIA) maintained close ties with MI6 in Iran and was well aware that British intelligence was working closely with General Fazlollah Zahedi, Mossadegh's former interior minister, who was eager to overthrow his old boss. Neither the White House nor the State Department, however, was enamored of the MI6 plot, especially after Mossadegh learned most of the details in October 1952 and expelled Britain's diplomats and spooks from Iran.

Just two months before handing the keys to the Oval Office over to Dwight Eisenhower, Harry Truman insisted that all covert action in Tehran be put on hold. "We tried to get the block-headed British to have their oil company make a fair deal with Iran," Truman complained privately, but "no, no, they could not do that."

 

President Eisenhower and his top advisers regarded the crisis in Iran very differently from their predecessors. Ike's secretary of state, John Foster Dulles, was a rabid anti-communist who dismissed Mohammed Mossadegh as a Russian stooge and who saw the Tudeh Party as the entering wedge for a Kremlin takeover in Tehran. Allen Dulles, the new CIA director and John Foster's younger brother, was an avid proponent of covert action with close ties to Britain's MI6 and had few qualms about meddling in the internal affairs of Iran or any other nation deemed vulnerable to Soviet subversion.

With Eisenhower's blessing, the Dulles brothers resurrected the dormant plot to topple Mossadegh and sent Kermit Roosevelt, a veteran CIA covert operator—whose grandfather Theodore had once sat in the White House—to Tehran in the spring of 1953 to make the necessary arrangements.

Roosevelt's plan, code-named "Operation Ajax," was really quite simple. In exchange for strong assurances of U.S. support, the Shah of Iran would issue a royal decree demanding that Mossadegh step down as prime minister and turn power over to General Zahedi, who would outlaw the Tudeh Party and negotiate a settlement in the ongoing oil dispute.

When the Shah announced the change of government on 16 August 1953, however, Mossadegh ignored him and responded instead by issuing a warrant for Zahedi's arrest. Not long afterward, Mohammed Reza Pahlavi flew to Rome for an unscheduled vacation, Zahedi went into hiding, and the CIA went back to the drawing board.

Forty-eight hours later, Kermit Roosevelt orchestrated what he later termed "a counter-coup" against Mossadegh. With help from Britain's MI6, Roosevelt distributed a quarter-million dollars in bribes to mobilize hundreds of pro-Shah mercenaries, who stormed into the streets chanting anti-government slogans and staged violent clashes with Mossadegh's supporters. Meanwhile, General Zahedi and right-wing military officers moved to restore order, rounding up Tudeh Party militants, arresting Prime Minister Mossadegh, and inviting the Shah to return to Tehran in triumph.

Having convinced themselves that Iran was about to fall to communism, Eisenhower and the Dulles brothers had encouraged pro-American forces to overthrow a democratically elected Iranian leader and place an increasingly autocratic ruler back on the Peacock Throne.

"Throughout the crisis the United States government had done everything it possibly could to back up the Shah," Ike confirmed in his memoirs many years later. "Indeed, reports from observers on the spot in Teheran during the critical days sounded more like a dime novel than historical fact."

Partners: The Shah and the United States

From the American standpoint, Operation Ajax had a very happy ending. In June 1954, the Shah resolved the oil dispute amicably by establishing an international consortium that included AIOC and three U.S. petroleum giants, who would distribute the output from wells and refineries that were to remain under Iranian control.

A year later, he agreed to join the Central Treaty Organization, an anti-Soviet pact sponsored by the Eisenhower administration, and permitted the United States to establish electronic surveillance posts along Iran's border with Russia.

Then in 1957, the Shah established the SAVAK (a Farsi acronym for State Information and Security Organization), which, with help from the CIA, systematically silenced all opposition, imprisoning and torturing thousands of anti-Pahlavi activists.

The Shah sealed his partnership with the United States during the early 1960s, when Iran aligned itself with Israel under American auspices to curb Soviet influence among Arab nationalists like Egypt's Gamal Abdel Nasser.

Searching for Stability

America's Iran watchers worried, however, that the Shah's repressive domestic policies might backfire, sparking an anti-Western backlash against a regime that was spending too many of its petro-dollars on guns and too few on butter.

Just ten weeks after John F. Kennedy moved into the White House, riots erupted half way around the world in Tehran. In May 1961, the new president established a National Security Council (NSC) task force to study the crisis in Iran.

 

Before the year was out, JFK's advisers concluded that the Iranian turmoil was home-grown, not communist-inspired, and feared that unless the Shah embraced economic modernization and political reform, his days were numbered. In April 1962, President Kennedy invited Mohammed Reza Pahlavi to Washington, where the two leaders reviewed a blueprint for stability in Iran.

Nine months later, the Shah unveiled his bold new "White Revolution," a set of "top-down" reforms designed to avert radical "bottom-up" change like Fidel Castro's "red revolution" in Cuba. Land reform, industrial growth, women's rights, and better schools were quite popular among Iran's emerging middle class, as were the U.S. Peace Corps volunteers who began arriving in the spring of 1963 to preach modernization.

Iranian landlords, on the other hand, felt threatened and resisted the White Revolution, as did clerics like Ruhollah Khomeini, a 61-year-old ayatollah who ridiculed the Shah as a U.S. puppet and denounced the American-backed reforms as "Westoxification." Most American officials, however, regarded Khomeini as little more than an annoying Islamic rabble-rouser and welcomed the Shah's decision in November 1964 to send him into exile, first to Turkey and then to Iraq.

By the late 1960s, Iran seemed to be a real success story for U.S. foreign policy at a time when Lyndon B. Johnson was increasingly preoccupied with the quagmire that he had inherited from JFK in Vietnam. Hundreds of U.S. corporations were investing in the Shah's economic miracle, thousands of Iranian students were flocking to the United States to attend college, and millions of barrels of oil were flowing from Iran to America's Cold War allies in Japan and Western Europe.

Convinced that the White Revolution was irreversible, Mohammed Reza Pahlavi vowed to make Iran a regional superpower and hosted a garish celebration in October 1971 to commemorate the 2500th anniversary of the founding of the Persian Empire by Cyrus the Great. Seven months later on his way home from a summit meeting with Soviet leaders in Moscow, President Richard Nixon, LBJ's successor, stopped in Tehran, where he made the Shah an offer he could not refuse.