Middle East

BP's Other Disaster

An Iranian opposition supporter next to a burning police motorcycle in Tehran last year.

Forgotten amid the havoc of what may well become the biggest environmental disaster ever is another mess created by BP some six decades earlier. It was a turn of fate that would trigger similarly irreparable damage by destroying millions of lives while changing the course of world history.

It all began in 1951 with the rise of an eccentric, yet charismatic prime minister named Mohammed Mossadegh in the tumultuous theater of Iranian politics. A fiery nationalist, Iran's first democratically elected leader was prone to weeping during speeches, wearing pajamas in public and giving his two-year-old granddaughter an audience during meetings with senior officials. The academic was wildly popular, too, and in 1951, was christened so by Time Magazine as "Man of the Year"—which also hailed him as an "Iranian George Washington."

But 27 months later, after fulfilling his political platform of nationalizing foreign oil operations in Iran, Mossadegh would be ousted in a coup d'etat engineered by British intelligence and the CIA at the behest of an entity known then as the Anglo-Iranian Oil Company (AIOC) before it became British Petroleum. In addition to costing hundreds of lives and ousting a popularly elected government in favor of a repressive monarchy, the ouster set into motion a far more serious wave of events—namely widespread political instability well beyond Iranian borders that reverberates to this day, along with environmental degradation, property and infrastructure destruction, and millions of lives lost over the course of three devastating wars.

Western nations have a long history of inflicting devastation on developing nations to access their natural resources. But this particular coup does provide a compelling window of perspective into how the nexus that often exists between governments and multinational corporations can inexorably change the course of world history.

In time, this intervention would also set the stage for other equally disastrous consequences of "regime changes" to come—in Latin America, Southeast Asia and, most recently, agonizingly in Iraq.

The urgency behind this coup was powerful not least because the United Kingdom owned most of AIOC stock and used its energy to fuel its vast overseas empire. Then-First Lord of the Admiralty Winston Churchill at one point assessed the situation by imploring members of Parliament in no uncertain terms to "look out upon the expanse of the oil regions of the world!"

Gladwyn Jebb, the U.K. delegate to the United Nations Security Council, echoed the need for a fast resolution. "The Iranian government is causing a great enterprise, the proper functioning of which is of immense profit not only to the United Kingdom but to the whole free world, to grind to a stop," he said. "Unless this is properly checked, the whole of the free world will be much poorer and weaker—including the deluded Iranian people."

A senior spokesman for the Ministry of Fuel and Power articulated a slightly different view. "It was British enterprise, skill and effort which discovered oil under the soil of Persia, which got the oil out, which has built the refinery, which has developed markets for Persian oil in 30 or 40 countries. None of these things would or could have been done by the Persian government or the Persian people."

To a degree, all were correct. From the 1920s to the 1940s, "the entire standard of living that people in England enjoyed was supported by oil from Iran," said Stephen Kinzer, author of "All the Shah's Men: an American Coup and the Roots of Middle East Terror" in a recent interview. "All the trucks and jeeps in Britain were being run on Iranian oil—factories all over Britain were being funded by oil from Iran; the Royal Navy, which projected British power all over the world, was run 100 percent on oil from Iran. So that became a fundamental foundation of British life."

How British is the London-based BP? "When it comes to oil spills, evidently not at all," wrote Karl Meyer and Shareen Blair Brysac, co-authors of "Kingmakers: the Invention of the Modern Middle East" in a June New York Times op-ed. "Its corporate culture remains roughly as transparent as the Gulf's chocolate waters."

In any event, the origins of BP—which is also the biggest supplier of fuel for the U.S. military—date back to 1901 when a wealthy British entrepreneur named William Knox D'Arcy negotiated an agreement with the Grand Vizier of Persia to look for oil near Masjid-i-Suleiman in the southwest on a range of land stretching 480,000 miles—the size of Texas. Seven years later, after all but giving up, the first discovery of oil in the Middle East would make D'Arcy one of the richest men in the world.

These days, the Obama White House is feeling the pinch in a stalemate over Iran's reported efforts to develop a nuclear weapon. Washington remains beholden to this standoff against Iran's religious theocracy—the same one that overturned the monarchy that the CIA installed in the putsch and ousted Mossadegh in 1953. It's been quite a quandary: Not only has the United States lost total access to Iran's 137.6 billion barrels of proven oil reserves, the Obama administration is under more pressure than ever to strike at Iran's suspected nuclear weapons facilities from the Beltway, while trying to restrain Israel and its hard-right government from doing so unilaterally.

Mossadegh and the Majlis

In 1949, amid heightened nationalism and recognition of 50-50 profit sharing agreements between foreign companies and governments in Kuwait and Saudi Arabia, members of Iran's parliament, also known as Majlis, pushed for new concessions. Contributing to this politically volatile atmosphere were prior fluctuations in international oil production coupled with a domestic economic downturn in the face of continued AOIC profits.

Under the foreign-educated Mossadegh, then a parliamentarian, negotiations proved inconsequential and, on March 15, 1951, the oil industry in Iran was nationalized; just over two months later, Mossadegh was named Iran's prime minister.

Production at the sprawling Abadan refinery, then the biggest in the world, ground to a halt as the British slapped a worldwide embargo on Iranian oil, blockaded much of its coast, lodged a protest before the United Nations Security Council and froze much of Iran's overseas assets as its technicians fled the country. Tehran, in turn, cut off diplomatic ties with London in October 1952, while its efforts to recruit nationals from other European nations to replace British engineers failed.

The U.K. government would also file a complaint with the International Court of Justice at The Hague. The judges found in favor of Iran. Mossadegh couldn't have been happier. The nationalization of foreign oil operations in Iran was at the epicenter of his grandiose political ambitions, and, under his watch, it had finally been achieved.

Throughout his tenure, Mossadegh was unequivocal about his nemeses in Whitehall. "You do not know how evil they are—you do not know how they sully everything they touch," wrote Vernon Walters in his book "Silent Missions," detailing Mossadegh's words to an American government official sent to resolve the deadlock.

It was this stubborn persona and his relentless quest for oil nationalization that would ultimately prove his undoing. "The single-mindedness with which he pursued his campaign made it impossible for him to compromise when he could and should have," wrote Stephen Kinzer in "All the Shah's Men."

None of this could have come at a worse time for the United Kingdom. Along with the loss of access to the energy resources that powered the British Empire, there was deep concern that the loss of the Abadan facility could set off further losses by emboldening similar nationalist appropriations of other British interests worldwide.

Meanwhile, the issue remained unresolved. And while Washington pressed AIOC to improve its terms, Mossadegh, Iran and the Majlis were beside themselves with euphoria. Between anti-U.K. sentiment, excitement over nationalization and political unrest, Mossadegh and his inner circle were confident they could hold for the best deal possible.

"By the elimination of the power of the British company," said Mossadegh in a testy speech in June of 1951, "we would also eliminate the corruption and intrigue, by means of which our country have been influenced."

But it was not to be.

Harry Truman's presidency had looked favorably on Iran's nationalist movement. This changed quickly, however, under his successor Dwight D. Eisenhower. To Eisenhower and his advisors, the specter of communism loomed large—as did a need for British support for the Korean War, which was underway.

In April of 1953, with the full approval of the Eisenhower White House, Secretary of State John Foster Dulles allocated $1 million to be used "in any way that would bring about the fall of Mossadegh," in favor of General Fazollah Zahedi, prior to the restoration of the Iranian monarchy in league with operatives from Britain's overseas intelligence agency, then known as SIS.

It would also involve a CIA agent named Kermit Roosevelt, the grandson of President Theodore Roosevelt, lots of something called "grey propaganda," plenty of intrigue and even more uncertainty.

Operation Ajax

"Mossadegh, by Western standards an appalling caricature of a statesman, was a fair sample of what the West would have to work with in the Middle East," read a 1952 report in Time. "To sit back and deplore him was to run away from the issue."

Soon, though, operatives of the CIA and the SIS did the exact opposite in full defiance of international law. They re-defined the issue itself. Not only did they upend the most popular ruler in the modern history of Iran, they also spawned a potent legend—part cold reality, part grounded in paranoid mythology—that would outlive many of the coup plotters themselves—that of the CIA "conspiracy."

If the status quo in Iran could be maintained, Churchill allegedly said, the coup "would represent the finest operation since the end of the war."
It was anything but easy amid Mossadegh's popular mandate. Mohammed Reza Pahlevi had ruled Iran since 1941, when the British and the Russians had installed him over his father, Reza Shah. Over the following decade, as Mossadegh and his feisty speeches fast became lighting rods of national attention, the threatened shah descended from his "peacock throne" to cede him power.

Shifting political fortunes between the monarchy and the government were accompanied by what intelligence agents characterized as one of their very biggest challenges at the outset: convincing the shah—"a creature of indecision, beset by formless doubts and fears"—to return to power.

Serious chaos had emerged by the time Mossadegh moved to consolidate power through autocratic means. His political agenda—weakened by economic problems stemming from the oil embargo coupled with subversion by the West—he felt, required drastic steps. After an intense tug of war with the Majlis he once led, Mossadegh initiated a successful referendum that effectively dissolved the parliamentary body on August 3, 1953.

The war of nerves between the wily Mossadegh and his foreign tormentors proved challenging for both sides. There were moments of outright despair in the CIA camp—including a point at which the shah fled from Baghdad to Rome. Thus the CIA and SIS agents were forced to improvise, according to the Wilber's account, knowing that otherwise "London and Washington would have thought they were crazy and told them to stop immediately."

At various points, for example, Iranian agents, posing as communists, would also threaten Muslim clerics with violence were they to oppose Mossadegh as a means of alienating the religious community in what was called "black propaganda."

Meanwhile, CIA agents used special cartoonists and journalists to plant unflattering articles and pictures of Mossadegh in the Iranian media—a phenomenon then known as "grey propaganda." Slanted information was also fed to international correspondents in Iran and the United States to accelerate the impression that Mossadegh's ouster had already taken place. The haphazard coup drew to a close with the August 19 seizure of Tehran's biggest radio station to broadcast the victorious transfer of power.

By 7:00 that night, Mossadegh was still on the run and his home had been completely ransacked. At that time, members of the officer corps sympathetic to Operation Ajax led units of Tehran's garrisons in capturing key military targets and executing arrest warrants throughout the capital based on information from Western intelligence agents and their Iranian spies.

Mossadegh was sentenced to three years in prison and would later spend the remainder of his life under house arrest. In March of 1967 he died at the age of 84 from throat cancer.

Following the takeover, AIOC became a conspicuously named international consortium, National Iranian Oil Company, which, on paper, agreed to a 50 percent profit-sharing agreement with Iran. There was one catch, though; the Iranians were not allowed to see the books.

The lessons of the overthrow, as written by Wilber, again offer a disquieting preamble for further violence and subversion in the decades to come. "The lesson here is clear," he wrote. "As in the larger world picture, U.S.-UK interests and activities must be coordinated. A great deal is to be gained by direct coordination in special fields of activity once both parties have recognized that their claims are really identical."

The "object lesson" according to The New York Times was one "in the heavy cost that must be paid" when a resource-rich nation such as Iran "goes berserk with fanatical nationalism." The royalist putsch to come would encourage "the incubation of extremism, both of the left and the right," said James Bill, author of "The Shah, the Ayatollah and the U.S.," who added that it would also prove an extremism that, in time, became "unalterably anti-American."

It was an "incubation" that handicapped any legitimacy the then-48-year-old shah might have had from the very beginning.

The shah and the white revolution

For the freshly installed king, "the coup had drastic consequences," Mohsen Milani wrote in "The Making of Iran's Islamic Revolution." "First, because it was generally believed that the United States had saved his throne, the shah lost his legitimacy."

"From then on, he was tainted as an American puppet," Milani added, "and, most important, the foreign-orchestrated coup seemed to have touched the very nerve of the middle-class Iranians who perceived the monarch as America's shah."

Washington furthered these expectations by immediately extending Tehran more than $40 million in economic assistance as Iran also re-opened diplomatic ties with the United Kingdom shortly thereafter. Amid cold-war tensions, the shah proceeded to align himself more closely with the United Kingdom and the United States, while he initiated political repression that intensified during a martial law that would be declared in August of 1953 only to be lifted four years later.

Attempts to resuscitate the economy amid political reforms foundered, owing to a slow recovery from oil nationalization and an excessive reliance on oil by the government. Inflation and popular discontent ensued. The shah responded by strengthening the powers of his feared and hated state police apparatus, the SAVAK—a vast network of more than 5,000 intelligence agents and informers whose brutal techniques would later hasten the monarch's undoing.

In 1962, many Iranians saw a glimmer of hope. The shah paid a lengthy visit to Washington after John F. Kennedy's election where the young president, it was believed, would press the shah to limit his harsh authoritarian ways.

These hopes were soon dashed. In 1963, more popular protests were viciously crushed at the beginning of the year. The violence signified a sharp turn of events in Iranian politics. "One result of these developments was to push the opposition toward an increasingly radical position," said Iran analyst Shaul Bakhash, adding that many were convinced that "constitutional methods of opposition against the shah were ineffective."

The shah managed to successfully legislate a modernization agenda in 1963. Having already implemented a land distribution program, the monarch passed a series of reforms via a national referendum that included profit-sharing for workers in private sector industries, the sale of government factories and assets to finance land reform, the nationalization of forests, the establishment of a "Literacy Corps" allowing men of military age to teach reading skills in the countryside in lieu of service in the armed forces, and suffrage for women.

Land reform and the new right for women to vote were deeply opposed by much of Iran's religious community. Later that year, a radical religious cleric from Qom was arrested after a passionate speech attacking the shah that ignited massive protests across the country followed by a severe repression.

His name was Ayatollah Ruhollah Khomeini.

This is the first segment of a two-part article by Joseph Kirschke. Part two can be read here