It shall be the duty of the Agency to perform such other functions and duties related to intelligence affecting the national security as the National Security Council may from time to time direct.
Per the National Security Act of 1947
With those words, the CIA became responsible for what we now call Covert Action (CA). WWII had ended two short years before the signing of the National Security Act of 1947, which created the modern Defense Department, the CIA, the National Security Council, and today's modern national security establishment. WWII had been a titanic struggle, hard to imagine today. The war cost a staggering 70 to 85 million - dead, from war, famine, and disease - 3% of the world population of 1940. Nations were destroyed and empires fell. All the nations involved were exhausted, including the two nations that emerged as the real winners: the United States and the Soviet Union (USSR).
Despite the losses and war-weariness, the U.S. and USSR immediately began a struggle for dominance. Each side's political and economic system was inimical to the other's system. Both were maneuvering for influence and a degree of control of the other world nations. Given the exhaustion from war and fear of nuclear destruction, the preferred method to gain that dominance was anything other than direct conflict, from economic and cultural influence to subversion, bribery, and propaganda. The inclusion of the phrase at the beginning of this post was designed to give the U.S. the ability to compete with the USSR in the area of clandestine warfare, something the USSR had a great deal of experience with.
Both sides began the post-war competition by using political action, a combination of propaganda, money, and political groups, in order to have democratic or communist governments win power. This was a fairly successful strategy in securing governments in Western and Eastern Europe. The U.S. seemed to get the hang of CA and was ready for its next big project: Iran.
Best I could do. It is hard to find old maps from USSR days.
The history of Iran is rich and complex. Space prevents me from going into all the details that led to the coup of 1953, but I will touch on some of the more immediate issues. Starting in 1908, Iranian petroleum was controlled by the Anglo-Iranian Oil Company (AIOC), a joint venture between the United Kingdom (UK) and Iran. Oil was Iran's most profitable export. However, the UK had a virtual lock on Iran's oil. The majority of executives and engineers were non-Iranians. The majority of the profits went to the UK - at one point 84%. Complicating this was a recent agreement between Saudi Arabia and the U.S. regarding the profits from Saudi oil, drilled and managed also by a joint company, ARAMCO. Both countries agreed to a 50-50 split of profits.
Iran was governed by a Monarch — the Shah — a parliament, and a Prime Minister and cabinet. The new Prime Minister, Mohammed Mosaddegh, had been elected in a free, democratic election. Part of his party's political platform was to nationalize the oil company. Mosaddegh began negotiations with the British, initially asking for a 50-50 split similar to that between Saudi Arabia and the U.S. The British refused.
By way of background, the UK was in dire straits. WWI had cost the UK an entire generation killed in the European trenches. WWII then wrecked Britain's economy. There was still rationing in the UK as a result of WWII. The UK needed the profits from AIOC in order to stay afloat. The Iranians argued that they needed the money worse than the UK, being one of the poorest countries in the world at that time. The Iranian government argued that there was enough to go around and 50-50 was fair. They wanted to reduce and limit British control over Iranian oil reserves and increase Iranian revenues.
Iranian Prime Minister Mosaddegh
As this was going on, the British approached the U.S. government with the idea of launching a coup against Mosaddegh. The Americans were initially resistant to the idea. Outgoing President Truman was not supportive of overthrowing the government merely for what he deemed an effort by the British to prop up their empire. The incoming Eisenhower Administration was also hesitant for similar reasons. Eisenhower was not a fan of colonialism and was against the U.S. becoming embroiled in efforts to secure these empires.
Finding no support, the British went back to square one. Negotiations with Iran failed, so Iran nationalized AIOC and expelled foreign corporate executives. The British retaliated by instituting a boycott of Iranian oil, freezing Iranian money in British banks, and pulling out foreign oil workers. This hit the Iranian oil industry hard and production dropped. However, even with the drop, Iran's oil revenues increased. Both sides were at a standstill.
The British then approached the U.S. again about overthrowing Mosaddegh, but with a new angle. They claimed Mosaddegh was in league with the communists. This caught U.S. attention. Mosaddegh himself, nor his political party, were communists. However, the Iranian communist party did support Mosaddegh on several occasions, even organizing demonstrations in support of his government. This, however, did not make a communist. Even during the coup itself, U.S. officials were willing to come to terms with Mosaddegh because they believed he could handle the communists. Yes, it doesn't make sense, but there it is. The U.S. became concerned about a communist takeover and agreed to work with British Intelligence to overthrow Mosaddegh.
I will pause here to point out one of the problems with CA. Regardless of the success or failure of a CA program, such action will engender negative consequences if your program is based on a false assumption. In this case, that assumption was that Mosaddegh was a communist. CA programs should take advantage of actual, real issues, otherwise, you are building a house on a foundation of sand. The British had manipulated the U.S. for their own advantage.
I will also point out that so far I have been using “U.S.” and “U.S. government” rather than “CIA” to point out that CA initiatives are carried out at the direction of the U.S. government, specifically the President. Too often the CIA bears the brunt of accusations that it lawlessly overthrew this or that government and it shoulders the majority of the blame. I understand that is a role the CIA must play, to take the hit for the President, but I want readers to understand that the CIA does not conduct these types of operations on its own initiatives.
The CIA began working with British Intelligence, SIS, to launch a coup. The CIA focused on political action. The first aim was to generate anti-Mosaddegh sentiment among the Iranian populace. The CIA and SIS had recruited various sources within the Iranian political establishment and groups that had influence within the country. These individuals were used to organize opposition and marshal resources against Mosaddegh. Agents in the media, print, and radio were used to spread anti-Mosaddegh articles and attack the government. CIA and SIS, working through Iranian sources, organized street demonstrations against the government.
All these activities had the effect of creating a degree of chaos and paralysis within the Iranian parliament and government. Mosaddegh was aware of the efforts to remove him from power, though it is not clear whether he specifically knew about the CIA's role. That said, he clearly knew the UK was involved. As pressure mounted, he took the extreme action of dissolving parliament. It was highly questionable whether he had the authority to take such an action since that power was vested with the Shah. Regardless, this was the pretext the CIA needed to ramp up its efforts.
The CIA had sent its senior Middle East officer Kermit Roosevelt, grandson of Teddy Roosevelt, to be in charge of the operation, dubbed AJAX. Roosevelt and other U.S. officials, including U.S. military officers and State Department officials, met with the Shah in order to convince him to sign several decrees dismissing Mosaddegh and replacing him with General Zahedi. The reason for the decrees was that the U.S. government and the CIA wanted the coup to appear as legitimate as possible. The idea was to allow the Shah to rule more as an absolute monarch than a limited constitutional monarch as called by the Iranian constitution. The Shah proved to be a weak link in the plan.
Kermit Roosevelt
The Shah was reluctant to sign the decrees and dismiss Mosaddegh. He actually supported the idea of nationalizing the oil industry and he hated the British. However, he received significant U.S. pressure from various officials, including the suggestion that if he did not agree to dismiss Mosaddegh, he, himself, could be deposed. The Shah signed the decrees and then left Tehran for a family vacation. In the meantime, the decrees dismissing Mosaddegh and appointing Zahedi as the new Prime Minister were delivered to Mosaddegh at his residence. Mosaddegh apparently knew this was coming and refused to accept the decrees and had the officer delivering said decrees arrested. In the meantime, the CIA had publicized the dismissal of Mosaddegh in the Iranian press hoping to generate support for the Shah. It had the opposite effect and Mosaddegh supporters took to the streets in violent protest. The Shah then fled to Baghdad and onward to Italy, while Zahedi went into hiding.
Another aside here. The problem, eventually surmountable, was that the U.S. had a weak leader to support: the Shah. Cutting and running at the first sign of trouble is a clear indication of a weak leader. This is a problem the U.S. government will encounter time and time again in the coming decades. We have a propensity to choose weak governments. In addition, the CIA miscalculated the support for the Shah and the support for Mosaddegh. Political Action had been effective in creating stress points for Mosaddegh's government, but it was not sufficient to lead to his removal.
The U.S. government and the CIA believed the coup had failed. U.S. officials were now looking at coming to an accommodation with Mosaddegh as long as he could control the Iranian communist party. Coup plotters were being arrested. Mosaddegh believed he had won and instructed his supporters to stop the demonstrations and go home. He also ordered the CIA to leave Iran. Never count your chickens before they hatch.
The remaining coup plotters did not give up. They knew that the upper classes in Iran were becoming nervous. The Shah had fled, arrests were being made and communists were out in the street supporting Mosaddegh. The upper classes were fearful that stability and their way of life were coming to an end. The coup plotters used these concerns. Using remaining CIA money, they linked up with pro-Shah clerics and had them issue decrees and give sermons in support of the Shah. The clerics were motivated by statements issued by the Iranian communists that clerics would be punished if they did not support Mosaddegh. They hired infiltrators to pose as communists, had them organize demonstrations, and convince real communists to take to the streets. The damage was extensive, with shops and bazaars destroyed. In addition, at least one cleric's home was bombed by infiltrators posing as communists.
At the same time, the coup plotters hired other infiltrators to pose as pro-Shah groups. They, in turn, organized angry mobs to counter-protest. The CIA came back into the game and hired some major Iranian gangsters to mobilize protests against Mosaddegh. The violence and chaos were sufficient for the army to deploy and drive the communist demonstrators away while seizing government buildings. In effect, they took over the government. Mosaddegh was arrested and the Shah returned to Iran.
The Shah
What are we to make of this coup? In the end, U.S. policy objectives were met. Mosaddegh was ousted and the Shah returned to rule as a supreme monarch. He was left in awe of the CIA for the remainder of his life and proved to be a staunch ally of the U.S. However, taking a cold hard look at this covert action we can say that the initial CIA plan failed. The program was saved by the action of the remaining coup plotters, assets of the CIA, or at least allies of the CIA, and the CIA jumping in to support their plan. Roosevelt took a lot of credit for the success, but in reality, his portion of the program failed.
The reason for the covert action, that Mosaddegh was a communist or in league with them, was false and he clearly had significant support among the Iranian people. Even the Shah did not want to oust him and supported the nationalization of the oil company. This made it difficult for political action to succeed on its own. U.S. and CIA involvement in the coup became common knowledge early on. The fact is, the larger a CA program is, the more people involved, will eventually lead to the erosion of clandestinity. People talk and mention that the USG or the CIA is behind the operation garners support. The CIA was flexible and fast to take advantage of the change in fortunes during the second stage of the coup.
In the short term, the CA program was a success. Mission accomplished. The long-term consequences were not so positive. In Iran and throughout the world, the impression was that the U.S. government had illegally overthrown a democratically elected government. That was seen as a stark contradiction of the U.S. stated policy of supporting democracy against communism. Furthermore, the Iranian people lost trust in the U.S. We had removed an elected government and installed a dictatorship, which became more and more repressive and brutal over the years. Whether you agree with this or not, that is the perception of the Iranian people. I would argue this has damaged our standing within Iran. While there is a great deal of discontent with the current regime among the Iranian people, the U.S. is not viewed as being a positive influence or an honest player.
What this successful covert action did, however, was embolden the U.S. government and the CIA to view covert action as an easier method of executing U.S. policy.