Continuity and Change Reinterpreting the Policies of the Truman and Eisenhower Administrations toward Iran, 19501954

What Ive always had in mind was and is a continuing foreign policy. . . . Partisan politics should stop at the boundaries of the United States.1
Harry S. Truman

Introduction
From 1950 to 1954, the United States faced the perplexing Anglo-Iranian oil crisis, nominally a commercial dispute between Iran and the British-owned Anglo-Iranian Oil Company (AIOC) but in practice laden with a potent mixture of concerns such as the Cold War, Anglo-American relations, international oil, and Middle Eastern security. The Truman administration adopted informal and formal mediating roles during the crisis. The Eisenhower administration, however, sponsored a coup through Operation Ajax just seven months after assuming ofce in January 1953, an operation that toppled the Iranian Prime Minister Mohammed Mossadegh and paved the way for Iran to become a U.S. client state under the Shah. Because the operation came so soon after the Truman administration vacated ofce, the transition between administrations seemed to mark not the continuity in foreign policy wished for by Truman but a watershed in U.S. policy toward Iran and in U.S. Cold War strategy more generally. This thesis has traditionally dominated analyses of U.S. policy toward Iran during the oil
1. Letter from Harry Truman to Dwight D. Eisenhower, c. late 1952/early 1953 (after the presidential election), cited by Harold Foote Gosnell, Trumans Crises: A Political Biography of Harry S. Truman (London: Greenwood Press, 1980), pp. 532533. Journal of Cold War Studies Vol. 7, No. 3, Summer 2005, pp. 79123 2005 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology

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crisis. Some have argued that the advent of the Republicans heralded a coordinated Anglo-American effort to roll back Communism and led to a much harder line vis--vis Iran.2 Others have stressed a greater willingness on the part of the Eisenhower administration to adopt a more assertive policy and a wider range of instruments, including use of the Central Intelligence Agency (CIA) for covert operations.3 Still others have emphasized the Republican administrations connections with big business,4 its greater fear of Communism and distrust of Third World nationalism,5 and the impact of changing world circumstances, notably the buildup of the North Atlantic Treaty Organization (NATO), the armistice in Korea, and the change of Soviet leadership after Josif Stalins death, an event that distracted the Soviet Communist Party from international affairs.6 This article does not dispute that the Eisenhower administrations resort to a coup in Iran was a signicant difference from the means employed by the Truman administration. But a disproportionate focus on the actual coup and on differences between the two administrations has tended to exaggerate policy disjunctions between them and to obscure why the Eisenhower administration sought to overthrow the Mossadegh regime. This article avoids giving undue emphasis to discontinuity and, in that respect, shares Francis Gavins
2. Fakhreddin Azimi, The Politics of Dynamic Stalemate: Iran 194453, Ph.D. diss., St Anthonys College, University of Oxford, 1984, p. 363; and Farhad Diba, Mohammad Mossadegh: A Political Biography (London: Croom Helm, 1986), p. 181. 3. Stephen E. Ambrose, Eisenhower: President and Elder Statesman, Vol. 2: 195269 (London: Allen and Unwin, 1984), p. 111; Mark Gasiorowski, U.S. Foreign Policy and the Shah: Building a Client State in Iran (Ithaca: Cornell University Press, 1991), pp. 8283; Mary Ann Heiss, Empire and Nationhood: The United States, Great Britain, and Iranian Oil, 195054 (New York: Columbia University Press, 1997); and C. M. Woodhouse, Something Ventured (London: Granada, 1982). Kermit Roosevelt has pointed also to the inuential Under Secretary of State, General Walter Bedell Smith, as favoring clandestine operations. Kermit Roosevelt, Countercoup: The Struggle for the Control of Iran (New York: McGraw-Hill, 1979), p. 4. 4. David Horowitz, The Free World Colossus: A Critique of American Foreign Policy in the Cold War (New York: Hill & Wang, 1971), pp. 184185; Joyce Kolko and Gabriel Kolko, The Limits of Power: The World and United States Foreign Policy, 194554 (New York: Harper & Row, 1972), pp. 412420; Richard. J. Barnet, Intervention and Revolution: The United States in the Third World (London: MacGibbon and Kee, 1970), pp. 225229; Joseph Frankel, British Foreign Policy, 194573 (London: Oxford University Press, 1975), p. 218; Mostapha Elm, Oil, Power, and Principle: Irans Oil Nationalization and Its Aftermath (Syracuse: Syracuse University Press, 1992), p. 276; and Robert Engler, The Politics of Oil: A Study of Private Power and Democratic Direction (New York: Macmillan, 1961), p. 310. 5. James A. Bill, The Eagle and the Lion: The Tragedy of American-Iranian Relations (New Haven: Yale University Press, 1988), p. 85; and Barry M. Rubin, Paved with Good Intentions: The American Experience in Iran (Oxford: Oxford University Press, 1981), p. 56. 6. W. Averell Harriman, Leadership in World Affairs, Foreign Affairs, Vol. 32, No. 4 (Winter 1953/ 1954), pp. 525540; Homa Katouzian, ed., Musaddiqs Memoirs (London: Jebhe, National Movement of Iran, 1988), p. 272; and Maziar Behrooz, Tudeh Factionalism and the 1953 Coup in Iran, International Journal of Middle East Studies, Vol. 33, No. 3 (August 2001), p. 377.

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revisionist emphasis, in an earlier issue of the Journal of Cold War Studies, on continuity as an explanation for U.S. policy toward Iran in 19501953.7 However, the article takes issue with Gavins emphasis on the large-scale U.S. military buildup undertaken by the Truman administration after the adoption of NSC-68. The argument I develop here is that the continuity in U.S. policy toward Iran was attributable instead to the unusually strong shared principles and assumptions that guided both administrations. Greater U.S. assertiveness in Iran resulted not from the change in administration but from a process spurred by the ineffectiveness of U.S. policy as of early 1952, by waning British power, and by the systematic closure of options in Iran that led to the ascendancy of policymakers favoring a stronger U.S. approach. Finally, the article seeks to shed further light on the coup itself by emphasizing that policy continuity rather than change best explains why the Eisenhower administration sought a change of Iranian leadership and pursued this objective by orchestrating a coup. The article is divided into ve sections. The rst provides the context of U.S. policymaking and outlines what was at stake for the United States in Iran and the oil dispute. The second develops the strong elements of continuity in the approaches of the Truman and Eisenhower administrations: their shared perception of the crisis as a Cold War issue; their preferred solution of an oil settlement to stimulate political reform and economic rehabilitation; and the shared assumptions that dened policy parameters and that, in turn, prescribed options. The third section demonstrates policy continuity in practice by analyzing what Secretary of State Dean Acheson called the Democrats one more big effort to solve the oil crisis in the autumn of 1952.8 This is a good test of continuity because the initiative was incomplete when Truman left ofce. Eisenhower had the choice of either proceeding with the plan or shelving it quietly. Moreover, this initiative has been much neglected as a consequence of an excessive focus on the later resort to a coup. The fourth section explains how the transition to a more assertive U.S. Iranian policy, so often attributed to the change of administrations, began much earlier under the Truman administration through three successive shifts of policy in 1952. The nal section addresses the coup itself, arguing that although the Eisenhower administration differed from its predecessor in the means it used, this difference stemmed mainly from the closure of the limited options bequeathed by the Truman administration.
7. Francis J. Gavin, Politics, Power, and U.S. Policy in Iran, 19501953, Journal of Cold War Studies, Vol. 1, No. 1 (Winter 1999), pp. 5689. 8. Dean Acheson, Present at the Creation: My Years in the State Department (London: Hamilton, 1970), p. 681.

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U.S.
The oil dispute began in late 1948 when the Iranian government presented the AIOC with a 25-point memorandum demanding that its 1933 oil concession be renegotiated to provide Iran with a more equitable return for the exploitation of its natural resources. Initially this incident seemed no more than a commercial disagreement with implications for the United States only insofar as the terms of a settlement might set a precedent for U.S. oil companies operating in the Middle East. However, the dispute quickly escalated as Iranian nationalist aspirations, a complacent British approach, and an unclear relationship between the AIOC and the British government blurred the boundaries between commercial negotiations and attempts to exercise British imperial power.9 Also, the Berlin Blockade of 19481949, the loss of China in 1949, and the globalization of U.S. containment policy after the outbreak of the Korean War superimposed a new Cold War dimension on the oil crisis. Moreover, once the United States showed an interest in the dispute, it became central in British and Iranian policies. Britain sought strong statements of support to cow Iran into accepting the Supplemental Oil Agreement, a deal concluded on 17 July 1949 that was better than the 1933 concession but that still ensured handsome prots for the company. Iran appealed to U.S. antiimperialism and exploited Anglo-American disagreement to use Washington to extract concessions from London. At stake for the United States in the oil crisis were relations with its premier Cold War ally, oil supplies, Middle Eastern defense, the protection of Iran against Communism and, for a limited period, the potential for escalation into confrontation with the Soviet Union. Because all these concerns were horribly entwined, the stakes were raised even further. At the macro level of the Cold War, U.S. global strategy was plagued by glaring capability decits as a consequence of the globalization of containment strategy after several years of postwar military austerity. Vital interests far outstripped the military capacity to defend them. Chinas intervention in the Korean War tied down the bulk of American conventional forces in the Far East. And it would take at least two years for the massive accretion of military capability envisaged in NSC-68 to begin coming on line.10 Even in Europe Secretary of State
9. For an assessment of the impact of the blurred relationship between the AIOC and the British government, see Stephen Marsh, HMG, AIOC and the Anglo-Iranian Oil Crisis, Diplomacy and Statecraft, Vol. 12, No. 4 (December 2001), pp. 143174. 10. For a concise overview of NSC-68, see Alan P. Dobson and Stephen Marsh, U.S. Foreign Policy Since 1945 (London: Routledge, 2001). The classic text remains John Lewis Gaddis, Strategies of Containment: A Critical Appraisal of Postwar American National Security Policy (New York: Oxford University Press, 1982). For different interpretations, see Ernest R May, ed., American Cold War Strategy: Interpreting NSC 68 (New York: Bedford Books, 1993).

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Acheson noted the irony of the marine band playing Ive Got Plenty of Nothin and It Aint Necessarily So at the NATO treaty ceremony in April 1949.11 The United States therefore desperately needed allies, and none was more important than Britain. Britain was in a strategically vital position, exercised crucial political inuence in Western Europe, the Middle East, and South East Asia, and retained an major economic position at the center of the Commonwealth and the Sterling Area. Also, in 1949 Britain devoted a greater proportion of its national income to defense expenditure than even the United States did,12 and by 1950 British production was two-and-a-half times that of France and 50 percent more than West Germany. Furthermore, Britain remained a considerable force, second only to the United States among the Western powers, and was thus uniquely placed to fulll many foreign policy objectives that the United States lacked the power, inuence, or willingness to tackle itself. U.S. policymakers therefore allocated Britain multiple roles, including those of leader in Western Europe, chief partner in strategic and economic planning, guarantor of political and economic stability in the Middle East, guardian of Commonwealth cohesion, and supplier of strategic staging posts and military bases, especially nuclear bases in Britain itself. U.S. ofcials readily conceded in 1950 that, of their international relationships, the United Kingdom was in a special or preferred positionthe facts of the world situation require it.13 U.S. ofcials found the Middle East a perplexing theater. The region had hitherto been of little geostrategic concern, and although the 1944 Culbertson Mission indicated some developing economic interest, by 1947 these interests, with the exception of oil, were still rated as not particularly outstanding.14 However, Stalins delay in withdrawing troops from northern Iran in 1946 caused a hardening of U.S. attitudes toward the Soviet Union,15
11. Acheson, Present at the Creation, p. 284. 12. The difference was 8.0 percent compared to 6.7 percent. CIA, The Possibility of Britains Abandonment of Overseas Commitments, 23 December 1949, in Harry S. Truman Library (HSTL), Presidents Secretarys Files (PSF), Intelligence Files, Box 257, p. 11. 13. Henry Richardson Labouisse Jr. to Perkins, 27 February 1950, United States National Archives (NA), Record Group (RG) 59, Box 2768, p. 4. 14. Memorandum, Specic Current Questions, n.d., in U.S. Department of State, Foreign Relations of the United States, 1947, Vol. V, pp. 556557 (hereinafter referred to as FRUS, with appropriate year and volume numbers). For details, see John A. DeNovo, The Culbertson Economic Mission and Anglo-American Tensions in the Middle East, 19441945, Journal of American History, Vol. 63, No. 4 (March 1977), pp. 913936. 15. Daniel Yergin, Shattered Peace: The Origins of the Cold War and the National Security State (Boston: Houghton Mifin, 1977), p. 179; Harry S. Truman, Memoirs, Vol. 1: Year of Decision (London: Hodder and Stoughton, 1955), pp. 460461; Mark H. Lytle, Origins of the Iranian-American Alliance 194153 (New York: Holmes and Maier, 1987); and Gary R. Hess, The Iranian Crisis of 19451946 and the Cold War, Political Science Quarterly, Vol. 89, No. 1 (March 1974), pp. 117146.

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and by November 1947 the NSC had accepted that the security of the Eastern Mediterranean and of the Middle East is vital to the security of the United States.16 Two years later, U.S. Assistant Secretary for Near Eastern and South Asian Affairs George McGhee told the Middle East Chiefs of Mission gathered in Istanbul that their region was emerging as a key area in the struggle against Communist subversion. The U.S. State Departments Bureau of Near Eastern, South Asian, and African affairs (NEA) articulated the reasons for this in 1950. Access to the Persian Gulf, the NEA argued, was a historic Soviet objective, and by achieving this goal the USSR would acquire advance bases for military and subversive activities hundreds of miles nearer potential U.S.UK lines of defense in the Middle East. The Soviet Union would also control part of the Middle Eastern oil reservoir and be able to threaten the remainder. Western communication and supply lines would also be jeopardized, not least shipping in the Persian Gulf and continental air routes across Iran and adjacent areas. Furthermore, the will of Middle Eastern countries to resist Soviet aggression would be gravely damaged, and Western rearmament and economic reconstruction, which were predicated on reliable sources of oil, would be jeopardized.17 Indeed, in 1954 Eisenhowers NSC estimated that Western Europe would be 90 percent dependent on Middle Eastern oil by 1975 and that, if such supplies were lost, Western Europe is not defensible, our investment in its rehabilitation will be dissipated, and it will be lost and become a liability to the free world.18 In many respects Iran was a microcosm of the wider Middle Eastern picture. The United States had little established interest there and in June 1949 ranked it far below Turkey and Greece, owing especially to the limited potential of the Iranian armed forces.19 Also, before NSC-68 was adopted, U.S. ofcials regarded Iran as safe, dismissing warnings to the contrary by the U.S. ambassador to Iran, John Wiley, as periodic cries of wolf and as exaggerated statements which he intended to be slightly shocking.20 The dominant assessment was that the Soviet Union would not risk overt aggression against Iran, that the outlawed Communist Tudeh Party was incapable of overthrow16. G. P. Merriam of the Policy Planning Staff, memorandum, 13 June 1949, in FRUS, 1949, Vol. VI, p. 39; and State Department, memorandum, n.d., in FRUS, 1947, Vol. V, p. 513. 17. NEA paper, Political and Economic Factors Involved in Military Assistance to Iran in FY 1951, n.d., in FRUS, 1950, Vol. V, p. 466. 18. NSC Staff study on certain problems relating to Iran, attached to Statement of Policy by the NSC, 2 January 1954, in FRUS, 19521954, Vol. X, p. 881. 19. G. P. Merriam, memorandum, 13 June 1949, in FRUS, 1949, Vol. VI, pp. 4243. 20. Daily Meeting with Secretary, 1 March 1950, in FRUS, 1950, Vol. V, p. 482; and George McGhee, Envoy to the Middle World: Adventures in Diplomacy (New York: Harper and Row, 1983), p. 73.

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ing the regime, and that the Iranian economy, though backward, was probably as stable as in any recent period.21 All of this changed quite radically, however, once the shift to global containment sensitized policymakers to weak spots in the perimeter. Iran was rapidly promoted in the list of U.S. vital interests. Its loss, U.S. ofcials feared, would give the Soviet Union a bulkhead in the Persian Gulf, with all the potential consequences for the Middle East outlined by the NEA. Also, it would undermine assistance being given to Greece and Turkey and end almost before they began U.S. hopes of developing a Northern Tier of countries to bolster Middle Eastern defense. As Wiley warned in characteristic prose in February 1950:
Once I had a friend who saved up enough money to buy a dress suit to take the girl of his choice to a dance. The great moment arrived. But he had forgotten to buy the white tie; everything, therefore, went to waste. In our policy towards Greece, Turkey and Iran, Iran is, I think, the white tie we forgot to buy.22

The nal complicating factor was the potential for the oil crisis to escalate into a superpower confrontation that would see either Iran partitioned between Britain and the Soviet Union or, still worse, the onset of a hot war. A Treaty of Friendship concluded in 1921 between Soviet Russia and Iran entitled Moscow to intervene if any foreign power invaded Iran. This clause suddenly appeared relevant when Britain seriously considered military action to protect its interests after Mossadegh formally nationalized the Iranian assets of the AIOC on 1 May 1951. The different assessments in London and Washington of the risks involved in military intervention exacerbated matters. Many British ofcials believed that over-much weight need not be attached to the argument that Russia could invoke the 1921 Persian-Russian Treaty to intervene in Iran, and that a preemptive strike would best safeguard British economic interests and minimize the chance of escalation. Although the British Cabinet was by no means united on the question of military intervention, some members argued that the risk of Soviet occupation of northern Iran might be worth accepting provided that we retained full control of the Abadan renery.23 British Chancellor of the Exchequer Hugh Gaitskell privately noted that partition of Iran between Britain and the
21. NSC-54, 27 January 1949, in FRUS, 1949, Vol. VI, pp. 545552; and Jernegan to Thurston, 11 October 1948, in FRUS, 1949, Vol. VI, pp. 46. For more on the Tudeh, see Osamu Miyata, The Tudeh Military Network during the Maziar Oil Nationalization Period, Middle Eastern Studies, Vol. 23, No. 3 (July 1987), pp. 313328; and M. Behrooz, Tudeh Factionalism and the 1953 Coup in Iran, International Journal of Middle East Studies, Vol. 33, No. 3 (August 2001), pp. 363382. 22. Wiley to Sec. State, 15 February 1950, in FRUS, 1950, Vol. V, p. 471. 23. Persia, memorandum by Sec. State for Foreign Affairs, 10 July 1951, in United Kingdom National Archives, London (hereinafter UKNA), CAB 129, CP (51)212, p. 2.

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Soviet Union sounds bad but I think it might be the best ultimate solution.24 U.S. ofcials, however, strongly opposed this line of thinking. Secretary of Defense Robert Lovett worried that British military action would provide the perfect pretext for the USSR to move troops into Azerbaijan.25 Also, even if a hot war did not follow, British action would alienate members of the United Nations (UN), give the Soviet Union a major propaganda victory, and put London and Washington publicly at loggerheads (especially considering U.S. leadership of the effort to evict the Soviet Union from Iran in 1946). Furthermore, potential armed intervention in Iran smacked of old-style gunboat diplomacy, which both annoyed anti-imperialists within the State Department and threatened U.S. attempts to inuence Third World nationalism favorably.

U.S. interests in the oil crisis were thus multifaceted, and policy had to take account of the complex interplay of global Cold War considerations, regional concerns for Middle Eastern security, and the micro level of Iran. Also, Irans elevation in U.S. strategic interests gave greater urgency to the matter. As early as April 1950 U.S. ofcials argued that the dangers had become so great and the stakes so high in Iran that the United States could not afford to take any chances.26 In light of traditional interpretations that U.S. policy toward Iran changed only after the Republicans assumed ofce in January 1953, it is instructive to examine the striking similarities in the goals and assumptions of the Truman and Eisenhower administrations during the oil crisis. At the broadest level, the administrations were joined in viewing the oil crisis as rst and foremost a Cold War concern. This is clear from Anglo-American disagreement about how to approach the crisis. British commercial interests ran up hard against U.S. requests that Britain expedite an oil settlement in order to stabilize Iran against the Communist Tudeh threat.27 As Sir William Strang, the British permanent under-secretary of state for foreign affairs, summed up, to the Americans, in the ght against Communism in Persia,
24. P. M. Williams, ed., The Diary of Hugh Gaitskell 19451956 (London: Cape, 1983), p. 260. 25. William R. Louis and James A. Bill, eds., Musaddiq, Iranian Nationalism and Oil (Austin: University of Texas Press, 1988), p. 8. 26. McGhee to Acheson, Iranian crisis, 25 April 1950, in FRUS, 1950, Vol. V, p. 524. 27. Record of Anglo-U.S. talks re: Iran and the Middle East, 26 October 1950, in FRUS, 1950, Vol. V, p. 611.

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the Anglo-Iranian Oil Company is expendable. It is not possible for us to start from this premise.28 The preoccupation of the Truman and Eisenhower administrations with the Cold War is also revealed in their appreciation of the crisis in Iran. On 14 May 1951 McGhee listed the primary objectives of the Truman administration as: to maintain peace; to keep Iran on the side of the West; to maintain the ow of oil; and to protect concession rights in Iran and other parts of the world.29 At approximately the same time Acheson averred that key U.S. interests were jeopardized by the oil crisis: (a) world peace, (b) stability and Western orientation Iran, ME and perhaps Moslem world, (c) continuance ow of oil essential to West, (d) stability ME and other fon [foreign] concessions and (e) Brit balance of payments position.30 Almost three years later an NSC assessment of the situation in Iran under the Eisenhower administration drew strikingly similar conclusions: Iran must be regarded as a continuing objective of Soviet expansion on account of its key strategic position, oil resources, vulnerability to subversion, and weak position in the event of armed attack by the USSR. Also, if Iran were lost to Communism it would, according to the report,
a. Be a major threat to the security of the entire Middle East, as well as Pakistan and India. b. Increase the Soviet Unions oil resources for war and its capability to threaten important free world lines of communication. c. Damage United States prestige in nearby countries and . . . seriously weaken, if not destroy, their will to resist communist pressures. d. Permit the communists to deny Iranian oil to the free world, or alternatively to use Iranian oil as a weapon of economic warfare. e. Have serious psychological impact elsewhere in the free world.31

These common Cold War priorities and Anglo-American friction indicate the broad continuity between the Truman and Eisenhower administrations conceptions of the crisis in Iran. Even when British military planning in spring 1951 threatened to allow the USSR to invoke the 1921 Treaty of Friendship, State Department ofcials were explicit and adamant that this is a cold-war problem we are dealing with, not a shooting-war problem.32 However, this
28. Strang to Franks, 25 April 1951, in UKNA, Foreign Ofce Files (FO) 371/91529. 29. Memorandum of conversation by Richard Funkhouser of the Ofce of Near Eastern Affairs,14 May 1951, in FRUS, 1951, Vol. V, p. 309. 30. Sec. State to embassy in U.K., 31 March 1951, in FRUS, 1951, Vol. V, p. 296. 31. Statement of Policy by the NSC, 2 January 1954, in FRUS, 19521954, Vol. X, pp. 865866. 32. State Dept. draft minutes of State-Joint Chiefs of Staff meeting, 2 May 1951, in FRUS, 1951, Vol. V, p. 119.

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theme of continuity extends far beyond broad conceptions and into agreement about the major threat to Iran and how best to alleviate it. The administrations shared a common diagnosis of the key problem in Iran and how to treat it. The main problem was that poor socioeconomic conditions provided a fertile breeding ground for Communist subversion. A series of reports in April 1950 laid out the apparently dangerous and explosive situation: Iran faced a serious foreign-exchange account decit, a decline in industrial activity and purchasing power, and an alarming ight of capital, as well as a lack of new investment. The Iranian Seven Year Plan, which envisaged 210 million of economic and social development, was stillborn.33 Irans leaders exacerbated matters by scapegoating the West rather than taking corrective action. U.S. ofcials feared a second China, whereby the lack of American aid partially replaced British intrigue as the whipping boy of Iranian politics.34 Three years later, the Eisenhower administration broadly concurred with these assessments. Irresponsible Iranian nancial management, coupled with a British oil embargo imposed as part of its economic sanctions against Mossadegh, had aggravated Irans economic problems. Indeed, on 17 July 1953 U.S. Charg in Iran Mattison referred to the almost hopeless nancial and economic situation.35 Even after the coup, Eisenhowers NSC emphasized the need to provide overdue economic and social welfare programs, the exhaustion of Irans foreign exchange, the adverse impact, particularly in urban centers, of an almost 50 percent reduction in imports, and inationary pressure that resulted from the governments printing of money to pay its bills.36 As for the solution to Irans problems, the administrations again saw eye to eye. For three key reasonsIrans Cold War allegiance and U.S. strategic planning; the dependence of the Seven-Year Plan on oil revenues; and enormous problems in extending long-term substantial U.S. aid to Iranthe solution had to be an oil settlement. First, the oil crisis threatened to incline
33. Rountree to Jernegan, 23 March 1950, in FRUS, 1950, Vol. V, pp. 491499; State Dept. Paper, The Present Crisis in Iran, n.d., in FRUS, 1950, Vol. V, pp. 509518; and Cost of plan as given to the House of Commons, 30 July 1951, Parliamentary Debates, Commons, 5th ser., Vol. 491 (1951), p. 966. The plan was developed by Overseas Consultants Inc., an organization of one British and eleven American rms of consulting engineers. On the origins and development of the company, see Overseas Consultants Inc., Report on Seven Year Development Plan for the Plan Organization of the Imperial Government of Iran, 5 vols. (New York: Overseas Consultants, 1949); and Laurence Paul ElwellSutton, Persian Oil: A Study in Power Politics (London: Lawrence and Wishart, 1955), pp. 159161. 34. Views of General Collins in McGhee to Sec. State, 25 April 1950, in FRUS, 1950, Vol. V, p. 523; and The Present Crisis in Iran, p. 511. Factors that bolstered this fear included the Shahs desire to know why the United States treated Iran so differently from Turkey and the negative popular reaction to rumors in February 1950 of an impending U.S. initiative in Indonesia. 35. Mattison to State Dept., 17 July 1953, in FRUS, 19521954, Vol. X, p. 737. 36. NSC Statement of Policy, 2 January 1954, in FRUS, 19521954, Vol. X, pp. 866, 878879.

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Iran toward either neutrality or Communism because the commercial aspects of the crisis were so entangled with Iranian nationalism and Irans struggle against British imperial power. Either potential outcome would be unacceptable. Moreover, even if Iran retained a Western orientation, it was unlikely, for as long as the dispute continued, to cooperate in U.S. strategic ambitions for regional defense, regardless of whether this was the Middle East Defense Organisation (MEDO) or as part of the Northern Tier with Turkey and Pakistan. It is not surprising, therefore, that even before Mossadegh nationalized the AIOCs Iranian assets U.S. ofcials were citing the dispute as a handicap in the control of communism in Iran.37 An oil settlement was also the chosen means to save Iran from Communism because socioeconomic reforms depended on resurrecting the Seven Year Plan. This in turn required a settlement of the oil dispute insofar as oil revenues constituted Irans principal source of foreign exchange and internal investment. In January 1954 the NSC pointed out that these revenues accounted for more than 50 percent of Irans foreign-exchange income and a third of its total income. Maintaining the idle oil facilities during the oil embargo drained the treasury. Some $40 million to $80 million would be required to reactivate the Abadan renery and bring back on line the production, pipeline, loading, and storage facilities.38 The nal reason an oil settlement was considered the only long-term hope for Iran is that large-scale and sustained U.S. aid was the only alternative to keep Iran aoat. Neither Truman nor Eisenhower was prepared to sanction this. Iran potentially had all the income it could manage through its oil reserves, and Congress was unlikely to approve large-scale aid if the Iranians could in any way be seen as contributing to a deadlock in the oil dispute. Also, substantial aid might relieve the pressure so much that Iran would never accept an oil deal, and the United States would be stuck with an indenite aid commitment. It was possible, too, that Iranian corruption and mismanagement would dissipate the effect of aid and that Iranian nationalism might turn against aid dependency as a form of neoimperialism, with serious implications for U.S. prestige. Furthermore, the appearance of bailing out Iran from its predicament would threaten wider U.S. interests. The British would be furious because it would undercut their economic pressure on Tehran to accept an oil deal. The sanctity of contract would be jeopardized if the United States were seen to aid states that nationalized foreign-owned industries without compensation. U.S. prestige throughout the Middle East would be en37. Istanbul Conference of Middle Eastern Chiefs of Mission, 1421 February 1951, in FRUS, 1951, Vol. V, p. 61. 38. NSC Statement of Policy, 2 January 1954, pp. 873, 876.

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dangered if U.S. leaders overcommitted themselves and then failed to achieve their objectives in Iran. The Truman and Eisenhower administrations were thus joined in their identication of Communist subversion as the key threat to Iran and in seeing an oil settlement as the key to providing the political reforms and socioeconomic improvement necessary to combat it. Still, this is not the limit of continuity between their approaches to Iran and the oil crisis. They also shared three key working assumptions that delimited options available to them for solving the disputeassumptions about Britains importance as the principal U.S. ally, the implications of any settlement for oil supplies and the sanctity of contract, and the necessity of having strong and pro-Western leaders in Iran. Both administrations recognized Britain as a major factor in their respective policies toward Iran. The reason was twofold: Britains immense signicance to U.S. Cold War strategy, and the enormous importance of the AIOC concession to Britain. The former gave British policymakers signicant inuence vis--vis Washington, especially with regard to the Middle East, a region in which the United States was relatively weak and Britain held a longestablished position that it deemed vital to defend.39 The result was AngloAmerican interdependence. The U.S. State Department noted in 1947, albeit in oversimplied terms, that it would be possible to describe the situation in terms of a simple bargain. If for political and strategic reasons we want them to hold a position of strength in the Middle East, then they must have from us economic concessions with respect to the area which will make it worth their while to stay there.40 As for the AIOC oil concession in Iran, it was Britains most important overseas asset and carried major economic, strategic, and symbolic signicance. Its revenues were vital to the British treasury, as oil production soared from 16.8 million tons in 1945 to 31.75 million by 1950.41 If Iranian oil were sacriced, Britain would lose its enormous investment in Iran and nd its balance of payments crippled owing to its extraordinary dependence on overseas trade in general and oil in particular.42 Furthermore, because the British government was the AIOCs major shareholder, the company was
39. Memorandum on policy in the Middle East and Eastern Mediterranean by the British Group, n.d., in FRUS, 1947, Vol. V, p. 580. 40. State Department memorandum, n.d. (cited in n. 16 supra), p. 516. 41. Henry Longhurst, Adventure in Oil: The Story of British Petroleum (London: Sidgwick and Jackson, 1959), p. 136; and record of meeting at British Treasury Department, 16 December 1953, in British Petroleum Archives, 58246. 42. Minute by Peter E. Ramsbotham, 22 November 1950, in UKNA, FO 371/82377; and National Intelligence Report 14, 8 January 1951, in FRUS, 1951, Vol. V, p. 269. Some idea of British reliance on Middle Eastern oil can be gained from oil import gures for 1949/1950: 22.1 million from Bahrain and Kuwait; 25.4 million from Saudi Arabia, Iraq, and Iran; and just 8.4 million from the rest of the world. Figures from Phillip Darby, British Defence Policy East of Suez, 194768 (London: Hodder and Stoughton, 1985), p. 25.

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often seen as an instrument of British policy toward Iran and the Middle East.43 British ofcials were convinced that their overseas interests necessitated a satisfactory outcome in Iran. U.S. policy toward Iran thus had to consider Britains enormous stake in the AIOC concession, the importance of Britain as a Cold War ally, the British role as military guarantor of the Middle East, and Britains strategic responsibility for Iran.44 In many respects the bargain of 1947 remained intact. In the specic case of Iran, this meant that if the United States wanted Britain to maintain its commitments, British economic interests had to be protected as far as possible. Britain was thus an important factor in, and constraint on, the Iranian policies of Truman and Eisenhower. Both administrations explicitly recognized this. In 1950, for example, Truman administration ofcials acknowledged that the success of U.S. objectives in Iran depended on British cooperation.45 Similarly, Eisenhowers NSC warned in March 1953 that to go against Britain in Iran would risk losing more elsewhere than could be gained in Iran itself.46 The Truman and Eisenhower administrations also shared concerns about the sanctity of contracts and about the implications of the oil crisis for world oil supplies and U.S. oil interests in the Middle East. Three commercial motives played a crucial role in U.S. policy across both administrations. First, the sanctity of contracts demanded an oil settlement that included reasonable compensation to the AIOC. Abrogation of the contract without compensation would have adverse repercussions for U.S. oil interests in the Middle East and for international trade more generally. Second, the stability of Middle Eastern oil concessions required the setting of a benchmark agreement that represented a fair division of prots between concession-granter and concession-holder. U.S. policymakers saw this benchmark as ARAMCOs 50:50 prot-sharing agreement with Saudi Arabia in December 1950.47 Thereafter the stability of Middle Eastern oil concessions demanded that an Iranian settlement should be roughly equivalent to this formula.48 Third, the U.S. gov43. Barry Rubin has described it as a state within a state. See Rubin, Paved with Good Intentions, p. 12. See also John Gallagher, Decline, Revival and Fall of the British Empire: The Ford Lectures and Other Essays (Cambridge, UK: Cambridge University Press, 1982), p. 125; and Arthur C. Millspaugh, Americans in Persia (Washington, DC: Brookings Institution, 1946), p. 162. 44. Ambassador at Large (Jessup) to Sec. State, memorandum, 25 July 1950, in FRUS, 1950, Vol. V, p. 189; and NSC Statement of Proposed Policy, 27 June 1951, in FRUS, 19521954, Vol. X, p. 74. 45. Richards to Sec. State, 14 December 1950, in FRUS, 1950, Vol. V, p. 632. 46. Memorandum of Discussion at the 135th meeting of the NSC, 4 March 1953, in FRUS, 1952 1954, Vol. X, p. 694. 47. Irvine H. Anderson, ARAMCO, The United States, and Saudi Arabia: A Study of the Dynamics of Foreign Oil Policy 193350 (Princeton, NJ: Princeton University Press, 1981). 48. As Secretary of State Dulles explained: Whatever solution is found for [the] Iranian problem will

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ernment wanted to ensure that oil supplies to the West and price stability in the world oil markets were maintained. The loss of Iranian oil in 1951 deprived the West of a signicant percentage of its oil needs. The resulting shortfall threatened price instability, caused an additional oil charge of $700,000,000 for Europe as a whole,49 and jeopardized Western rearmament and reconstruction programs spurred by the Korean War. The Truman administration responded with Plan of Action No. 1, under which nineteen American oil companies entered a voluntary arrangement to alleviate oil shortages. Authorized under the Defense Production Act (DPA), normal commercial activities were intensied and tanker capacity used more effectively through voluntary reroutings to supply 19,429,000 barrels of crude oil and 26,558,000 barrels of rened products to areas in need in the free world.50 The Eisenhower administration did something similar, only in reverse, to protect price and supply stability in world oil markets as Iranian oil was brought back on line. By the spring of 1953, oil supplies had been so successfully restored that doubts arose in British circles about whether it was in the UKs interest to reach a settlement so long as Middle East crude oil remained in surplus and tankers were plentiful.51 These circumstances meant that production cutbacks were required elsewhere if the reintegration of Iranian oil was not to destabilize the world market. To this end, Eisenhower, like Truman before him, used the DPA to give U.S. oil companies antitrust protection to form a voluntary arrangement. This time it took the form of the oil consortium that resolved the dispute in October 1954 in a deal that upheld the 50:50 prot-sharing standard, protected the sanctity of contracts by awarding the AIOC compensation, and somewhat mollied British concerns by giving the AIOC a 40-percent stake.52
soon be forced on both of us [Britain and America] by all other countries if [it is] in any way more advantageous to them than those now in operation. Cited from Secretary of State to the Embassy in Iran, 23 September 1953, in FRUS, 19521954, Vol. X, p. 802. 49. National Intelligence Report 14, p. 269. 50. Report to the NSC by the Secretary of the Interior and Petroleum Administrator for Defense, 8 December 1952, in HSTL, PSF, p. 10. 51. Paper by Peter E. Ramsbotham, Persian OilFuture Policy, 14 April 1953, in UKNA, FO 371/ 104615; and John H. Brook (Ministry of Fuel and Power) to John A. Beckett (Petroleum Attach at the British Embassy Washington), n.d., in UKNA, POWE 33 1937. 52. The agreement also gave the National Iranian Oil Company (NIOC) nominal ownership of the Iranian oil industrys assets and divided the concession thus: The AIOC had a 40 percent stake, the ve U.S. oil majors shared 40 percent, Royal Dutch-Shell was given 14 percent, and Compagnie Franaise des Ptroles received 6 percent. Intensive lobbying by a number of smaller American independent oil companies resulted in the U.S. oil majors reducing their share to 7 percent each, thus leaving 5 percent to divide between nine independents, who created the Iricon Agency for this purpose. Compensation to the AIOC amounted to 25 million from Iran, 32.4 million from other consortium participants in the rst year of operations, and a further payment per ton of crude oil equivalent to 182 million. James H. Bamberg, The History of the British Petroleum Company, Vol. 2: The AngloIranian Years (New York: Cambridge University Press, 1994), p. 509.

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The issue of Iranian leadership was the nal factor that guided the policies of both administrations . Truman and Eisenhower pragmatically wanted strong pro-Western Iranian leadership and, where possible, to work with the forces of nationalism. The continuity was stronger than claimed by some scholars, particularly those who have cited Operation Ajax as signaling a hardline shift by the Eisenhower administration away from Mossadegh and nationalist movements more generally. In reality, the Truman administration had dealt happily with the more hardline General Razmara prior to his assassination and Mossadeghs accession to power. Once Mossadegh was in ofce, the Truman administration, for want of a better option, subsumed its reservations about him as a violent nationalist and an unknown quantity.53 He was considered honest and anti-Russian, had promised to keep Iranian oil owing to its existing customers, and would give the United States a chance to channel nationalism against Communism.54 His popularity meant also that he was perhaps the only person who could, in George McGhees words, make an agreement with the Anglo-Iranian Oil Company and get away with it.55 However, by the time Eisenhower came to power, Mossadegh was but a pale shadow of initial U.S. assessments and hopes. The Iranian leader by that point was relying increasingly on Tudeh support to sustain himself in power, was undermining the loyalty of the armed forces to the Shah, was unsupportive of the Iranian military, and seemed unable or unwilling to settle the oil dispute.56 Alternative leadership was thus required, and the Eisenhower administration moved to secure it. That the motivation was more exible than often alleged is underlined by the continuing U.S. interest in Iranian nationalism. As the NSC stated on 2 January 1954, the United States should recognize the strength of Iranian nationalist feeling; try to direct it into constructive channels and be ready to exploit any opportunity to do so.57 The second factor suggesting considerable similarities between the administrations in their selection of Iranian leadership is that it was the Truman administration that began the U.S. move away from Mossadegh and extreme
53. State Dept. Draft minutes of State-Joint Chiefs of Staff meeting, 2 May 1951, in FRUS, 1951, Vol. V, p. 118; Sec. State to US Embassy Iran, 10 May 1951, in FRUS, 19521954, Vol. X, pp. 50 51; and State Dept. to U.S. Embassy Iran, 7 May 1951, in NA, RG 59, LM 73, Reel 44. 54. CIA report Analysis of Iranian political situation, 12 October 1951, in HSTL, PSF, Box 180, Subject File Iran; W. Averell Harriman to Sec. State, 19 July 1951, in HSTL, PSF, Box 180, Subject File Iran; and Diba, Mohammad Mossadegh, pp. 9697. Acheson has argued that the United States was slow to perceive Mossadeghs essential conservatism. Dean Acheson, Present at the Creation, p. 504. 55. Memorandum of conversation by Richard Funkhouser, 14 May 1951, p. 315. 56. By 1953 he had drastically cut the secret service, decreased the military budget by 15 percent, and transferred 15,000 men from the army to the gendarmerie. Copy of communication from U.S. Embassy Iran, 10 April 1953, in UKNA, FO 371/104566; and Ervand Abrahamian, Iran Between Two Revolutions (Princeton: Princeton University Press, 1982), p. 273. 57. NSC Statement of Policy, 2 January 1954, p. 870.

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Iranian nationalism.58 This shift was spurred by growing doubts both about American rather than Communist ability to capture nationalist movements generally and about Mossadegh himself. From August 1951 to the spring of 1952, key gures in the Truman administration, including McGhee, U.S. Ambassador to Iran Loy Henderson, and Special Envoy Averell Harriman, became disenchanted with Mossadegh.59 Instead of a cooperative bulwark against Communism, he had become an apparently irresponsible fanatic who lived in a dream world in which everyone helped Iran on his terms. Mossadegh was also unwilling to spend more on Irans military forces, threatened to sell oil to the Eastern bloc, and was intransigent in the oil dispute.60 By the spring of 1952 the Truman administration was prepared to let Mossadegh fall in the hope that new leadership would bring an oil settlement and stability to Iran. At this time Britain was backing the candidacy of Qavam al-Saltana, who from three previous spells as prime minister was known to be a more conservative force liable to dissolve the Majlis (Iranian parliament) and arrest dissidents and extreme nationalists, including Mullah Kashani and Mossadegh. Tellingly, the Truman administration implicitly supported British action by exerting pressure on Mossadegh to resign, which he duly did on 16 July.61 That Eisenhower ever had to deal with Mossadegh was due mainly to British bungling of the opportunity to work with Qavam. This asco allowed Mossadegh to sweep back into power on a tide of nationalist fervor and forced the Truman administration to cozy up to him once more.

Policy Continuity in Practice: The Democrats One More Big Effort

There was considerable continuity in Trumans and Eisenhowers perceptions of the oil crisis, of how best to save Iran, and of the considerations that deter58. Others have also argued that Truman quite quickly recognized the need to be pragmatic in choosing leaders and regimes to work with. See, for example, Linda Wills Qaimmaqami, The Catalyst of Nationalization: Max Thornburg and the Failure of Private Sector Developmentalism in Iran, 1947 51, Diplomatic History, Vol. 19, No. 1 (Winter 1995), pp. 131. Qaimmaqami argues that by April 1951 the Truman administration had recognized that future American security in the Middle East meant large government loans, direct American intervention, support for dictatorship with democratic genuections, the promotion of stable political systems, and statist control over slow economic reforms. 59. Henderson to Berry, 12 January 1952, in NA, RG 59, LM 73, Reel 44; Henderson to State Dept., 28 September 1951, in FRUS, 19521954, Vol. X, p. 180; Card reference, 8 April 1952, in HSTL, Acheson Papers, Box 167; and McGhee, Envoy to the Middle World, p. 392. 60. Charg dAffaires U.S. Embassy U.K. (Peneld) to State Dept., 18 January 1952, in FRUS, 1952 1954, Vol. X, p. 330; Henderson to State Dept., 4 January 1952, in FRUS, 19521954, Vol. X, p. 302; Berry to Sec. State, 8 January 1952, in FRUS, 19521954, Vol. X, p. 306; and W. Averell Harriman to Sec. State, 22 August 1951, in HSTL, PSF, Box 180, Subject File Iran. 61. For further details see section four.

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mined policy parameters. They were united in giving priority to Cold War concerns and in identifying Communist subversion as the key threat to Iran. They agreed that the principal solution was political reform and socioeconomic improvement for the people of Iran, and they both were convinced that achieving this goal depended on an oil settlement. They also agreed about the structural constraints that helped shape their policies toward Iran. The leadership in Iran had to be strong and pro-Western, the United States could push Britain only so far, and an oil settlement in Iran should threaten neither the sanctity of contracts nor supply and price stability in world oil markets. The acid test of continuity between the two administrations will come when we analyze policy in practice. For this there is no better test than the nal, incomplete attempt of the Truman administration to resolve the oil crisis and the subsequent decision of the Eisenhower administration about what to do with it. On 30 August 1952 Truman and Churchill made a joint proposal to Mossadegh for the settlement of the dispute. Mossadegh rejected the overture on 24 September and threatened to terminate diplomatic relations with Britain unless an improved offer was made quickly. On 8 October 1952 Secretary of State Acheson duly laid out yet another American oil plan, one that envisaged three stages. First, a lump sum settlement would circumvent long-standing problems of compensation and counterclaims. This settlement would involve the purchase of 15 million tons of crude oil and a further 15 million tons of oil-related products. Second, an international oil distribution company would be created to purchase up to 25 million tons of oil and related products per annum from the National Iranian Oil Company (NIOC) for at least a decade. Third, the international oil distribution company would advance $100 million against future oil purchases. Payment would comprise an initial lump sum of $50 million followed by $10 million a month thereafter.62 The plan required the cooperation of three parties that the State Department anticipated would be reluctant to act: the major U.S. oil companies, the U.S. Justice Department, and Britain. The U.S. oil companies were needed because only they had the tanker, renery, and market capacity to lift sufcient quantities of Iranian oil and to reintegrate it into the world market. The Justice Department was involved because the plan required the U.S. oil majors to form a voluntary consortium that potentially exposed them to prosecution under Sherman antitrust legislation. British cooperation was needed because of the UKs threat to sue anyone lifting oil from Iran and because of the countrys wider importance in U.S. Cold War strategy.
62. For greater detail, see Sec. State to U.S. Embassy Iran, 10 October 1952, in FRUS, 19521954, Vol. X, pp. 488490.

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Preliminary negotiations conrmed State Department expectations: The British wanted no part of the plan.63 The most abhorrent feature, from Londons perspective, was the prospect of a settlement without arbitration, a result deemed bad in principle, dangerous in its repercussions and impracticable.64 Besides, even before the plan was aired, Churchill had resolved to use the joint proposal as his ace to trump Mossadeghs Communist card. Instead of making more concessions, Britain wanted to meet Mossadegh with a continued Truman-Churchill accord and pressure him to accept terms endorsed by the United States as fair and just.65 The Justice Department was perhaps even more hostile because the U.S. oil companies were facing criminal and civil proceedings as a result of an investigation launched in 1949 by the Federal Trade Commission (FTC) into the activities of the international oil cartel. Granting the oil companies antitrust immunity would undermine the ongoing antitrust action and the credibility of the FTC, and it would also expose the Truman administration to damaging charges of pandering to big business with a presidential election imminent. As for the oil majors themselves, they too were wary of the State Departments proposal. Why should they cooperate with an administration that was prosecuting them for the very kind of action that it now urged them to undertake in Iran, especially when the DPA, which could have provided antitrust protection, was due to expire in June 1953?66 Besides, they did not need Iranian oil; their commercial concerns inclined them to use Irans fate as an example to any country considering breaking the sanctity of contracts,67 and their views of the importance of British cooperation differed from those of the State Department. The latter adopted a tough approach. For example, on 21 November the director of the Policy Planning Staff, Paul Nitze, told Texas Oil Company representatives that although full British agreement was desirable it might not . . . be possible to save Iran if one accepted a U.K. veto over every action we considered necessary.68 But the oil companies knew that their afliates often required the co63. Draft Cabinet paper by Ross, The United States Ideas of a Settlement of the Oil Dispute, n.d., in UKNA, FO 371/98702; and Sec. State to U.S. Embassy UK, 12 October 1952, in FRUS, 1952 1954, Vol. X, p. 491. 64. FO to Washington Embassy, 25 October 1952, in UKNA, FO 371/98702. 65. FO to Washington Embassy containing a personal message from Churchill to Truman, 28 September 1952, in UKNA, FO 371/98698; CC (52)81, pt. 2, 26 September 1952, in UKNA, CAB 128; FO to Washington Embassy, 12 October 1952, in UKNA, FO 371/98701; and Notes for talk with Mr. Nitze, n.d. and unsigned, in UKNA, FO 371/98702. 66. Princeton Seminar, 15 May 1954, in HSTL, Acheson Papers, Reel 4, track 1, p. 3; and Engler, The Politics of Oil, p. 210. 67. Brewster B. Jennings to George McGhee, 17 May 1951, in NA, RG 59, LM 73, Reel 39; Standard Oil to McGhee, 18 May 1951 in NA, RG 59, LM 73, Reel 39; and Memorandum of conversation by Richard Funkhouser, 14 May 1951, pp. 309315. 68. Acheson was even more direct. The British, as he put it, were not using their brains and should

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operation of the British government and that the AIOC was convinced that it had reached the last ditch and had resolved to stand rm on its legal rights.69 Industry solidarity was required if the stability of oil concessions were to be safeguarded. Not even potential rich pickings in Iran could dissuade them from making British agreement a prerequisite for their possible involvement in the oil plan.70 At this point the case for the transition between administrations causing policy change begins to unravel. The State Department tackled the numerous reservations about its oil plan in a way that scholars emphasizing Republican sympathies for big business as an explanation of apparent policy change might nd difcult to reconcile. On 7 November Truman agreed to Achesons request that he use sections 708a and 708b of the 1950 DPA to allow U.S. oil companies to form a voluntary arrangement to pump Iranian oil. State Department ofcials then used Trumans approval of antitrust immunity for the oil companies to cow the Justice Department into submission. On 6 January 1953, with the support of the Defense Department, they declared that an indictment of the oil majors by a grand jury on the complaint of the U.S. government would be immensely damaging to American interests.71 On 11 January the Truman administration, relieved of its presidential electoral considerations by the Republican victory in November 1952, publicized its decision to drop criminal proceedings against the oil majors. Fifteen years later, in what one ofcial described as a textbook example of how to bring about the evisceration of an anti-trust case, civil proceedings were also closed out.72 Thus, the Truman rather than the Eisenhower administration sacriced the principles and legal obligations of the Justice Department on the altar of
either exploit Iranian resources or allow someone else to do it. Memorandum of conversation between Nitze and Texas Oil Company representatives (Rogers, Long, Lilly), 21 November 1952, in NA, RG 59, LM 73, Reel 34; and Memorandum of meeting with oil company representatives, 4 December 1952, in NA, RG 59, LM 73, Reel 34. 69. Unsigned letter to Reiber, 4 September 1952, in BP Archives, 91032; and 28th meeting of the Cabinet Persia (Ofcial) Committee, 13 October 1952, in BP Archives, 101912. 70. Linder to Sec. State, 11 December 1952, in NA, RG 59, LM 73, Reel 34. This line basically repeated that taken by the oil companies in earlier discussions with the Truman administration in May 1951. The companies claimed that going into Iran would be tantamount to Highway robbery and that it would amount to cutting the industrys own throat since concession jumping would be fatal for concessionaires in other parts of the world. Memorandum of conversation by Richard Funkhouser, 14 May 1951, p. 311. Fesharaki has argued that the fear of further nationalization was the most important motive for the solidarity of the U.S. companies with the AIOC. Fereidun Fesharaki, Development of the Iranian Oil Industry: International and Domestic Aspects (New York: Praeger, 1976), p. 45. 71. Report to the NSC, National Security problems concerning free world petroleum demands and potential supplies, 6 January 1953, in HSTL, PSF, Box 219, NSC Meetings 124128, folder NSC Meeting 128, 9 January 1953, p. 9; and Memorandum of conversation by Byroade, 8 August 1952, in FRUS, 19521954, Vol. IX, pp. 265266. 72. Robert Grifth, Forging Americas Postwar Order, in Michael J. Lacey, The Truman Presidency (New York: Cambridge University Press, 1989), p. 78.

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Cold War expediency. In doing so, the State Department removed two of the three stumbling blocks to its oil plan. The Justice Department was no longer a threat, and the oil companies were mollied somewhat by the guarantee of antitrust immunity and the termination of criminal proceedings. As McGhee noted, the legal action had in a perverse way been perhaps helpful, insofar as it could be called off.73 This left just the British to be dealt with. Although Churchills government had refrained from outright rejection of the oil plan for fear of pushing the United States into independent action in Iran, it had actually resolved to do nothing, and persuade the Americans to do the same, even if this meant risking a break in Anglo-Iranian relations.74 To increase the pressure on Britain, the Truman administration played up the immediacy of the Communist threat to Iran.75 Also, as the British government had feared, U.S. ofcials threatened independent action and withdrawal of support from the oil embargo.76 When Britain remained obstinate, the United States demonstrated its determination to force through the oil plan by undermining British economic sanctions on Iran. On 6 December the U.S. government issued a statement that was widely interpreted as an invitation to handle Iranian oil.77 At the end of December a joint U.S.-Iranian Economic and Social Development Commission was established that allowed Iran to receive up to $20 million during the U.S. scal year ending 30 June 1953 in addition to funds
73. Princeton Seminar, 15 May 1954, in HSTL, Acheson Papers, Reel 4, track 2, p. 6. Leonard J. Emmerglick, a senior antitrust attorney, claimed that the reason for the abandonment of the criminal proceedings was the considered opinion of two Presidents, two Secretaries of State or their principal representatives, two Secretaries of Defense, and in addition, the Chairman of the Joint Chiefs of Staff, the Central Intelligence Agency, and a number of present and former Cabinet members. Cited in Daniel Yergin, The Prize: The Epic Quest for Oil, Money, and Power (New York: Simon and Schuster, 1991), p. 475. 74. FO to Washington Embassy, 11 October 1952, in UKNA, FO 371/98700; Persian Oil, Minute by Makins, 9 October 1952, in UKNA, FO 371/98700; Teheran Embassy to FO, 9 October 1952 in UKNA, FO 371/98700; Washington Embassy to FO, 11 October 1952, in UKNA, FO 371/98701; and Gifford to State Dept., 13 October 1952, in FRUS, 19521954, Vol. X, p. 493. 75. This is not to suggest that U.S. concerns about the Communist threat were not sincerely held. Nevertheless, exaggerating the immediacy of that threat was intended to spur British action. In November the CIA did not envisage a serious crisis in the short term, but the State Department nevertheless warned Britain of an imminent danger that Iran would break all ties with the West. CIA National Intelligence Estimate, Probable Developments in Iran through 1953, 13 November 1952, in HSTL, Student Research B File: Oil Crisis in Iran, Box 1, File 9; and Memorandum by Byroade, 22 November 1952, in NA, RG 59, LM 73, Reel 34. 76. November, 20 November 1952, in HSTL, Acheson Papers, Box 67a; Nitze to Sec. State, 22 December 1952, in FRUS, 19521954, Vol. X, p. 556; Byroade to Acheson, Recommended Change in U.S. Policy toward Iran, 16 September 1952, in HSTL, Acheson Papers, Box 167; 27th meeting of the Cabinet Persia (Ofcial) Committee, 8 October 1952, in BP Archives, 101912; Minute by Makins, 26 September 1952, in UKNA, FO 371/98698; Funkhouser to Dorsz, Resumption of Iranian Oil Movements, 3 October 1951, in NA, LM 73, Reel 39; and memorandum of meeting by Richards (GTI), 28 October 1952, in NA, RG 59, LM 73, Reel 39. 77. A. E. C. Drake (New York) to Snow, 9 December 1952, in BP Archives, 91032.

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already available through the ongoing Technical Cooperation Agreement. U.S. ofcials also gave consideration to Mossadeghs request for 120,000 tons of sugar on credit in the knowledge that Britain would interpret this as tantamount to budgetary assistance.78 The British were skeptical about the U.S. predictions of imminent disaster in Iran, and they considered Mossadegh a spent force.79 In Londons view, the termination of Anglo-Iranian relations on 22 October was simply the nal absurdity of Mossadeqs measures.80 Crucially the American electorate delivered a reprieve for the British. Prompt consultations with the incoming administration suggested that it would be more sympathetic to Britains position. The oil companies would likely exert more inuence, the new administration would probably favor clear-cut action as contrasted with the alleged shilly-shallying of the present administration, and a desire for quick successes against Communism would undoubtedly induce a strong line with Mossadegh.81 British ofcials realized that the Truman administration suddenly faced a pressing time constraint if it wanted to settle the dispute before it left ofce, and Britain could hold off its pressure for a nite period, especially given the strong de facto support of the U.S. oil majors for the British position.82 Britain thus refused to abandon the principle of arbitration, attacked the U.S. retreat on the oil embargo, and publicly reafrmed its intent to prosecute any purchaser of Iranian oil.83 Britain also gave the Truman administration an ultimatum: either it cooperated on British terms or the government would simply play out time.84 Matters became so tense that the U.S. ambassador to Britain, Walter Gifford, warned that uncertainty about Mossadeghs willing78. Henderson to State Dept., 31 December 1952, in FRUS, 19521954, Vol. X, p. 569. 79. Record of conversation with G. H. Middleton, 19 November 1952, in BP Archives, 91032. 80. Letter by W. D. Heathe Eves, 16 October 1952, in BP Archives, 91032. 81. Persia, handwritten note by Strang dated 29 November 1952 on minute by Bowker, 28 November 1952, in UKNA, FO 371/98703; C. E. Steel, quoted by Moyara de Moraes Ruehsen, Operation Ajax Revisited: Iran, 1953, Middle Eastern Studies, Vol. 29, No. 3 (July 1993), p. 470; and Washington Embassy to FO, 6 December 1952, in UKNA, FO 371/98703. 82. As AIOC chairman Sir William Fraser advised, it remained highly unlikely that the major U.S. oil companies would break ranks by lifting Iranian oil, and only they had the capacity and markets to make a signicant difference. Extracts from minutes of the 32nd meeting of the Cabinet Persia (Ofcial) Committee, 21 October 1952, in BP Archives, 91032; and FO to Paris, 13 December 1952, in UKNA, FO 371/98704. 83. Gifford to State Dept., 24 December 1952, in FRUS, 195254, Vol. X, p. 557 n. 3; Washington Embassy to FO, 6 December 1952, in BP Archives, 46596; FO Intel despatched to posts abroad, 6 December 1952, in BP Archives, 53228; and Parliamentary Debates (Hansard) 5th Series, Vol. 509, 8 December 1952, pp. 3539. 84. Draft minute by Rothnie, 18 December 1952, in UKNA, FO 371/98704; and Minute by Dixon, 5 December 1952, in UKNA, FO 371/98703.

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ness to accept the oil plan meant that it was not worth risking further damage to Anglo-American relations.85 Reluctantly, the Truman administration accepted the need for modications to its oil plan that were acceptable to Britain and that thus removed the last obstacle to the U.S. oil majors participation. Revised terms were presented to Mossadegh on 15 January 1953. International arbitration was substituted for the lump-sum compensation scheme and was to be calculated on the basis of Britains Coal Nationalisation Act of 1946. The proposed U.S. $100 million advance against future deliveries of oil to the U.S. Defense Materials Procurement Agency was tied to an arbitration agreement and an oil sales contract. When these were concluded, Iran would receive immediately $50 million and the rest in installments. Also, the AIOC or a subsidiary, either alone or as part of a consortium, should have the right to market Iranian oil.86 Time ran out on 20 January 1953 for the Truman administration, and it is at this point that most accounts of the oil crisis have identied the onset of a different U.S. approach to Iran. Indeed, the British themselves predicted that the prospect was never better for the vital 100% Anglo-U.S. front which has never yet really been established against Mossadeq.87 However, none of these things actually happened. The Truman rather than the Eisenhower administration dropped criminal proceedings against the oil majors. Also, the Eisenhower administrations approach to the oil crisis and the forcefulness of its policy toward Britain were quite similar to its predecessors. Eisenhower actually underwrote the Truman administrations oil plan in autumn 1952 by supporting the extension of antitrust immunity to the oil companies beyond the expiry of Section 708 of the DPA on 30 June 1953.88 More important, once in ofce his administration decided not only to run with the plan but to push the matter hard with Britainhard enough to belie claims that Eisenhower and Dulles had been waiting to launch a coordinated Anglo-American front against Mossadegh. Mossadegh retreated from the basis for compensation agreed in January. Britain declared that it had conceded as much as it would and demanded State Department assurances that the United States would not press for any further concessions.89 But the Eisenhower administration refused either to accept that the proposals of 15 January had sanctity in themselves or to regard them as a joint offer in the fullest sense of the
85. Gifford to State Dept., 16 December 1952, in FRUS, 19521954, Vol. X, p. 551 n. 2. 86. Bamberg, History of the British Petroleum Company, p. 482. 87. Record of conversation with G. H. Middleton, 19 November 1952. 88. Dulles to Bruce, 3 December 1952, in Dwight D. Eisenhower (DDE) Library, J. F. Dulles Papers 195159, Subject Series, Box 8, Classied. 89. FO to Washington Embassy, n.d., in UKNA, FO 371/104612; and Washington Embassy to London, 27 January 1953, in BP Archives, 100570.

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word.90 The administration also demonstrated considerable patience with Mossadegh and sympathized with his desire to establish, and limit, the amount of compensation payable by Iran. Moreover, U.S. ofcials took seriously Mossadeghs threat in early February to sell Iranian oil at a 50 percent discount to all comers if Britain insisted on compensation for loss of future prots. A greater availability of oil tankers meant that Mossadegh was better placed than at any time previously to carry out his implicit threat to sell oil to Communist countries or to dump Iranian oil on world markets.91 Instead of moving strongly against Mossadegh, as accounts emphasizing a change of policy between administrations would lead one to expect, Eisenhower turned to the British to make still further concessions. In fact, Britain was cast back into the same position it had occupied during the Truman administration, when it was subjected to the strongest pressures to do things we think are foolish92 but unable to ignore those pressures for fear of a breach in Anglo-American relations. On 20 February they duly conceded a formula for compensation payments that addressed Iranian and, by implication, U.S. concerns about Irans acceptance of an unquantied burden. In effect Iran would make cash payments representing 25 percent of its annual oil export revenue for twenty years with the balance of whatever compensation the International Court of Justice awarded.93 It is telling of the continuity between the policies of the Truman and Eisenhower administrations toward Iran that British embassy ofcials concluded on 27 January that U.S. views had changed little with the change in administration. Ambassador Henderson likewise felt that there was little or no difference in the policies of our Government under the new Eisenhower Administration so far as Iran was concerned.94

How can the strong elements of continuity in both the principles and practice of the Truman and Eisenhower administrations policies toward Iran be rec90. Elm, Oil, Power, and Principle, pp. 278280; and Bamberg, History of the British Petroleum Company, p. 484. 91. Sec. State to U.S. Embassy U.K., 10 February 1953, in FRUS, 19521954, Vol. X, p. 663; and CC (53) 20th conclusion, 17 March 1953, UKNA, CAB 128. 92. Minute by Butler, 30 January 1953, in UKNA, POWE 33 1937. 93. Bamberg, History of the British Petroleum Company, p. 485. 94. Reminiscences of Loy Henderson, in DDE Library, Columbia University Oral Research Ofce Collection (CUOROC), p. 11; and memorandum of conversation between Nitze, Byroade, and Richards with British Embassy ofcials, 27 January 1953, in FRUS, 19521954, Vol. X, p. 651 n. 4.

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onciled with frequent claims that Eisenhower took a rmer stance than Truman did vis--vis Iran? The answer lies in policy change at the levels of the Middle East and Iran. This change did not, as popularly assumed, occur as a result of the transition between the Truman and Eisenhower administrations. Rather, it began in early 1952 as a consequence of the proven ineffectiveness of U.S. policy. Thereafter, as analysis of three shifts in policy during 1952 will show, the Truman administration eventually resolved to assume principal responsibility for the Middle East and to steer a course more independent of Britain in Iran. Thus, although the Eisenhower administration ultimately resorted to means different from those favored by its predecessor, it inherited and continued, rather than initiated, a more assertive U.S. policy. From mid 1949 the Truman administration sought rst informally, and then formally, to mediate a negotiated settlement of the oil dispute. By far its most important success was in deterring British military action, which threatened to escalate the crisis by allowing Soviet intervention in Northern Iran. Britain considered launching a limited military strike to seize the oil renery at Abadan, which was easier than occupying southern Iran and would ease pressure on the British treasury because crude oil could be shipped from Kuwait to Abadan for rening. Ultimately, though, the Truman administrations strong and consistent opposition to military intervention, coupled with its mediation efforts, closed off this British option. At a key meeting in September 1951, the British Cabinet concluded: We could not afford to break with the United States on an issue of this kind.95 The Truman administration also made some progress in reducing the gap between British and Iranian positions in the oil dispute. The British shifted under sustained U.S. pressure from resolute rejection of nationalization to at least agreeing to recognize the principle of it in any oil deal. They also improved the terms of the Supplemental Oil Agreement to a point they claimed was equivalent to the 50:50 prot-sharing standard. More important still, the United States developed a much-improved knowledge of conditions in Iran and of Mossadegh. In the summer of 1951 Averell Harriman went to Iran in the rst formal U.S. mediation attempt. Beginning on 14 July and continuing until late August, the Harriman Mission revealed that Irans position was too rigid and impractical. As for Mossadegh, he had strong support, and the Shah was unlikely to move against him, but he also seemed unwilling to listen to American advice.96 This latter point in particular was important because it
95. CM (51)60, 27 September 1951, in UKNA, CAB 128; and London to Teheran Embassy, 27 September 1951, in BP Archives, 100652. 96. Harriman to State Dept., 22 August 1951, in FRUS, 19521954, Vol. X, pp. 144145; Harriman to State Dept., 23 August 1951, in FRUS, 19521954, Vol. X, p. 148; Harriman to State Dept., 19 July 1951, in FRUS, 19521954, Vol. X, p. 95; and Harriman to Sec. State, 19 July 1951, in HSTL,

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was echoed in October when Mossadegh met State Department representatives while in New York for a UN Security Council meeting. Acheson afterward likened these talks to walking in a maze and every so often nding oneself at the beginning again.97 Yet despite some successes and improved intelligence, U.S. policy by 1952 had failed to deliver an oil deal, and Britain and Iran had settled into an uncompromising stalemate that jeopardized U.S. objectives. Worse still, the Truman administration had reached an impasse that J. H. Ferguson, deputy director of the State Departments Policy Planning Staff, had long feared: The administration was stuck in the position of more or less permanent mediator with insufcient inuence to effect a solution but so deeply committed that it had to keep on indenitely.98 The administration also was stuck with an ineffective strategy that was racked with inherent contradictions. In November 1950 the State Department had laid out U.S. policy in order to seek a parallel though not identical UK-U.S. approach to Iran that would promote U.S. aims without either undermining Britains position or giving Iran the impression of a basic Anglo-American policy cleavage.99 Framed at a time when the United States acknowledged that the success of its policies in Iran depended on British cooperation, this strategy recognized that the U.S. government had only a limited ability to determine events within Iran. Yet the strategy also assumed sufcient American strength to control the demands of Iranian nationalists and to persuade Britains government to appease Tehran, and it presupposed that the United States could develop a distinctive policy toward Iran that would harness nationalism against Communism but would neither provide the Iranians with an opportunity to exploit Anglo-American differences nor severely damage British interests in Iran. Less than eighteen months later, this naive strategy lay in tatters. Mossadegh proved difcult to deal with, and Iranian nationalism was hard to control. Morover, Iran managed to nd and exploit every sign of AngloAmerican disagreement. The United States disagreed with Britain over whether to force or persuade Iran to accept an oil settlement, what terms would represent an acceptable oil deal, the strength of the Communist threat to Iran, the impact of Iranian nationalism, the usefulness of dealing with Mossadegh, and the chances of reaching an oil agreement with a successor
PSF, Subject File, Box 180, IranW. Averell Harriman. Harriman reported, too, that Mossadegh was seemingly obsessed with the idea of eliminating completely British oil company operations and inuence in Iran. See Harriman to State Dept., 17 July 1951, in FRUS, 19521954, Vol. X, p. 94. 97. Acheson, Present at the Creation, p. 510. 98. Report by Ferguson, Further American activity in resolving the Iranian oil controversy, 8 August 1951, in NA, RG 59, LM 73, Reel 39. 99. Sec. State to U.S. Embassy Iran, 18 November 1950, in FRUS, 1950, Vol. V, p. 614.

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government.100 But the United States could not break with Britain because British cooperation was vital to Middle Eastern defense, and Iran in any case would benet from Anglo-American disharmony. In part because of this dilemma, U.S. mediation was repeatedly hijacked as Britain and Iran used it less to nd a settlement than to pull the United States toward their respective positions. Iran played up the Communist threat in order to enlist Washingtons help in forcing ever greater concessions from Britain. Conversely the British, who resented but could not ignore American interference, wanted to use formal U.S. mediation to tie American policymakers into supporting specic terms and prevent the United States from suggesting later on that Britain make more concessions. As a result, Mossadegh came under greater pressure to settle on British terms. In short, U.S. policy was increasingly stymied and required an urgent review. This review, and the chain of events that developed from it, lay behind the Truman administrations adoption of a progressively more assertive policy toward Iran. By this point, unlike in 1950, the British and Iranian positions were clear. Mossadegh was unlikely either to become more reliable or to refrain from using Anglo-American differences to push for greater concessions. Britain was locked into a war of attrition and had abandoned hope of making an agreement with Mossadegh. Any prospect that British policy would change was dashed when the election of Churchills Conservative Party in the autumn of 1951 added only a certain truculent braggadocio to the existing stance.101 Although U.S. policy was the key to breaking the Anglo-Iranian impasse, U.S. policymakers in early 1952 were divided over three possible courses of action. Some wanted to give Britain rmer support, an option that appealed to those concerned about Anglo-American relations and the wider Cold War picture. Prior to a Truman-Churchill summit meeting in January 1952, U.S. ofcials readily acknowledged that the United States still had a special relationship with Britain and that Britain was vital to U.S. interests, particularly in the containment of Communism.102 But they also acknowledged that the
100. Acheson, memorandum, 4 November 1951, in FRUS, 19521954, Vol. X, pp. 256258; Minute by Churchill, 24 November 1951, in UKNA, PREM 11 725; CC (51)18, 19 December 1951, in UKNA, CAB 128; Record of conversation by Dixon, 14 November 1951, in UKNA, FO 371/91612; CIA report, Analysis of the Iranian political situation, 12 October 1951, in HSTL, PSF, Box 180, Subject le Iran; Henderson to State Dept., 22 October 1951, in FRUS, 19521954, Vol. X, pp. 236 240; and Shepherd to FO, 7 November 1951, in UKNA, FO 371/91472. 101. Sec. State to State Dept., 10 November 1951, in FRUS, 19521954, Vol. X, p. 280. 102. Paper prepared by the Policy Planning Staff, Outline for Discussion at JCS Meeting November 21 1951, 20 November 1951, in FRUS, 1951, Vol. IV, pp. 980985; and State Dept. record of a StateJoint Chiefs of Staff Meeting held at the Pentagon, 21 November 1951, in FRUS, 1951, Vol. IV, pp. 985989. In January 1951 Ambassador Gifford reported that American prestige in Britain was at its lowest ebb in ve years. Gifford to Sec. State, 20 January 1951, in FRUS, 1951, Vol. IV, pp. 894 899.

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relationship was not working well, a point that was underscored during the summit talks when the two sides clashed over Iran. Robert Lovett reported that Acheson gave Foreign Secretary Anthony Eden such a beating over Iran that their exchanges were probably as personal and bitter as any between Eden and Dulles.103 Against this backdrop, some ofcials argued that it was time to ease the pressure on Britain a little in the interest of wider considerations. The proposal to support Britain also appealed to those who doubted that an oil deal could be struck with Mossadegh or who feared that indulgence of Mossadegh would send bad signals about the U.S. commitment to the sanctity of contracts. More important, it was promoted by those who were wary of accepting greater commitments in the Middle Easta consideration that reected the still unresolved dilemma of how great a role the United States should assume in an area it had long deemed vital to its interests. For some time, the British had been urging the United States to accept a more equitable share of the burden of defending the region.104 Churchill even pressed at the Washington talks for a U.S. brigade to help protect the Suez Canal.105 U.S. ofcials who supported closer cooperation with Britain over Iran hoped that it would sugar the pill of U.S. efforts to avoid overt association with British imperialism and to fend off Churchills attempts to drag the United States into the Suez Canal mess.106 They also hoped that cooperation on Iran would soften the impact of the continued reluctance of the Joint Chiefs of Staff in particular to make greater commitments in the Middle East. Other U.S. ofcials, however, wanted to maintain a hands off approach vis--vis Iran. Two years of informal and formal mediation had landed the United States in a deeply embarrassing position. The U.S. government had tried to assert its neutrality in the oil dispute and yet to deny Iran the right of neutrality in the Cold War. Moreover, U.S. claims to neutrality were compromised by Anglo-Iranian refusal to interpret U.S. intervention in this way107and by some of the actions the United States took. For example, on 17
103. Lovett to Eisenhower, 24 January 1952, in FRUS, 19521954, Vol. VI, Part 1, pp. 859861; and David Carlton, Anthony Eden: A Biography (London: Allen Lane, 1981), p. 307. See also Acheson, Present at the Creation, p. 600; and David S. McLellan, Dean Acheson: The State Department Years (New York: Dodd Mead, 1976), p. 390. 104. Cherwell to Prime Minister, 8 November 1951, in UKNA, PREM 11 708; and U.S. Ambassador in France (Bruce) to Sec. State, 19 December 1951, in FRUS, 1951, Vol. IV, pp. 993995. 105. U.S. Delegation minutes of the third formal meeting of President Truman and Prime Minister Churchill at the White House, 8 January 1952, in FRUS, 19521954, Vol. VI, Part 1, pp. 775786. 106. Steering group on preparation for President and Prime Minister talks, negotiating paper General Middle East, 31 December 1951, in HSTL, PSF, Box 116, Truman-Churchill talks, General le, Truman-Churchill meetings: Negotiating Papers, Folder 1. 107. Harold Macmillan, for example, noted that from the start the Americans were certainly unhelpful. Perhaps the oil interests were jealous; perhaps the politicians were not sorry to see Socialist Britain

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February 1950 the U.S. embassy in London conceded that much of [the] effect of our categorical statement regarding non-intervention may be dissipated by our action in having promised [the] Iranian Ambassador to study detailed points of issue between [the] A.I.O.C. and Iran.108 Conversely, a CIA report in October 1951 warned of dire consequences if the United States continues to side spectacularly with the British, and in January 1952 Henderson reported that the United States had gone so far in trying to be loyal to Britain that it had created the impression that it was deferring to the British lead in Iran and elsewhere in the Middle East.109 In addition to these problems, the recent course of events suggested that the United States would be unable to impose its will decisively on either Britain or Iran. By contrast, a withdrawal from overt mediation of the oil crisis to a less active position would ease Anglo-American relations, and an end to American third-partying might force Iran to initiate bilateral negotiations. Supporters of this view argued that it was politically damaging both at home and abroad, especially in an election year, to adhere to a policy that was widely seen as ineffective. A third group of ofcials wanted to steer a course increasingly independent of Britain in Iran and in the wider Middle East. Pressure was growing within the State Department for this idea. Many there sympathized with Hendersons query in January 1952 whether the United States can afford much longer to defer to Brit[ish] leadership in this area.110 Association with Britain was damaging U.S. values and standing throughout the Middle East,111 and British policies often seemingly ran contrary to U.S. objectives. The Truman administration sensed that Britain had palpably mishandled the oil crisis and was pushing Iran toward Communism. The hardline British stance against Egypt repeated the mistake and brought into question the longterm future of Britains huge military base in Suez and the strategically important Suez Canal. Furthermore, with Iran and Egypt alienated, the prospects were poor for regional defense cooperation. Perhaps, therefore, the time had come for the administration to be more assertive vis--vis Britain in order to save Iran from Communism. Proponents of this view argued that the United
hoist with their own petard. Alistair Horne, MacMillan, Vol. 1: The Making of a Prime Minister, 18971957 (London: Macmillan, 1988), p. 310. 108. U.S. Embassy U.K. to State Dept., 17 February 1950, in NA, RG 59, LM 73, Reel 39; and Memorandum of conversation with Ala, 27 April 1950, in HSTL, Acheson Papers, Box 65. 109. W. Averell Harriman, CIA report, Analysis of Iranian Political Situation, 12 October 1951, in HSTL, PSF, Box 180, Subject File Iran; and Henderson to State Dept., 5 January 1952, in FRUS, 19521954, Vol. X, p. 304. 110. Henderson to State Dept., 5 January 1952, in FRUS, 19521954, Vol. X, p. 304. 111. Articles by Henry F. Grady, British American Policy in Iran, 18 March 1952, in HSTL, H. F. Grady Papers, Box 2, General File, p. 4; W. Averell Harriman, CIA report, Analysis of Iranian Political Situation, 12 October 1951, in HSTL, PSF, Box 180, Subject File Iran; and Henderson to State Dept., 5 January 1952, in FRUS, 19521954, Vol. X, p. 304.

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States should look anew at the option of purchasing Iranian oil112 and should convince Britain of U.S. determination to force the issue by giving Mossadegh budgetary assistance irrespective of an oil settlement.113 Competing preferences within and across different U.S. government agencies made for an inconclusive debate in early 1952. However, the debate signaled that two years of largely ineffective mediation had created a momentum for policy change. In subsequent months, U.S. policy toward Iran shifted on three occasions. In each case the policy became more assertive as Britain and Iran were forced into concessions that upheld the sanctity of contracts and the 50:50 prot-sharing precedent, that encouraged the consolidation of pro-Western leadership in Iran, and that respected British interests as much as possible without compromising U.S. objectives. The rst policy shift was signaled in March 1952 by the State Departments Ofce of Greek, Turkish, and Iranian Affairs (GTI), which argued that U.S. third-partying may have encouraged Irans uncompromising position and that the United States should exercise greater reserve in the hope of encouraging Iran to initiate talks with Britain. The GTI acknowledged the difculty of working with Mossadegh and argued that the United States should refrain from undercutting British pressure on Tehran and should encourage the Shah to adopt a rmer position as a counterweight to Mossadeghs recklessness. Although none of these measures promised a rapid oil settlement, the GTI claimed that over time they would move events in the right direction.114 This change amounted to an implicit deal with Britain to trade Mossadegh in return for progress in the oil dispute under new Iranian leadership. The timing of the shift owed to the conuence of several factors. First, existing policy had proven ineffective in reaching an oil settlement. Second, Anglo-American relations were under pressure, and the British remained implacably hostile to Mossadegh and were eager to deal with a successor government. Third, as early as September 1951 the U.S. Psychological Strategy Board, an agency responsible for political warfare, had concluded that there is limited agreement that Mossadegh will have to be replaced before the chances for an oil agreement can improve.115 By 1952 this sentiment had
112. This was suggested in September 1951. Memorandum by Webb, 21 September 1951, in FRUS, 19521954, Vol. X, p. 164. 113. Memorandum by William E. Warne to Ambassador Loy Henderson, 30 July 1952, in NA, LM 73, Reel 44; and W. E. Warne, Oral History, 21 May 1988, in HSTL, p. 98. This was in line with Ambassador Gradys desire a year earlier to push an Export-Import Bank loan. Grady to State Dept., 13 August 1951, in FRUS, 19521954, Vol. X, p. 136. 114. Card reference, 25 March 1952, in HSTL, Acheson Papers, Box 167. 115. Psychological Strategy Board, 21 September 1951, in HSTL, Student Research B File: Iran Oil 19511953, Box 1, File 9, pt. 11.

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hardened and spread, something Mossadegh himself seemingly vindicated by demanding in February 1952 that Iran receive all revenues from Iranian oil and asserting his preference for 100 per cent of 50 cents rather than 50 per cent of a dollar.116 Fourth, U.S. assessments of the possibility for constructive change in Iran had become markedly more optimistic. In February 1952 some ofcials estimated that the Iranian government would, after all, be able to meet its nancial obligations until at least the end of the summer, despite no obvious upturn in its economic fortunes.117 Also, conditions in Iran seemed to have changed sufciently to create the possibility that a more reasonable successor government would come to power and would settle the oil crisis and move Iran away from the Soviet orbit.118 Although the Truman administration stopped short of outright collaboration with Britains efforts to remove Mossadegh in favor of Qavam, the administration readied itself for a change of Iranian leadership. The State Department considered what funds might be made available to a successor government and authorized Ambassador Henderson to tell the Shah that no oil settlement was likely with Mossadegh and that Irans problems could not be solved without such a settlement. Furthermore, Henderson reported that he was favorably impressed by Qavam in June and was given permission to discuss the suitability of alternatives to Mossadegh proposed by the Shah.119 In addition, the Truman administration took steps that clearly helped Britains efforts to compel Mossadegh to resign. For example, U.S. ofcials rejected Iranian suggestions that the United States could purchase oil at a 50 percent discount and refused to provide the Mossadegh with budgetary assistance. The Truman administrations position on this matter seemed to change so sharply that British ofcials reported, with satisfaction, that the United States was now more opposed than we are to a continuance of the Musaddiq regime.120
116. Record of meeting in Strangs room in FO, 27 February 1952, in BP Archives, 101912. 117. Probable Developments in Iran in 1952 in the Absence of an Oil Settlement, 4 February 1952, in HSTL, PSF, NIE-46. 118. Washington Embassy to FO, 14 March 1952, in UKNA, FO 371/98686; Middleton to A. D. M. Ross, 17 March 1952, in UKNA, FO 371/98687; Henderson to State Dept., 13 March 1952, in FRUS, 19521954, Vol. X, p. 368; Henderson to U.S. Embassy UK, 28 February 1952, in FRUS, 19521954, Vol. X, pp. 361363; and Card reference, 3 June 1952, in HSTL, Acheson Papers, Box 167. 119. Henderson to State Dept., 12 June 1952, in FRUS, 19521954, Vol. X, p. 392 n. 3; Sec. State to Iran Embassy, 30 May 1952, in FRUS, 19521954, Vol. X, p. 387; Sec. State to Iran Embassy, 29 May 1952, in FRUS, 19521954, Vol. X, p. 386 n. 2; and Henderson to State Department, 28 May 1952, in FRUS, 19521954, Vol. X, pp. 384386. 120. Henderson to State Dept., 29 January 1952, in FRUS, 19521954, Vol. X, p. 344; H. N. Howard Papers, in HSTL, Box 14, Middle East Chronological File 19501954; Middleton to A. D. M. Ross, 17 March 1952, in UKNA, FO 371/98687; Franks to FO, 11 April 1952, in UKNA, FO

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The second policy shift was catalyzed by Britains failure to capitalize on Qavams appointment as prime minister and Mossadeghs consequent return to power in July 1952. This debacle convinced U.S. policymakers that Iran was going down the drain and that something had to be done.121 Reluctantly, they concluded that they would have to work with Mossadegh because no opposition elements could be expected to take responsibility in Iran for a long time if ever. They surmised that it would be futile to hope Mossadegh would soon fall from power again or to consider most unorthodox methods, such as sponsoring a coup.122 U.S. ofcials also believed they would have to resume mediating the oil dispute in order to safeguard Iran against Communism and the sanctity of contracts against a gradual breakdown of the oil boycott. This policy shift resulted in the Anglo-American joint proposal of 30 August 1952. Although it ultimately failed, its negotiation was characterized by a much more assertive U.S. line toward Britain, including threats to adopt an independent policy. On 31 July the State Department presented its plan: (i) An immediate U.S. grant of $10 million. (ii) Purchase by the AIOC or another British nominated company of all oil products presently in storage in Iran at Persian Gulf prices less an appropriate discount. (iii) An arbitration committee of three people to consider compensation but which would not have to commence prior to aid. (iv) Prompt undertaking of negotiations for a settlement. (v) Britain and America not to oppose Iranian sales of oil in excess to that purchased by the AIOC.123 These proposals demonstrated a new U.S. determination to drive through a settlement regardless of British sensitivities. The terms represented what the Americans believed ought to be acceptable rather than what suited British arguments about commercial feasibility. The demand for a prompt British response showed newfound resolve. Moreover, the style of presentation was different. It was not a suggestion or an overture for discussion. Rather, it was a
371/98688; FO to Washington Embassy, 21 April 1952, in UKNA, FO 371/98688; and Henderson to State Dept., 24 May 1952, in FRUS, 19521954, Vol. X, p. 382. 121. Franks to FO, 29 July 1952, in UKNA, FO 371/98691. 122. Henderson to State Dept., 28 July 1952, in FRUS, 19521954, Vol. X, p. 416; Washington Embassy to FO, 26 July 1952, in UKNA, FO 371/98691; Washington Embassy to FO, 31 July 1952, in UKNA, FO 371/98691; Franks to FO containing copy of State Dept. instructions to Henderson, 31 July 1952, in UKNA, FO 371/98691; Franks to FO, 29 July 1952, in UKNA, FO 371/98691; and Henderson to State Dept., 31 July 1952, in FRUS, 19521954, Vol. X, p. 427. 123. Franks to FO containing copy of State Dept. instructions to Henderson, 31 July 1952, in UKNA, FO 371/98691.

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fait accompli backed by an implicit ultimatum: If Britain did not cooperate, the United States would nally take independent action in Iran. British ofcials disagreed with the United States that there was no chance of dealing with a successor government, that aid should be given to Mossadegh simply because there was no immediate prospect of obtaining a more compliant government, and that Mossadegh provided any real defense against Communism.124 They also suspected that the Americans had decided to supplant their interests in Iran and the Middle East more generally.125 Consequently, the British government rejected the U.S. plan, arguing that it compromised British negotiating principles of fair compensation, security for the effective payment of compensation, no better deal for Iran than other concession-granting countries would provide, and no settlement based on discrimination against British nationals.126 However, the new U.S. assertiveness revealed itself again in a backlash against British counterproposals that were considered relevant and related to our proposals . . . only by being expressed on paper by means of a typewriter.127 On 12 August the British ambassador to Washington, Oliver Franks, reported grave difculty in dissuading the State Department from taking immediate independent action.128 The next day, Acheson warned that emergency aid would soon have to be granted to Iran on a crash basis, and six days later Truman told Churchill that if British policies lost Iran to Communism it would place a strain on general AngloAmerican relationships not pleasant to contemplate.129 Churchill ultimately extracted some concessions from the Truman administration and linked the United States with the joint proposal. However,
124. Teheran Embassy to FO, 2 August 1952, in UKNA, FO 371/98692; FO to Washington Embassy containing personal message for Acheson, 9 August 1952, in UKNA, FO 371/98691; and extracts from the 22nd meeting of the Cabinet Persia (Ofcial) Committee, 15 August 1952, in BP Archives, 101912. 125. The British took this threat seriously. For example, Churchill warned Truman that Anglo-American relations would be seriously damaged if it came about that American oil interests were working to take our place in the Persian oil elds. Note by Secretary of the Cabinet circulating texts of telegrams exchanged between the Prime Minister and the President, 19 August 1952, in UKNA, CAB 129, C (52)286. 126. Memorandum by Foreign Secretary Persia, 5 August 1952, in UKNA, CAB 129, C (52)276. 127. Acheson, Present at the Creation, p. 680. British amendments to the U.S. proposals included: (a) The AIOC should not abandon its recourse to legal action against other buyers of Iranian oil prior to a nal settlement; (b) U.S. aid should be given after, not before, Iran accepted arbitration on reasonable terms and made an agreement with the AIOC to lift stocks of oil; (c) Purchases by the AIOC of Iranian oil should be conditional on the acceptance of arbitration; and (d) The approval of the AIOC Board would be required before these proposals could be considered as a binding agreement between Britain and America.See Parliamentary Debates, Commons, 5th ser., Vol. 504 (23 July 1952), p. 533; Letter to E. E. Hudson, 31 July 1952, in BP Archives, 53518; and FO to Washington Embassy containing personal message for Acheson, 9 August 1952, in UKNA, FO 371/98691. 128. Franks to FO, 12 August 1952, in UKNA, FO 371/98693. 129. Washington Embassy to FO with a personal message from Acheson for Eden, 13 August 1952, in

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this compromise did not signal a waning of U.S. assertiveness. On the contrary, the Truman administrations third shift in its policy toward Iran came in the autumn of 1952, when it launched an intensive effort to resolve the oil crisis against the opposition not only of Britain but also of the U.S. oil majors and the U.S. Justice Department. This increasingly assertive policy emerged as policymakers favoring a more independent U.S. role in the Middle East gained ascendancy within the administration. Earlier on, U.S. policy had been hamstrung by its traditional dependence on Britains defense role in the Middle East. This factor was highlighted in late 1949 and 1950 when the State Department and the Joint Chiefs of Staff disagreed about the relative importance of the region. The State Department wanted to extend containment to the Middle East by including it in grant aid and military assistance programs.130 As Acheson recalled, we began to think that the Russian menace was a little more acute than we thought it was. The North Atlantic began to evolve, and we said Well, weve got to have something comparable to that in the Middle East.131 By contrast, the U.S. military deemphasized the Middle East and, in January 1950, concluded that the military strategic interests in the N.E.A. area were now viewed as being almost negligible in light of interests in other areas.132 As General Lyman L. Lemnitzer, the director of the Ofce of Military Assistance, bluntly conrmed in February 1950, it was impossible to devote any substantial portion of our limited military resources to this particular area.133 In 1952 the battle over the Middle East was rejoined. Priorities elsewhere, notably in Korea, ensured continued Pentagon resistance to even indirect U.S. responsibilities in the Middle East. Because the local countries in the region were unable, either individually or collectively, to resist Communism, U.S. military planners sought to rely on still inuential but declining imperial powers to defend the area.134 For example, in July 1952 the Defense DepartUKNA, FO 371/98693; and Note by Secretary of the Cabinet circulating texts of telegrams exchanged between the Prime Minister and the President, 19 August 1952, in UKNA, CAB 129, C (52)286. 130. Secretary of State to Embassy Iran, 15 July 1950, in FRUS, 1950, Vol. V, p. 173. 131. Princeton Seminar, 1516 May 1954, in HSTL, Acheson Papers, Box 76, Folder 1, Reel 5, track 2, p. 16. 132. Memorandum by Chief of Programme Staff MDAP (Bray) to Deputy Director MDA (Ohly), 25 January 1950, in FRUS, 1950, Vol. V, p. 122. 133. Ohly to Bray, 6 February 1950, in FRUS, 1950, Vol. V, p. 123 n. 6. 134. Commonwealth Capabilities and Intentions in the Middle East, 31 December 1951, in HSTL, Acheson Papers, Box 167; Circular airgram to certain missions in the Near East, 15 August 1952 in HSTL, Acheson Papers, Box 167; State Dept. to U.S. Embassy U.K., 6 September 1952 in HSTL, Acheson Papers, Box 167; Negotiating paper by State Dept., Middle East Command, 4 January 1952, in FRUS, 19521954, Vol. IX, pp. 168170; Peter L. Hahn, Containment and Egyptian Nationalism: The Unsuccessful Effort to Establish the Middle East Command, 195153, Diplomatic History, Vol. 11, No. 1 (Winter 1987), pp. 2340; Key problems affecting U.S. efforts to strengthen

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ment insisted that the French and especially the British must not be allowed to reduce their military responsibilities, by transferring them to the United States.135 George McGhee saw this strategy as part of a deliberate policy that our Joint Chiefs of Staff very carefully thought out to do nothing in the Middle East so that if a vacuum occurred the British would have to attempt to ll it.136 Even if that was the case, however, time and events were moving against the Joint Chiefs. Intermittent and sometimes inconsistent efforts in the Middle East to use imperial powers and local governments had resulted in an attempt to follow the middle-of-the-road that had satised neither side and rendered basic U.S. policies ineffective in combating neutralism and Communism.137 This outcome was no longer tolerable, and it was also increasingly unnecessary insofar as deference to British sensibilities was based mainly on Britains defense role in the Middle East. Imperial decline meant that by 1952 the British could do little more than provide the minimum requirements for the shortest line of defense east of Suez. Indeed, Britains commitment to Europe had required the diversion of resources from the Middle East.138 In contrast to growing U.S. interest in the Northern Tier, British defense planners concentrated on an inner core of Middle Eastern states centered on Egypt. Such was Britains unpopularity and decline that U.S. ofcials like Henry Byroade, the assistant secretary of state for Near Eastern, South Asian, and African Affairs, even feared that there is a real possibility that the British are going to get out of the area in a rather disgraceful way.139 All of this culminated in a crucial shift in U.S. Middle Eastern strategy. Led by Paul Nitze, State Department ofcials castigated the Joint Chiefs of Staff for their Never-Never Land kind of analysis140 and argued that Britains decline in the Middle East opened a power vacuum that whether we like it or
the Near East, 25 April 1951, in HSTL, PSF, Intelligence File, Box 253, NIE-26, p. 7; and Prospects for an inclusive Middle East Defense Organization, 17 March 1952, in HSTL, PSF, Intelligence File, Box 258, Specic Estimates, nos. 2135, p. 3. 135. Hoskins to Byroade, Reappraisal of U.S. Policies in the NEA Area, 25 July 1952, in FRUS, 19521954, Vol. IX, pp. 256262. 136. Princeton Seminar, 1516 May 1954, in HSTL, Acheson Papers, Box 76, Reel 6, p. 7. 137. Hoskins to Byroade, Reappraisal of U.S. Policies in the NEA Area, 25 July 1952, in FRUS, 19521954, Vol. IX, pp. 256262. 138. Nitze to Cabell et al., 26 May 1952, in H. W. Brands, The Cairo-Teheran Connection in Anglo-American Rivalry in the Middle East, 19511953, The International History Review, Vol. 11, No. 3 (August 1989), p. 444; and John Kent, British Imperial Strategy and the Origins of the Cold War 194449 (Leicester, NY: Leicester University Press, 1993), p. 203. 139. Memorandum of conversation by Byroade, 8 August 1952, in FRUS, 19521954, Vol. IX, pp. 262266; and minutes of State-Joint Chiefs of Staff Meeting, 18 June 1952, in FRUS, 1952 1954, Vol. IX, pp. 237247. 140. Princeton Seminar, 1516 May 1954, in HSTL, Acheson Papers, Box 76, Reel 6, p. 7.

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not, will be lled by someone.141 This meant both that a U.S. assumption of greater leadership in the NEA area [is] increasingly essential if not inevitable142 and that at least a limited U.S. military role in the region was necessary. Under enormous pressure the JCS conceded that it was unrealistic to rely on Britain for Middle Eastern defense and promised to investigate the possibility of establishing a forward defense of the region to protect some of the oil and strategic bases.143 No one expected an immediate buildup of U.S. military forces, but the real signicance was that forward planning for the time, which may come in 1956 or 1957, when other commitments may permit the furnishing of equipment in signicant quantities to the Near East,144 freed U.S. Middle Eastern policy of some of its British shackles. The connection between the greater U.S. role in the Middle East and the whittling away of options in the oil dispute consonant with U.S. principles best explains the increasingly assertive U.S. policy in Iran. The new approach evolved under the Truman administration as a result of two years of frustrating mediation and proven policy ineffectiveness. It culminated in the conclusion that we must strike out on an independent policy or run the gravest risk of having Iran disappear behind the Iron Curtain and the whole military and political situation in the Middle East change adversely to us.145 This process was embraced and continued by the Eisenhower administration. Dulles and Secretary of Defense Charles Wilson concluded in March 1953, as the Truman administration had begun to before them, that the United States must assume the position of senior partner in Iran and the Middle East.146 AngloAmerican cooperation remained important, but the United States was more willing to present the British with a fait accompli in the expectation that they would toe the line.147 Similarly, with respect to Iran, the Eisenhower adminis141. Hoskins to Byroade, Reappraisal of U.S. Policies in the NEA Area, 25 July 1952, in FRUS, 19521954, Vol. IX, p. 260. 142. Ibid., pp. 256262. 143. Ibid., p. 267 n. 3; Matthews to Lovett, 15 August 1952, in FRUS, 19521954, Vol. IX, pp. 266 267; and David Devereux, Britain and the Failure of Collective Defence in the Middle East, 1948 53, in Ann Deighton, ed., Britain and the First Cold War (London: Macmillan, 1990), p. 247. 144. Matthews to Lovett, 15 August 1952, in FRUS, 19521954, Vol. IX, pp. 266267. Several months earlier, Nitze had argued: If we think by 1956 we could really build up a defensive position in the Middle East, then it would be possible to think about a forward strategy as we have in Western Europe. In other words, if we look at this as a 1956 problem rather than a current problem, then perhaps matters will not look as hopeless. Minutes of State-Joint Chiefs of Staff Meeting, 18 June 1952, in FRUS, 19521954, Vol. IX, p. 238. 145. Acheson, Present at the Creation, p. 682. 146. Memoranda of 136th meeting NSC on Wednesday 11 March 1953, 12 March 1953, in DDE Library, Ann Whitman le, NSC Series, Box 4. 147. Anita Inder Singh, The Limits of British Inuence: South Asia and the Anglo-American Relationship, 194756 (London: Pinter, 1993), pp. 128130.

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tration continued the more independent and assertive line struck by its predecessor. In March 1954 Dulles warned that if Britain did not behave more reasonably in the still ongoing Iranian oil dispute, the United States would not worry about protecting British interests in Iran. The State Department even suggested that $100 million be taken out of a subsidy to England and use it to keep Iran going.148

When the Eisenhower administration launched Operation Ajax to remove Mossadegh in August 1953, it might well have drawn condence, as Francis Gavin has suggested, from the rapid U.S. military buildup that by then had shifted the global East-West balance of power in Americas favor.149 Likewise, new senior personnel, notably the Dulles brothers, were undoubtedly instrumental in the decision. Important though these factors may have been, we can shed further light on the Eisenhower administrations hardening line in Iran, and even on the coup itself, by viewing them in the context of the Truman administrations closure of options in Iran and progressive shift throughout 1952 toward a more independent and assertive U.S. policy. By continuing the Truman administrations parting effort to resolve the oil dispute, the Eisenhower administration was willing to deal with Mossadegh within the policy parameters set by its predecessor. February and March 1953 were, in three respects, critical months in the decision to get rid of Mossadegh. First, the British concessions of 20 February marked the point at which British and American economic interests were joined. Prior to the British concession the Eisenhower administration knew that, in the words of Acting Secretary of State Matthews, three years of pressure had reduced Britain to a position [which] is relatively close to rock bottom on principles.150 Once Churchills government conceded the new offer, the United States could push for nothing further without breaking the 50:50 prot-sharing precedent or endangering the sanctity of contracts. In this light it is highly instructive that Under Secretary of State General Walter Bedell Smith chose 19 February to assure British ofcials that he and Dulles had now reached the limit of concession.151
148. Telephone conversation with Secretary Wilson, 17 March 1954, 9:25 a.m. and 10:15 a.m., in DDE Library, J. F. Dulles Papers, Telephone Call Series, Box 2, Telephone Memos. March 195430 April 1954 (3). 149. Gavin, Politics, Power, and U.S. Policy in Iran, pp. 5689. 150. Matthews to U.S. Embassy U.K., 3 February 1953, in FRUS, 19521954, Vol. X, p. 661. 151. Washington Embassy to FO, 19 February 1953, in FO 371/104612.

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The second key factor was that two extremely important NSC meetings held in March 1953 revealed the dearth of remaining options in Iran. Secretary of State Dulles believed that the most likely immediate scenario was a dictatorship under Mossadegh, but he was concerned that if the Soviet Union made a concerted effort to take Iran, the United States could do little short of accept it as a casus belli for a third world war.152 In the event that time could be bought, Dulles developed three options, all deeply problematic: (1) the recall of Ambassador Henderson, whose credibility in Iranian eyes was probably impaired, before Mossadegh could seek his removal; (2) a public split with Britain and the pursuit of an independent policy to regain Iranian favor; or (3) the provision of material support to Mossadegh, including the dispatch of technicians and the purchase of oil from the NIOC. The option of recalling Henderson was quickly rejected as a negative exercise in damage limitation that would leave the administration vulnerable to charges of simply abandoning Iran to Communism. The second option drew more support. The administration had accepted its predecessors recognition that the United States had to assume the role of senior partner to Britain in the Middle East. Moreover, as Deputy Assistant Secretary of State Jernegan put it in June 1953, U.S. ofcials increasingly sensed that to tie ourselves to the tail of the British kite in the Middle East at the present juncture . . . would be to abandon all hope of a peaceful alignment of that area with the West.153 For the time being, however, aspirations for a bolder policy were thwarted by the limited U.S. capabilities in the Middle East. The NSC conceded in June 1953 that tangible evidences of progress for United States purposes in this area are meagre. The evidences of frustration are plentiful. The margins for action remain thin at best.154 Thus, although cooperation with Britain seemed increasingly difcult, it also remained essential. In the NSC debates of March 1953 even Secretary Humphrey, who favored a more independent U.S. policy, conceded that we could not afford to achieve our objectives in Iran if we did in the British at the same time.155 All of this made Dulless nal option of supporting Mossadegh highly problematic as well. The oil companies remained unhappy about the prospect of bailing out Mossadegh and Iran. It was seemingly impossible to push Britain into further concessions without jeopardizing U.S. interests in the sanctity
152. Dulles had expressed similar sentiments to Henderson just prior to this meeting. Sec. State to U.S. Embassy Iran, 2 March 1953, in FRUS, 19521954, Vol. X, p. 692. 153. Jernegan to Sec. State, 17 June 1953, in FRUS, 19521954, Vol. VI, pp. 992993. 154. Status of National Security Programs, 30 June 1953, in DDE Library, White House Ofce, Ofce to the Special Assistant for National Security Affairs, Records 19521961, NSC Series, Status of Projects Sub-series, Box 3, NSC-161 (Vol. 1). 155. Memoranda of 136th meeting NSC on Wednesday 11 March 1953, 12 March 1953.

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of contracts and the 50:50 prot-sharing precedent. Further obstacles arose from Mossadegh himself and from the expected course of events in Iran. U.S. ofcials had long doubted Mossadeghs candor and regarded him as always wanting to take one step forward in order to take two backward.156 In January Mossadegh had given the Republicans damaging rst-hand experience of his unreliability when he reneged on the agreed basis for international compensation. By March, Eisenhower doubted that even a unilateral U.S. agreement with Mossadegh excluding the British would be worth anything.157 Furthermore, U.S. ofcials worried that unless Mossadegh accepted the 20 February proposals for an oil settlement, Iran would slide gradually into Communism. To be sure, Iran did not face imminent economic collapse. By the rst half of 1953 its agrarian economy seemed capable of continuing for quite some time without an oil settlement, particularly if it received limited U.S. technical assistance.158 Nor was the Eisenhower administration any more inclined than its predecessor had been to regard Mossadegh as a Communist sympathizer. Secretary of State Dulles believed that as long as the latter [Mossadegh] lives there was but little danger of a Communist takeover, and on 19 May the State Department concluded that the previous six months had witnessed no increased Tudeh strength, despite the governments failing ability to maintain order and Mossadeghs declining popularity, particularly with former National Front leaders.159 The key problem, instead, was that Mossadegh seemed poised to become the Edvard Bene of Iran.160 He was relying increasingly on Tudeh support in his power struggle with the Shah as the National Front fragmented. His failure to address socioeconomic problems seemingly encouraged Communist subversion. His age and inrmity made it difcult to know how much longer he could continue to lead. By the time he would step down, the position in Iran would most probably have deteriorated so far that the United States would be powerless to prevent a Tudeh takeover.
156. Vernon Walters, Silent Missions (New York: Doubleday, 1978), p. 250. 157. Memoranda of 136th meeting NSC on Wednesday 11 March 1953, 12 March 1953. 158. Meeting NSC-147, 1 June 1953, in DDE Library, Ann Whitman File 195361, NSC Series, Box 4, p. 4; and FO to Washington Embassy, 7 March 1953, in UKNA, FO 371/104614. By 1952/ 1953 the economy was in a sustainable balance-of-payments and scal position without oil income and could probably have continued indenitely without further belt-tightening measures. Patrick Clawson and Cyrus Sassanpour, Adjustment to a Foreign Exchange Shock: Iran, 19511953, International Journal of Middle East Studies, Vol. 19, No. 1 (February 1987), pp. 122. 159. 135th Meeting of the NSC, 4 March 1953, in FRUS, 19521954, Vol. X, pp. 692701; Review of Persian situation 1/11/5231/3/53, 19 May 1953, in UKNA, FO 371/104566; Memorandum from Washington Embassy, 11 May 1953, in UKNA, FO 371/104566; and Henderson to State Dept., 8 May 1953, in FRUS, 19521954, Vol. X, pp. 726727. 160. Berry to State Dept., 17 August 1953, in FRUS, 19521954, Vol. X, p. 748.

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After the high-level internal debates in March 1953, the Eisenhower administration concluced that it had nally run out of policy options consonant with the principles and considerations it shared with its predecessor. All that was left was for Mossadegh to accept the 20 February proposals or to look to new leadership in Iran. Ambassador Henderson neatly captured this continuity in U.S. policy in his observation that in the spring of 1953 the Eisenhower Administration, just as the Truman Administration during its last days, was coming to the conclusion that the only hope of saving Iran was a changing of Prime Ministers.161 Earlier movement in this direction thus accelerated. The third key development in the February/March period sealed Mossadeghs fate. On 4 March Mossadegh overplayed his Communist card. After Henderson told Mossadegh that the United States could not justify purchasing Iranian oil until Britains outstanding claims were settled, the ambassador added: You could tell them that you were saving Iran from Communism.162 On 20 March Mossadegh rejected the British offer of 20 February and thereby publicly demonstrated that he either would not, or could not, settle the oil crisis on terms acceptable to the United States. This conuence of events brought the Eisenhower administration to the last option of its predecessors policya change of Iranian leadership. The importance of reaching this point in the eventual resort to a coup can be demonstrated by cross-referencing the events of February and March 1953 with Donald Wilbers inside account of Operation Ajax. In late 1952 British ofcials led by Christopher Woodhouse, the former station chief in Tehran for British intelligence, approached their U.S. counterparts led by Kermit Roosevelt, the head of the U.S. Middle Eastern Division of the Ofce of Policy Coordination within the CIA, with Operation Boot to oust Mossadegh.163 The plan received a mixed reception, but the British hoped that the new administration might be more sympathetic. However, the Eisenhower administration initially preferred to continue the search for a negotiated settlement. Crucially, Wilbers account conrms that it was not until March 1953 that Bedell Smith conceded that the U.S. government could no longer approve of Mossadeghs government, and it was not until 16 April that

161. Reminiscences of Loy Henderson, in DDE Library, CUOROC, p. 11. 162. FO to Washington, 7 March 1953, in UKNA, FO 371/104614. 163. This called for the activation of a network, coordinated by the key British agents, the Rashidian brothers, and comprising Majlis deputies, mullahs, tribal leaders, and journalists. See Mark Gasiorowski, The 1953 Coup dEtat in Iran, International Journal of Middle Eastern Studies, Vol. 19, No. 3 (August 1987), p. 270.

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a comprehensive study, Factors Involved in the Overthrow of Mossadeq, was completed.164 Furthermore the process of closing off the last U.S. policy options, combined with the acknowledgment of probable meager U.S. inuence over events in Iran when Mossadegh eventually fell, helped spur U.S. policymakers to regard desperate measures as their only hope. With Iran seemingly doomed, the risks involved in trying to effect a change of government were much reduced. As Wilbers account reveals, U.S. ofcials concluded that even if the ouster of Mossadegh failed, it would probably only accelerate the inevitable expulsion of the United States and eventual Tudeh triumph under Soviet direction. The growing belief that there was nothing much to lose by attempting to remove Mossadegh was evident in Hendersons position at the end of March 1953. Whereas in July 1952 he had warned that a successful military coup would lead to Tudeh control of the nationalist movement, he argued in March 1953 that nothing whatever was to be hoped for from Mussadeq and that the risks involved in a change of government would not be too great.165 This leaves only the means chosen to effect new leadership in Iran as a signicant difference in policy between the Truman and Eisenhower administrations. This difference is undoubtedly of major importance and attributable in part to changes in key ofcials. For instance, Roosevelt cites the pivotal role of the Dulles brothers in approving Operation Ajax.166 Upon closer inspection, however, the change of administration was not as crucial as often alleged. Wilbers account of the CIA operation reveals that the Eisenhower administration itself regarded a coup solely as a last resort, rather than a preferred option. Once the administration nally decided to pursue a change of regime, it wanted at least to create the illusion that this was brought about through constitutional means. The U.S. station chief in Tehran was authorized on 20 May to spend one million rials per week bribing members of the Iranian Majlis.167 Simultaneously, the Eisenhower administration stepped up its pressure on Mossadegh. In early April Dulles publicly declared that a quick resumption of AIOC talks was not expected. The administration continued
164. Donald Wilber, Clandestine Service History: Overthrow of Premier Mossadeq of Iran, November 1952August 1953, available online at, <http://cryptome.org/iran-cia/cia-iran-pdf.htm , pp. 12. 165. Wilber, Clandestine Service History, Appendix B, p. 27. See also Henderson to State Dept., 31 July 1952, in FRUS, 19521954, Vol. X, p. 427; and Henderson to State Dept., 31 March 1953, in FRUS, 19521954, Vol. X, p. 721. 166. Roosevelt, Countercoup, p. 19. Apparently, Henderson disliked the methods but saw no other way of getting it done. Moyara de Moraes Ruehsen, Operation Ajax, p. 476; and Henderson to RM Melbourne, 19 April 1980, in Library of Congress, Henderson Papers, Box 9, Subject File Iran Misc. 167. Wilber, Clandestine Service History, pp. 12.

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informally to restrain American oil technicians from going to Iran, and it held up Point IV funding as part of what William Warne, the director of the U.S. Technical Co-operation Mission in Iran, recalls as a deliberate, announced intent to force the issue of Mossadegh in Iran.168 Eisenhower used a condential plea by Mossadegh on 8 May for nancial aid to drive a wedge between him and his supporters. (Mossadegh had not consulted his supporters before sending the letter.) Eisenhower hoped to make clear that Iran could expect little support so long as Mossadegh remained in power. The administration withheld a response until 29 June and then brusquely rejected the request and published both letters before the response even reached Iran.169 Only after Mossadegh suspended the Majlis and thus corrupted the constitutional channels in Iranand, in the process, eliminated the external means of effecting changedid the Eisenhower administration nally embrace the proposal for a coup. Indeed, it is logical to suggest that if Truman had remained in power and these same circumstances had arisen his administration would probably have been forced into a similar intervention. The coup was, after all, the only remaining means of salvaging U.S. interests in the region. The Truman administration was aware that its earlier policies had failed, and that the situation in Iran seemed increasingly hopeless. Hence, there was little to lose in the event of failure. Certainly some ofcials in the Truman administration, such as Byroade and Henderson, came to see no alternative to a coup. Moreover, for all that is said about the Eisenhower administrations greater willingness to rely on covert operations, it is worth bearing in mind that Truman was the one who in June 1948 approved the creation of an ofce within the CIA to conduct covert warfare against Communist subversion.170 Likewise, it was the Truman administration that set up covert operations in Iran from the late 1940s that included the preparation of escape routes and guerrilla capabilities in the event of war, the maintenance of contacts with indigenous southern tribes, and operation BEDAMN against the Tudeh. In the nal lead-up to the coup the Eisenhower administration simply turned these inherited covert assets, which already targeted the Tudeh, against Mossadegh.171
168. Sec. State to U.S. Embassy Iran, 13 March 1953, in FRUS, 19521954, Vol. X, p. 715; Washington to London, 3 April 1953, in BP Archives, 100570; Minute P. E. Ramsbotham, 10 June 1953, in UKNA, FO 371/104616; and W. E. Warne, Oral History, p. 93. 169. Mattison reported that Eisenhowers letter in particular had helped to belie the carefully nurtured idea that Mossadegh enjoyed American patronage. See Mattison to State Dept., 17 July 1953, in FRUS, 19521954, Vol. X, p. 736; and Mattison to State Dept., 25 July 1953, in FRUS, 19521954, Vol. X, p. 738. For Eisenhowers letter, see Yonah Alexander and Allan Nanes, eds., The United States and Iran: A Documentary History (Frederick, MD: Alethia Books, 1980), pp. 234235. 170. Allen Dulles to Truman, in Gavin, Politics, Power, and U.S. Policy in Iran, p. 88 n. 130. 171. Details in Gasiorowski, The 1953 Coup dEtat in Iran, pp. 268269.

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Conclusion
U.S. policy toward Iran from 1950 to 1954 has long been interpreted through the lens of differences between the Truman and Eisenhower administrations. The coup has likewise been viewed as a break with the Truman administrations policy and as having been driven by one or more factors connected with the change of presidentsby Republican connections with big business, by the Eisenhower administrations penchant for covert action, or by new AngloAmerican agreement in Iran. This article, however, has offered a more complex picture of U.S. policy during the oil crisis by arguing that, at least in Iran, Truman did see his desire for a continuing foreign policy largely realized, contrary to expectations at the time and many judgments since then. The assertiveness displayed by the Eisenhower administration was already evident during the nal year of the Truman administration, when it became clear that U.S. policy was ineffective and that a new approach was needed. Likewise, the resort to a coup was more the logical outgrowth of shared goals and policy parameters than of either Eisenhowers assumption of ofce or of the shift in the global and regional balance of power with the USSR. Policy continuity between the administrations was rooted in shared fears, objectives, and assumptions. Both administrations viewed the oil crisis as a Cold War issue, and their principal fear was that Iran would be lost to Communism. Given the dependence of Western Europe on Middle Eastern oil supplies, the loss of Iran would inevitably have catastrophic effects for the rest of the region and for global containment. Although the potential for armed conict existed, neither administration believed that Soviet military annexation of Iran was likelyespecially after the British were forced to abandon their ill-considered threat of military action. Instead, both administrations regarded Communist subversion as the principal threat to Iransubversion that took advantage of socioeconomic unrest and that, as the oil crisis developed, threatened to overwhelm Iranian nationalism. Both administrations sought to counter this threat by encouraging Iranian political reform and economic development through the resurrection of the Seven Year Plan. But because oil revenues were Irans principal source of foreign exchange and internal investment, U.S. ofcials believed that the Seven Year Plan would be feasible only if the oil dispute were settled. The only alternative for keeping Iran aoat was large-scale and sustained U.S. aid, which neither Truman nor Eisenhower was prepared to condone. Even if such a proposal could make it through Congress, which was unlikely, it would antagonize Britain, encourage Iranian intransigence, and potentially burden the United States with an indenite aid commitment. Additionally, Iranian corruption and mismanagement might negate the benecial effect of any aid.
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There was also a risk that dependency on external support would turn Iranian nationalism against U.S. neoimperialism and that bailing out Iran from its predicament would jeopardize the sanctity of contracts. Policy continuity between the Truman and Eisenhower administrations was reinforced by common assumptions that dened policy parameters and consequent policy options. Policy toward Iran was shaped in part by considerations of Britains importance as the principal U.S. ally. It was also shaped by concern about the implications of any settlement for oil supplies and the sanctity of contracts, and by a desire to work with the best candidates for strong pro-Western leadership in Iran. Truman and Eisenhower both recognized that Britain was the chief U.S. ally, particularly in the Middle East, where U.S. resources and options were limited. Reliance on Britains military position would have to continue until the United States could project power into the region and alternative arrangements could be made. Moreover, the AIOC concession was Britains most important overseas asset, and if the United States wanted Britain to remain an effective ally, British economic interests had to be protected as best possible. As for the sanctity of contracts and oil supplies, an oil settlement had to provide compensation to the AIOC in such a way as to demonstrate that abrogation of contracts would be harshly penalized. Also, the Truman and Eisenhower administrations accepted ARAMCOs 50:50 prot-sharing arrangement with Saudi Arabia as a just benchmark that should be approximated but not exceeded in Iran. Ofcials in both administrations wanted to ensure that neither the oil dispute nor its resolution would destabilize world oil prices through gluts, scarcity, or dumping. Finally, they had to work with Iranian leaders most likely to be pro-Western and able to conclude an oil deal. For both administrations, this decision was pragmatic rather than ideological. Truman worked comfortably with Razmara and hesitantly embraced Mossadegh as his successor mainly because of a lack of alternatives (though also in the hope that Mossadeghs nationalist popularity would be sufcient to force an oil deal past the Majlis). By 1952 Mossadegh had turned out to be such a disappointment that the Truman administration was prepared to see him overthrown if the new leadership and consequent greater British cooperation would facilitate a conclusion of the oil dispute. When Mossadegh returned to power soon afterward, Truman and Eisenhower then tried to work with him again for want of a viable option until he rejected the 20 February proposals, a move that demonstrated once and for all that he was unwilling to settle the oil dispute on terms acceptable to the United States. The overwhelming weight of policy continuity rather than change between administrations is demonstrated in the way that the Eisenhower administration followed up on its predecessors last effort to solve the oil crisis.
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The Truman administration sacriced criminal antitrust proceedings against the oil majors, and Eisenhower underwrote their subsequent participation in the oil plan by agreeing to extend their antitrust immunity beyond the expiry of Section 708 of the DPA on 30 June 1953. Once in ofce the Eisenhower administration confounded British expectations (and the retrospective judgment of some scholars) by refusing to establish a concerted Anglo-American position against Mossadegh. Instead, Eisenhower extracted concessions from Britain beyond those that Truman had asked and retained the Truman administrations critical stance against Britains willingness to risk losing Iran to Communism simply for the sake of British economic interests. We now need to return to the question of policy change and Eisenhowers apparently more assertive stance in the oil crisis. U.S. policy toward Iran from 1950 to 1954 certainly changed tone, but this was not due to the change in administration. Rather, the impetus for change came from the growing evidence that the policy was ineffective. By early 1952 two years of mediation found the United States hopelessly entangled in the oil dispute with insufcient inuence either to extract itself or to force Britain and Iran into a settlement. From this came the policy review that led to three notable shifts in 1952, each time toward a more assertive and independent policy as options were closed off and as policymakers who wanted a more aggressive U.S. role in the Middle East gained ascendance. By the autumn of 1952 AngloAmerican priorities in Iran were seemingly irreconcilable, and the effects of British decline had persuaded the Truman administration that the United States had to assume the role of senior partner in the region. This conclusion was endorsed, not initiated, by the Eisenhower administration. The new approach freed U.S. policy of one of its nal constraints. From late 1952 on the Truman and Eisenhower administrations could whittle away the few remaining policy options that were consonant with their shared goals and assumptions. Finally, the coup itself marked a clear and important difference in the means used by the two administrations. The difference is explicable in part by broader differences between the administrations, notably the preferences of new high-level ofcials such as the Dulles brothers. However, the Eisenhower administrations quest to overthrow the regime in Iran was the consequence not of a random choice but of its decision to stick with its predecessors policy until a coup seemed the only remaining option. It is important to recognize but not to overstate the differences between the Truman and Eisenhower administrations on the issue of covert operations. On the one hand, Truman approved the CIA ofce for covert operations against Communist subversion, and his administration conducted such operations in Iran and established the assets that Eisenhower eventually used against Mossadegh. On the other
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hand, it is clear that the Eisenhower administration wanted to bring about Mossadeghs overthrow in a way that would give the appearance of constitutional change. Orchestrating a coup was thus the last rather than the preferred means to ensure successful implementation of a policy that was itself determined by the objectives, principles, and assumptions shared so strongly by the two administrations.

Acknowledgments
My thanks go to the Harry S. Truman Library and the British Academy for their research scholarships and to the British Petroleum Archive.

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