HTS 2041: The Modern Middle East

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Exploring the Economic Root of Iran’s Negative Perception of the U.S. and the West

The Iranian Revolution that occurred at the end of the 1970’s and the anti-American sentiment which played into the subsequent U.S. Embassy hostage crisis are relatively well known events. However, up until very recently I was never aware of where that negative sentiment stemmed from. One of the causes of this was actually revealed to me by Ben Affleck’s critically acclaimed movie Argo which briefly describes the role that the U.S. government played in the 1950’s coup that replaced the very popular, democratically elected Prime Minister Mohammad Mosaddegh with Fazlollah Zahedi and restored Shah Mohammad Reza Pahlavi to power, replacing Iran’s tenuous (at best) constitutional monarchy with an autocratic ruler. In this blog, I will attempt to explain one of the main motivations behind the U.S. supporting the coup and give an overview of Iran’s interaction with Western powers beginning with the last rulers of the Qajar dynasty in an exploration of one of the many factors that culminated in the revolution’s hostile environment towards the West: economic imperialism.

A famous photo of Iranians climbing over the gate to the U.S. Embassy

A famous photo of Iranians climbing over the gate to the U.S. Embassy during the revolution

The background of the story starts with a series of concessions and capitulations Iran granted to the British and Russians at the end of the 19th century including the Reuter Concession which, according to a source quoted in Gelvin, was “the most complete and extraordinary surrender of the entire industrial resources of a kingdom into foreign hands that has probably ever been dreamed of, much less accomplished, in history.” It is actually quite ironic that the Shah of Iran repeatedly engaged in giving concessions and then ended up paying enormous sums of money to get out of them once he or the public realized they were not in his country’s best interests. For example, after giving a concession allowing a British citizen complete control over the tobacco industry in Iran for fifty years the Shah agreed to pay 346,000 British pounds to cancel the deal and ended up having to borrow 500,000 British pounds in order to do so. In an attempt to raise money to modernize the country Iran kept granting concessions that landed them in a massive pile of debt and only reduced its economic robustness and national sovereignty even more. This is a perfect case of defensive developmentalism that ended up going extremely wrong and sets the tone for the main topic of discussion.

Iran’s history of having been sorely taken advantage of by Western powers put in place the foundations for its very understandable resentment towards America, with the heart of the issue being the nearly complete foreign control of Iran’s most valuable natural resource: oil. In 1901, the Iranian government granted a huge concession with overarching ramifications to an Australian named William d’Arcy. The concession, which granted him absolute access to and undisputed power over the entire oil industry for fifty years, put in place the “modus operandi” for foreign interests to take an overwhelming majority of the profits from the industry, leeching Iran’s economic lifeblood and preventing them from being able to invest in further development.

The history of just the economic facet of the issue that follows is extremely complex and would take a book to explain; therefore I am just going to skim the surface of the topic. D’Arcy ended up selling his rights to the Burmah Oil Company which established as one of its subsidiaries the Anglo-Persian Oil Company. In order to further manifest its foothold in Iran and transform its navy from a coal burning fleet to an oil based one, the British government seized the opportunity and bought the majority of shares in the company. This move firmly established them as leaders in the oil industry. Time and time again, the Iranian government afterwards tried to renegotiate the terms of the agreement, now controlled by the British, with various degrees of success including a renegotiation in 1933 that actually ended up extending the d’Arcy Oil Concession by thirty-two years.

Shah Mohammad Reza Pahlavi

Shah Mohammad Reza Pahlavi

Finally, in 1951 Prime Minister Mohammad Mosaddegh (in the absence of the Shah who was at the time in exile as a result of widespread disapproval of his reign) successfully nationalized the oil industry with the backing of the Majlis, effectively cutting off foreign control and allowing the oil profits to stay in Iran. However, foreign interests, primarily the British and the United States governments, did not approve of this move and in 1953 orchestrated a coup referred to by the CIA as “Operation Ajax” in order to reinstate the deeply unpopular Shah. In the end, the attempt at handing the reins of power back over to the Shah was a success. However the reinstated regime’s widespread corruption, brutal oppression of resistance, and the Shah’s lavish lifestyle supported by funneling the country’s oil profits to his family were all factors that culminated in the Iranian Revolution. With its involvement in the coup, the United States marked itself in Iran’s eyes as only supporting democracy when it suits American interests. Subsequently the people saw the U.S. as being directly responsible for Shah Mohammed Reza Pahlavi’s continued rule and thus the problems of the country. Therefore it is little wonder that the revolution in the 1970’s was marked by a distinctive anti-American and non-Western sentiment.

This is just a very narrow analysis of an extremely complex and multi-faceted issue whose consequences are still playing out to this day.

Sources: Gelvin (Chapters 5, 10, and 19) and Wikipedia

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14 Comments

  1. flambert3 says:

    I have not seen the movie or done much research about the issue but I can believe that the US will look out for its own interest even if it means going through a country to do it. Is there any European backlash for this as well for the British who have constantly took advantage of Iran for its oil?

  2. marymsherman says:

    I really enjoyed reading your piece. I havent seen the movie yet either (though I really want to!), but I heard its a spectacular film. It doesn’t come to me as much of a surprise that Iran’s government is primarily anti-west. What good have we done for them, if we’re being completely honest? I’m looking forward to getting to this topic in class as well so that we can go more into detail. Revolutions tend to be very unique but also very similar at the core, and I’ll be interested to hear more about the Iranian Revolution.

  3. I really like your blog and I enjoyed reading it. I have seen the movie Persepolis and learnt a little bit background about Iranian revolution. For me, normal citizens actually do not hold a grudge toward the U.S. or Britain. Their attitude seems more like resistance to westernization. For them, being westernized is being away from traditional Islamic principles. Yes, foreign powers’ control over their oil resource is definitely an effect which enrage the Iranians, but I doubt the fact that most of the Iranian will care a lot about the oil. After all, profit from oil will either goes to the hand of foreign powers or their business men. Maybe religion is the tool that the ruling group uses to create the hostile atmosphere in Iran. There are many possibilities when come to political world.

    Shitian Liu

  4. I really enjoyed the movie Argo and thought it did a very well explaining this conflict between the two countries. Also, i am very curious what deals the British made in order to extend the concession by 32 years. This exploitation of a poorer country also reminds me of America’s interactions with Panama during the building of the panama canal.

  5. jdowling6 says:

    Very interesting piece and enjoyable read. I knew that anti-Americanism sentiment existed but not as strong as I thought. It makes sense to me now that the roots of sentiment are somehow always related to economic imperialism.

  6. jkipp3 says:

    Classic overly-confident 1950’s decision to play world sheriff as soon as the fallout from Hiroshima and Nagasaki had begun to clear…

  7. mitch7991 says:

    First of all, I’d like to say that I completely understand why Iran would feel the way they do. Second, it’s a shame what ignorance does to our global perspective. Matter of fact, I think the majority of the American people don’t even know about Operation Ajax. We just know that the Middle East disdains us, and about 9/11.. So yeah, we hate y’all too. All I can say is that what the American government did was wrong. BUT, it was the American government that did it. There has been many a time where a country’s government carries out an action against another nation and the unsuspecting people of that country end up paying the price for it. I’m confident that if the American people knew the scoop, they would never have approved of such an ordeal.

  8. I think it’s also worthy to note the crippling economic sanctions the U.S. has instituted in recent years in Iran. We can see again and again the U.S. seriously crippling economies in order to gain something, yet it doesn’t ever seem to work. I’d want to know what the author of this blog thinks about this.

  9. ojanus3 says:

    I think this blog is an interesting introduction to the issue of anti-American and anti-Western sentiment in the middle east. I am looking forward to talking more specifically about this topic in class.

  10. I enjoyed this article as well because it had a direct impact on my father during the 70s and 80s to decide to attend college in the United States and to remain here while the revolution occurred. I will agree with other comments above that Iran’s people do not share a hate toward the US, in fact last time I was over there, I was treated quite well (and they love american money for some reason). But I will agree that Iran is against westernization because of their very strong religious roots in their country.

  11. sstephenson3 says:

    This was a very informative and very well put together piece. In reference to the subject of the article, I find it completely ludicrous that Americans, specifically members of the US government, ever considered this to be a good idea. It is a very odd occurrence because United States citizens, by their nature of being majority immigrants from other cultures, often try to separate themselves from the failed ideals of their parent nations. One such idea that we should have learned from is the absolute failure of Western European powers to achieve honest agreements with Middle East nation. It seems to me that the objective in these dealings between East and West have more to do with personal gain, on the side of the East, and exploitation, on the side of the West. Given this nature of the relationships between these two parts of the world, I don’t blame Iran for harboring the anit-American sentiment that they hold. We simply had no business meddling in their political affairs, nor is there ever an occasion where we should.

  12. shaimsn says:

    Thanks for writing about this. The class discussion we had was very interesting.

    We talked about the geographical factors Iran is concerned about (being surrounded by countries where the US has entered).

    We talked about Iran’s tactical aim at Israel instead of the US (closer distance, less cost, less trackable missiles, smaller target and publicly known as a US ally).

    We talked a little bit about how Iran would retaliate. I wanted to share this 5 minute video with all of you – I found it very precise and explicative.

  13. akranc3 says:

    Very good article. It gives a good summary of why Iran is so angry with America. However, I feel that it is all their fault. Maybe not the people alive now, but definitely the Iranian’s problems are the result of Iranians. Concessions are a good idea to modernize, but the way they were handled out was, for lack of a better word, stupid. Giving foreigners power over some of your most profitable resources for such a long time should result in modernization of at least some of the sectors and infrastructure that service that resource. However, they should expect things to go wrong when that resource is their most profitable, and they can’t even touch it for several decades.They should have reduced the length of these concessions, thus allowing modernization to happen on the small scale. This would have allowed some modernization to happen while at the same time limiting the amount of “abuse” that could occur.

  14. kledbetter6 says:

    Does anyone know why the coup was codenamed “Operation Ajax”? Ajax is the name of two characters from the Greek mythology, one of whom kills himself and one of whom was swallowed by the sea. I wonder why the CIA deemed this an appropriate name for this operation? Regardless, I don’t agree with what the CIA and MI6 did, particularly as it was motivated by protecting their economic interests. I wish there was something to facilitate communication directly between citizens of countries whose governments are on unfriendly terms, so that perhaps any assumptions about the majority of the people in a country could be eliminated.

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