Strait of Hormuz
Strait of Hormuz Assessing the threat to oil flows through the Strait U.S.-Iran Relations Prior to the fall of the Shah in the late 1970's, Iran was an American ally. The source of contention between the U.S. and Iran is the product of a series of historical events. According to…
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The Strauss Center
In 1953, the United States played a significant role in a coup that removed democratically elected Premier Mohammed Mossadeq, restoring the Shah Mohammad Reza Pahlavi to power. Mossadeq sought to nationalize the oil industry whereas the Shah promoted a privatized system. Nationalization would allow Iran, rather than Great Britain, to profit from Iran's natural resource. As a result, the British urged the U.S. to aid the coup plot.

The British initially sought cooperation in planning the coup from President Truman, but he refused. After President Eisenhower's election in 1953, the British approached with the coup idea. Eisenhower agreed and ordered the CIA to embark on Operation Ajax, a covert operation against Iran's government.

Operation Ajax undermined Mossadeq's government by bribing influential figures, planting false reports in newspapers and provoking street violence.[ii] On August 19, 1953, Mossadeq was forced from power and the Shah took over.

The U.S. benefited from this "˜shift' in political discourse; the U.S. gained control over Iranian oil and redistributed British production shares to U.S. companies. U.S corporations acquired 40 percent of Iran's oil, Anglo-Iranian Oil's (the British corporation later renamed British Petroleum) share reduced to 40 percent, and French and Dutch companies acquired the other 20 percent.[iii]

The Iranians, on the other hand, did not benefit from the change in government nor did they reap the profits of its natural resource, oil.

The U.S.-supported coup (1953) ushered in two decades of dictatorship under the Shah, who relied heavily on U.S. aid and arms. During this period, Iran's society changed and modernized too rapidly for some opponents of the regime.

President Carter criticized the Shah's regime and its poor human rights record. The Shah, understanding that he depended on U.S. support, responded to Carter's request for change by taking steps towards liberalization. Carter, in turn, better appreciated the strategic importance of Iran both in the Middle East and for the United States in general: the U.S.-Iran alliance helped balance Soviet influence in the region.

The Iranian people, on the other hand, grew weary of repression and corruption, which the Iranians believed was inextricably linked to the United States. Some Iranians wanted a sense of stability and order and called for the traditions of Islam. Many Iranians looked to Ayatollah Khomeini for guidance and leadership in their opposition against the Shah. Khomeini regarded the Shah's regime as corrupt and illegitimate and referred to the U.S. as the "Great Satan." At the request of the Iranian prime minister, the Shah left Iran on January 16, 1979. On February 1, 1979, Khomeini became the new leader of Iran.

On November 4, 1979, a group of Iranian students stormed the American Embassy in Tehran and took 63 American Embassy personnel hostage. The specific grievance of the students (the hostage takers) focused on the Shah and his relationship with the U.S. In October 1979, U.S. officials learned the Shah was diagnosed with cancer. The Shah requested entry to the U.S. for medical treatment; President Carter rejected his request. After a vigorous campaign led by influential U.S. Shah supporters, the Shah was admitted into the United States.

The arrival of the Shah to the U.S. instigated Iranian unrest, which led to the invasion of the U.S. Embassy. It evoked memories of the 1953 coup and aroused fear that the U.S. was planning another coup to restore the Shah to power.[iv] In short, for the students who took over the Embassy, for the Iranian revolutionary officials who supported them, and for much of Iran, the taking of the Embassy was a response to the 1953 coup against Mossadeq.[v]

The U.S. responded to the situation through economic and diplomatic pressures. President Carter stopped U.S. oil imports from Iran, froze all Iranian assets in U.S. banks, and, with the exception of humanitarian goods, the U.S. ceased all trade with Iran. However, the economic sanctions and diplomatic pressures did not compel a hostage release. The U.S. then responded with a failed military action, resulting in the deaths of eight Americans. The hostage crisis served as the defining moment of the U.S.-Iran relationship for Americans.

Within a day of Reagan taking the oath of presidency, the hostages were released and returned stateside. However, during President Reagan's administration, there was little to no improvement in U.S.-Iran relations. In 1983, Hezbollah conducted a series of anti-American terrorist attacks, and in 2003, the U.S. Supreme Court decided that Iran supported the terrorist organization. The Iran-Contra scandal followed the Hezbollah attacks. During the Iran-Contra scandal, the U.S. illegally sold weapons to Iran and used the profits to support the Contras in Nicaragua.

Despite the series of events with Iran in the 1980s, it was the accidental shooting down of a commercial airline by the U.S. that increased the hostilities between the U.S. and Iran. In 1988, the USS Vincennes shot down an Iranian commercial flight in Iranian air space over the Strait of Hormuz - 290 Iranians died. Although the U.S. paid a compensation of $61.8 million to Iran, the U.S. never paid for the lost aircraft nor did they offer an official apology to Iran.

The election of reformist Mohammad Khatami in 1997 brought a sense of optimism for U.S.-Iran relations. Throughout his campaign and post-election, Khatami expressed that he wanted to improve Iranian relations with the U.S. In his first major campaign speech, Khatami suggested that if the U.S. changed its bad behavior, the U.S. and Iran could have normal relations.[vi] This was a major shift from the past leadership of Khomeini who believed that Iran and the U.S. could never have normal relations.

Although the Clinton Administration welcomed Khatami's election, they remained vigilant and cautious of the sincerity of Khatami's rhetoric toward the U.S. Although Khatami indicated that the time was not yet right for direct bilateral discussions, he argued that the two countries begin to build relations through more informal, cultural exchanges.[vii]

Not too long after Khatami made these statements, the Clinton administration sent an American wrestling team to compete in Iran. The U.S. and Iran soon followed by allowing more open travel between the two countries to further encourage and facilitate people-to-people exchanges.[viii] The U.S. even lifted the embargo on two import items: rugs and pistachios.

However, the amicable exchanges ultimately stalled. Iran's conservatives remained unwilling to make further concessions and the U.S. was equally unwilling to negotiate terms of discussions including changes in Iranian policy on Israel, nuclear energy, and support for terrorism.

There have been no improvements in U.S.-Iran relations during the Bush Administration. In his State of the Union Address in 2002, President Bush labeled Iran as part of the "˜Axis of Evil,' outraging the Iranian leadership. Iran responded with a public statement: "the Islamic Republic is proud to be a target of the hate and anger of the world's greatest evil; we never seek to be praised by American officials."[ix]

However, in 2003, Iran did offer a proposal trying to ease strained relations between the two rivals. Iran put several different issues on the table including an offer, within the framework of the negotiations, to disarm Hezbollah and turn it into a mere political organization. Secondly, the offer included an end of all support for Islamic jihad and Hamas, and provisions that Iran would encourage the Palestinians to go a political route, rather than military route, in their dealings with Israel.[x] The U.S. rejected the offer. Overall, the rhetoric of the Bush administration has been that Iran is a threat to not only the United States, but also to the international community.