Made by History | Perspective
July 17, 2018 at 6:00 AM
The Trump administration has taken a hard line against Iran.
On May 8, the United States withdrew from the 2015 nuclear deal. In June, the United States demanded an end to all purchases of Iranian oil, effectively placing an embargo on Iran’s oil exports. Now, it is pressuring allies to comply.
While the administration has denied it, the embargo is a gamble designed to precipitate regime change in Iran by creating enough economic pain to prompt increased anti-government demonstrations. Such a dual economic-political crisis could topple the leadership and lead to the installation of a friendlier regime.
This sustained economic warfare harks back to an earlier stage of U.S.-Iran relations: the 1951-1953 oil embargo against Iran. That embargo preceded the Anglo-American coup d’état that ousted the elected nationalist prime minister, Mohammad Mossadegh, in August 1953 and installed a dictatorship under Shah Mohammad Reza Pahlavi.
This precedent suggests that the Trump administration should proceed with extreme care. As it did in the early 1950s, economic warfare might encourage U.S. officials to look more favorably upon regime change as a strategic option, without considering the consequences, which could reshape U.S.-Iranian relations for decades to come.
In 1951, Iran was one of the largest oil exporters in the world. Its oil industry was owned by a British company, the Anglo-Iranian Oil Co. (today known as BP), which paid a royalty to Iran but kept most of the oil profits for itself.
Inside Iran, anger at this injustice reached crisis proportions after World War II. In 1951, Mossadegh was swept into power and nationalized the oil industry, claiming it as the rightful property of the Iranian people. In retaliation, Britain imposed an oil embargo on Iran.
The embargo was very successful. Major oil companies refused to do business with Mossadegh. Iranian production collapsed, falling from 660,000 barrels per day in 1950 to practically nothing in 1952. Without oil exports, the Iranian state confronted fiscal collapse. This was the British goal: They hoped economic pressure would force Mossadegh from office.
The United States was more hesitant. Government officials supported the embargo but worried about its ultimate effect on Iran. Iran’s nationalization could not be allowed to succeed because of its deleterious impact on U.S. oil companies operating in the region. Yet the United States also doubted Iran’s ability to survive without oil revenue. According to one U.S. assessment, losing oil revenue would lead to “a progressive deterioration of the economy,” ending, ultimately, in its collapse.
In the midst of the Cold War, U.S. policymakers worried that an economic catastrophe in Iran would shatter the country’s political system and leave it exposed to communist infiltration — especially likely since Iran shared a long border with the Soviet Union.
This assessment misread the situation: Mossadegh himself was no communist, and Iran’s communist organization, the Tudeh Party, was not ready to seize power. While oil was an important source of revenue for Iran’s government, the country’s economy was primarily agricultural. There is even evidence to suggest that Mossadegh’s “oil-less” economic policies were working to stabilize Iran in the absence of oil revenue.
Nevertheless, officials within the CIA argued that leaving Mossadegh in power would produce “bankruptcy, unrest and, at worst, Communist control of the state.” The only way to “save the situation” in Iran was to “throw out Mossadegh” and have Iran’s monarch, the shah, install a new government.
Ultimately, U.S. policy was driven by a false perception of what was happening in Iran and fear over what might happen. Staving off communism was the primary goal. But it was the embargo, and the oil-less Iran it produced, that convinced U.S. policymakers that they faced a choice between surrendering Iran to economic catastrophe and eventual communist domination, or regime change. They chose the latter.
A CIA operation code-named TPAJAX succeeded in ousting Mossadegh on Aug. 19, 1953. His government was replaced by a new, authoritarian regime led by the shah, who reversed nationalization, restarted the flow of oil and turned Iran into a key U.S. Cold War ally.
But the shah’s repressive policies over the next 25 years generated immense dissatisfaction among Iranians, who widely blamed the United States for putting him in power. This anger culminated in the 1978-1979 Islamic Revolution and the fall of the shah, the hostage crisis and the bitterness, enmity and suspicion that have characterized U.S.-Iranian relations since.
Today, the Trump administration hopes to use economic warfare to bring about regime change. And again, as in the 1950s, U.S. officials argue that such measures are necessary to save Iran from calamity. President Trump has claimed that the “long-suffering people of Iran” will be free only if the regime is toppled.
But although Iran is governed by a repressive and corrupt regime, one that has enriched its leaders while mismanaging the country’s natural resources and ignoring its environmental crises, the regime is also resilient, with no substantive organized domestic opposition to challenge it.
And the legacy of the 1953 coup remains a powerful one, frequently cited by officials from Tehran as evidence of U.S. duplicity. An aggressive U.S. push for regime change, including support for those demonstrating against the regime’s repression, will only encourage Iranians to close ranks. One opposition group, the Mujahideen-e Khalq, has considerable support within the Trump administration but an uncertain amount of support inside Iran.
Furthermore, an oil embargo may not work. A reduction in Iranian supply would lead to an increase in prices. Iran would earn as much from exporting less, mitigating the effect of sanctions. Other countries also might not go along with the U.S. demand for a full embargo, undermining its effectiveness.
Yet this probably won’t deter the Trump administration from escalating its confrontation with Tehran, imposing the harshest sanctions “in history” in an effort to topple the government.
The consequences could be severe. Economic conditions inside Iran could fuel more protests, which could in turn convince the Trump administration to exert more pressure. As in the 1950s, worsening economic conditions could convince U.S. policymakers that regime change is both more vital and more attainable, creating a feedback loop that would lead to tougher sanctions, harsher rhetoric and perhaps even war, all while global oil prices edge higher because of the spiraling geopolitical risk and the shutdown of Iranian output.
And even if the U.S. strategy of regime change were successful, it’s not at all clear what kind of government would arise in Tehran, or whether it would be friendly toward the United States or legitimate in the eyes of Iranians.
Regime change could work in the short term. But in the long term it could poison the Iranian public against the United States, create immense economic dislocation within Iran and fuel further regional instability. The United States should think long and hard before it embarks upon this risky and potentially disastrous course of action.