The Iranian military, with the support and financial assistance of the United States government, overthrows the government of Premier Mohammed Mosaddeq and reinstates the Shah of Iran. Iran remained a solid Cold War ally of the United States until a revolution ended the Shah's rule in 1979.
Mosaddeq came to prominence in Iran in 1951 when he was appointed premier. A fierce nationalist, Mosaddeq immediately began attacks on British oil companies operating in his country, calling for expropriation and nationalization of the oil fields. His actions brought him into conflict with the pro-Western elites of Iran and the Shah, Mohammed Reza Pahlevi. Indeed, the Shah dismissed Mossadeq in mid-1952, but massive public riots condemning the action forced the Shah to reinstate Mossadeq a short time later. U.S. officials watched events in Iran with growing suspicion. British intelligence sources, working with the American Central Intelligence Agency (CIA), came to the conclusion that Mossadeq had communist leanings and would move Iran into the Soviet orbit if allowed to stay in power. Working with Shah, the CIA and British intelligence began to engineer a plot to overthrow Mossadeq. The Iranian premier, however, got wind of the plan and called his supporters to take to the streets in protest. At this point, the Shah left the country for "medical reasons." While British intelligence backed away from the debacle, the CIA continued its covert operations in Iran. Working with pro-Shah forces and, most importantly, the Iranian military, the CIA cajoled, threatened, and bribed its way into influence and helped to organize another coup attempt against Mossadeq. On August 19, 1953, the military, backed by street protests organized and financed by the CIA, overthrew Mossadeq. The Shah quickly returned to take power and, as thanks for the American help, signed over 40 percent of Iran's oil fields to U.S. companies.
Mossadeq was arrested, served three years in prison, and died under house arrest in 1967. The Shah became one of America's most trusted Cold War allies, and U.S. economic and military aid poured into Iran during the 1950s, 1960s, and 1970s. In 1978, however, anti-Shah and anti-American protests broke out in Iran and the Shah was toppled from power in 1979. Angry militants seized the U.S. embassy and held the American staff hostage until January 1981. Nationalism, not communism, proved to be the most serious threat to U.S. power in Iran.