Monday, November 14, 2011

"The Peacock Throne": The United States and the Shah of Iran

I am coauthor of an updated version of the college American history textbook, currently titled “American Dreams and Reality: A Retelling of the American Story.” Here, I describe the close relationship between the Shah of Iran and American presidents from Eisenhower to Carter and the economic troubles facing the United States in the late 1970s.

The United States had been deeply involved in Iranian politics since 1953 when the CIA, at the direction of the Eisenhower Administration and at the urging of the British government, overthrew the democratically elected government of Prime Minister Mohammad Mosaddegh. The Iranian leader had angered the West when he seized control of the Anglo-Iranian Oil Company.

he British firm, through bribes to the Iranian monarchy, made huge profits off of Iran’s most valuable economic resource while contributing little to the Iranians themselves. In spite of its vast oil reserves, by the 1950s Iran remained a poor country with high rates of infant mortality and illiteracy. Mosaddegh wanted Iranians to profit from their own oil and for the money to be invested in Iranian schools, colleges, agricultural projects and hospitals. He also wanted to limit the power of the Shah, the nation’s strongly pro-Western emperor Mohammad Reza Pahlavi.

Pahlavi had ascended the so-called “peacock throne” in Iran in 1941 and, when the CIA engineered a coup against Mosaddegh, he rolled back democratic reforms. The Shah “became increasingly isolated and dictatorial,” as author Stephen Kinzer reported. He crushed dissent and spent huge amounts of money on weaponry -- $10 billion in the United States alone -- between 1972 and 1976. His secret police force, SAVAK, tortured and killed dissidents or had them deported. The Shah seemed oblivious to the suffering of his people, living in vast luxury while many families worried whether they would have enough to eat.

In 1971, the Shah threw a lavishly expensive celebration of the 2,500th anniversary of the establishment of the Persian Empire. The party, held in the ruins of the ancient Persian royal desert city of Persepolis, brought kings, queens and world leaders from around the globe. Ordinary Iranians saw the event, which cost up to $300 million ($1.5 billion today) as obscene in a country where the average person earned only $500 a year (about $2,700 annually in 2011 dollars) as a vivid symbol of the Shah’s selfishness and indifference to the suffering of his people.

There was no more ferocious critic of the Shah, of his closeness to the United States, and his support for the state of Israel than the Ayatollah Ruhollah Khomeini. The Ayatollah also objected to the Shah’s so-called 1961 “White Revolution,” which not only involved the distribution of limited government-owned land to the poor, and profit-sharing for workers, but also voting and education rights for women and the creation of a Literacy Corps to extend education to the countryside. Giving women the right to vote, Khomeini said, represented an attempt “to corrupt our chaste women.” Khomeini realized that the Literacy Corps posed a threat to the monopoly the mullahs had on education in Iran’s rural areas. The Shah arrested Khomeini and he was expelled from the country, and by 1978 living in Paris. Opposition to the Shah came not just from mullahs, but also from secular intellectuals who wanted a more democratic government.

In spite of his support for human rights, Carter visited Iran in late December 1977 and praised the dictator for creating "an island of stability in one of the most troubled areas of the world." Carter proclaimed that the Shah had won "the respect and the admiration and love" of his people, had been a good ally, and ranked among the world’s great leaders. In spite of American support, the Shah’s regime began to unravel in the late 1970s when an economic slowdown produced rising unemployment and inflation, which reached a catastrophic 50 percent.

Riots broke out, starting in January 1978, with protestors in the large cities like the capital, Tehran, numbering in the millions. In August 1978, a fire at a movie theater in Abadan killed 377 people. Most Iranians believed the Shah had set the fire. The Shah ordered a crackdown, and police killed some 8,000 demonstrators, including 700 at one protest in Jaleh Square in Tehran. The Shah imposed martial law, and Khomeini responded by calling a general strike. Strikes by oil workers brought the Iranian economy to a standstill. When soldiers refused to follow orders to shoot at protestors, the Shah realized his life and his family’s lives were in danger, and he fled into exile.

The Ayatollah arrived at the airport in Tehran on February 1, 1979, as a returning hero. He and his fellow conservative clerics gained control of a revolution that had included communists, socialists, liberals, and others advocating a secular, more democratic state. Khomeini soon ruled by religious decree, making his interpretation of Islam the law of the land. Music was banished, women were forced to wear traditional head coverings, supporters of the Shah were executed and religious minorities like Zoroastrians and Christians were persecuted.


The chaos surrounding the Iranian Revolution caused a drop in the world’s supply of oil by 2 million to 2.5 million barrels of oil a day between November 1978 and June 1979, causing crude prices to more than double from $14 to $35 a barrel. Gasoline prices at the pump climbed to an unprecedented 90 cents a gallon (about $2.67 in 2011 dollars), and drivers sometimes spent hours in line at the gas station. Violence broke out. In Los Angeles, one person attacked a pregnant woman accused of cutting in line. Some carried guns when they went to fill up. Cases of gas poisoning increased as some tried to steal gasoline from their neighbors’ cars by sucking on hoses. Angry drivers sported bumper stickers saying “Carter – kiss my gas.”

By January of 1980, inflation roared at a devastating 18.2 percent, the highest in six years. The prime interest rate stood at 18.5 percent in April of that year, causing home sales to drop by 6 percent and higher unemployment in the construction trades. Unemployment reached 7.8 percent in 1979 and most economists expected it to go higher in 1980. “No one could buy ordinary goods without hurting,” wrote historian Kevin Mattson, “and no one could buy a house as interest rates rose.”

Religious in his orientation, Carter believed he detected a crisis in the American spirit, caused by the economic troubles of the decade, the lost war in Vietnam, political assassinations and Watergate. Carter decided to make a speech that addressed the despair many Americans felt. Carter cancelled a scheduled speech on the economy and withdrew for ten days to Camp David, where he consulted with economic and religious thinkers. It would be the most prophetic speech of his career.

Carter warned his audience that this would be “not a message of happiness or reassurance, but it is truth and it is a warning.” He asked Americans to help him in finding solutions, but he expressed doubt that government action alone would work. “All the legislation in the world can’t fix what’s wrong with America,” he said. Americans, he said, had found themselves in a new age of limits. The country would have to learn how to find happiness in harder times. "In a nation that was proud of hard work, strong families, close-knit communities and our faith in God, too many of us now tend to worship self-indulgence and consumption,” Carter said. “Human identity is no longer defined by what one does but by what one owns."

Carter urged Americans to think of future generations and conserve energy. He pledged to limit oil imports, and to increase funding for research into alternative energy sources such as solar power. He called on Americans to approach the energy crisis with the same spirit that suffused the Apollo mission that placed the first humans on the lunar surface just a decade earlier. “[T]he solution of the energy crisis can also help us to conquer the crisis of spirit in our country,” he said. “it can rekindle our spirit of unity, our confidence in the future, and give our nation and all of us individually a new sense of purpose.”

Initial reaction to the speech was strongly positive. According to Mattson, “[t]housands of Americans telephoned [the White House], 84 percent of them supporting the speech.” Unfortunately, Carter quickly squandered what he gained from the speech. Just two days later, he impulsively fired and asked for the resignation of five cabinet officers. It made Americans again think the administration was clueless, lurching from one action to another with no grand plan. The Carter years seemed like a parade of crises. The economy continued to be shaky and by that November events in Iran would overtake the White House.

Michael Phillips has authored the following:











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