Mohammad Mosaddegh
Operation Ajax

In March 1953, Secretary of State John Foster Dulles directed the CIA, which was headed by his younger brother Allen Dulles, to draft plans to overthrow Mossadegh. On 4 April 1953, Dulles approved $1 million to be used "in any way that would bring about the fall of Mosaddegh". Soon the CIA's Tehran station started to launch a propaganda campaign against Mossadegh. Finally, according to The New York Times, in early June, American and British intelligence officials met again, this time in Beirut, and put the finishing touches on the strategy. Soon afterward, according to his later published accounts, the chief of the CIA's Near East and Africa division, Kermit Roosevelt, Jr. the grandson of US President Theodore Roosevelt, arrived in Tehran to direct it. In 2000, The New York Times made partial publication of a leaked CIA document titled Clandestine Service History – Overthrow of Premier Mosaddegh of Iran – November 1952 – August 1953.

The plot, known as Operation Ajax, centered on convincing Iran's monarch to issue a decree to dismiss Mosaddegh from office, as he had attempted some months earlier. But the Shah was terrified to attempt such a dangerously unpopular and risky move against Mosaddegh. It would take much persuasion and many US-funded meetings, which included bribing his sister Ashraf with a mink coat and money, to successfully change his mind.

Mosaddegh became aware of the plots against him and grew increasingly wary of conspirators acting within his government. According to Donald Wilber, who was involved in the plot to remove Mossadegh from power, in early August, Iranian CIA operatives pretending to be socialists and nationalists threatened Muslim leaders with "savage punishment if they opposed Mossadegh", thereby giving the impression that Mossadegh was cracking down on dissent earlier than planned, and stirring anti-Mossadegh sentiments within the religious community. A referendum to dissolve parliament and give the prime minister power to make law was submitted to voters, and it passed with 99 per cent approval, 2,043,300 votes to 1300 votes against. According to historian Mark Gasiorowski, "There were separate polling stations for yes and no votes, producing sharp criticism of Mosaddeq" and that the "controversial referendum...gave the CIA's precoup propaganda campaign to show up Mosaddeq as an anti-democratic dictator an easy target". On or around 16 August, Parliament was suspended indefinitely, and Mosaddeq's emergency powers were extended.

Declassified documents released by the CIA in 2017 revealed that—after the Shah had fled to Italy—CIA headquarters believed the coup to have failed. Following the initial failed coup by the foreign-backed General Fazlollah Zahedi, the CIA sent Roosevelt a telegram on 18 August 1953 telling him to flee Iran immediately, but Roosevelt ignored it and began work on the second coup, circulating a false account that Mossadegh attempted to seize the throne and bribed Iranian agents.

Soon, massive popular protests, aided by Roosevelt's team, took place across the city and elsewhere with tribesmen at the ready to assist the coup, with anti- and pro-monarchy protesters, both being paid by Roosevelt. By paying mobs to demonstrate, tricking Mossadegh into urging his supporters to stay home, and bribing and mobilising officers against Mossadegh, he was able to force a military confrontation outside Mossadegh's home.

The protests turned increasingly violent, leaving almost 300 dead, at which point the pro-monarchy leadership, led by retired army General and former Minister of Interior in Mosaddegh's cabinet, Fazlollah Zahedi, interceded, joined with underground figures such as the Rashidian brothers and local strongman Shaban Jafari. Pro-Shah tank regiments stormed the capital and bombarded the prime minister's official residence. With loyalist troops overwhelmed, Mossadegh was taken into hiding by his aides, narrowly escaping the mob that set in to ransack his house. The following day, he surrendered himself at the Officers' Club, where General Zahedi had been set up with makeshift headquarters by the CIA. Zahedi announced an order for his arrest on the radio, and Mosaddegh was transferred to a military jail shortly after.

The Shah finally agreed to Mossadegh's overthrow after Roosevelt said that the United States would proceed with or without him, and formally dismissed the prime minister in a written decree, an act that had been made part of the constitution during the Constitutional Assembly of 1949, convened under martial law, at which time the power of the monarchy was increased in various ways by the Shah himself. As a precautionary measure, he flew to Baghdad and from there hid safely in Rome. He actually signed two decrees, one dismissing Mosaddegh and the other nominating the CIA's choice, General Zahedi, as Prime Minister. These decrees, called Farmāns, played a major role in giving legitimacy to the coup, and were further spread by CIA officials. On 22 August, the Shah returned from Rome.

Zahedi's new government soon reached an agreement with foreign oil companies to form a consortium and "restore the flow of Iranian oil to world markets in substantial quantities", giving the United States and Great Britain the lion's share of the restored British holdings. In return, the US massively funded the Shah's resulting government, until the Shah's overthrow in 1979.

As soon as the coup succeeded, many of Mosaddegh's former associates and supporters were tried, imprisoned, and tortured. Some were sentenced to death and executed. The minister of foreign affairs and the closest associate of Mosaddegh, Hossein Fatemi, was executed by order of the Shah's military court. The order was carried out by firing squad on 10 November 1954.
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