Iran in the 20th Century

Iran was neutral during World War I (1914-1918), but was the site of several battles between British and Russian allies and the Turks over the control of its oil fields. In 1919 Iran signed an agreement whereby Britain was to exercise controlling influence in Iranian affairs, but the Majlis refused to ratify it. Two years later the British began to withdraw their forces from the country. Soon afterward, Reza Shah Pahlavi, commander of an Iranian cossack force, established a new independent government, with himself as minister of war. He became prime minister in 1923 and two years later was elected shah by the Majlis, which had deposed Ahmad Shah, the last of the Qajar dynasty. During his reign the judiciary was modernized, transportation and communication facilities were improved, and a broad program of Westernization was begun. One decree ordered the Sunni Muslim population to wear European-style hats instead of their traditional fezzes. Most of the Sunni obeyed without protest; a minority, led by Muslim clergy, rioted, and several were killed. The government next abolished all feudal titles and began a long-range program for the economic modernization of the country. Early in 1936 the shah's wife and daughters appeared in public without veils, violating an ancient national tradition. Thereafter, most Iranian women gradually stopped wearing their veils. In 1936 Iran signed a treaty of friendship and nonaggression with Iraq, Turkey, and Afghanistan.

World War II (1939-1945)

At the beginning of World War II, Germany, Turkey, Great Britain, and the Union of Soviet Socialist Republics (USSR) attempted unsuccessfully to form alliances with Iran. In 1941, however, both Great Britain and the USSR occupied areas of the country to protect the oil fields from possible German seizure. As a result of the Allied invasion, all Axis nationals were expelled, all Axis consulates and legations were closed, the Allies assumed control of all Iranian communication facilities, and Reza Shah Pahlavi, who had been friendly to Axis interests, abdicated.

The shah was succeeded by his son, Muhammad Reza Shah Pahlavi, who adopted a pro-Allied policy and granted the parliament's demand for liberal reforms. In January 1942, Iran, Great Britain, and the USSR signed a treaty guaranteeing Anglo-Soviet respect for Iranian territorial integrity and military aid to fulfill this pledge. The Allies also agreed to consult the Iranian government on all economic, political, and military measures affecting the domestic policy of the country, to withdraw the occupation forces as soon as possible, and to provide economic assistance.

By 1943, the USSR and Great Britain, with the assistance of United States military forces and lend-lease funds, had made extensive improvements in Iran's transportation facilities in order to strengthen the country's usefulness in the transfer of military supplies to the Soviet fighting front. Iran complained, however, that the USSR had completely isolated its occupation zone from outside contact. The Soviet government defended its action by explaining that it was protecting itself against possible Anglo-American expansion in Iran. This dispute was resolved in November 1943 at the Tehran Conference attended by President Franklin D. Roosevelt of the United States, Prime Minister Winston S. Churchill of Great Britain, and Premier Joseph Stalin of the Soviet Union. The Declaration on Iran, produced by this conference and issued on December 1, stated that the three governments were "at one with the government of Iran in their desire for the maintenance of the independence, sovereignty, and territorial integrity of Iran."

In the early part of 1945 it became safe for Allied shipping to use the Bosporus and the Dardanelles to send war matériel to the USSR, which eliminated the need for an overland route through Iran. In May the government of Iran requested that the occupying countries withdraw their troops. The United States agreed, but neither the USSR nor Great Britain would consent. After prolonged negotiations, Great Britain and the USSR agreed to withdraw from Iran by March 2, 1946. The Iranian government nevertheless became increasingly concerned about the Soviet occupation. Iranian officials claimed that they were not permitted to enter the Soviet-occupied provinces of Azerbaijan and Kurdistan to quell anti-Iranian disturbances provoked by pro-Soviet forces. By mid-November, Azerbaijan was the site of an independence movement supported by Soviet authorities.

Battle over Oil

Iran signed the United Nations (UN) charter at San Francisco on June 26, 1945, becoming one of the original members of that organization. In the latter part of 1946, the USSR began to press for immediate action on the part of Iran for the formation of a Soviet-Iranian oil company. Counting on U.S. aid, Iran announced in October 1947 its rejection of the Soviet oil plan and the establishment of a five-year oil program whereby Iran would develop its own oil resources. On July 29, 1948, the United States made a $26-million loan to Iran for the purchase and repair of surplus American army equipment.

In the realm of domestic politics, outstanding developments during 1949 included the outlawing of the pro-Soviet Tudeh (Masses) Party, enactment of legislation making parliament a bicameral body, and growth of widespread resentment over foreign oil concessions. In response to public sentiment on the oil question, the government obtained an agreement in July from the British-owned Anglo-Iranian Oil Company to double royalty payments on petroleum taken from Iranian fields. Parliament, however, failed to ratify the agreement, which was declared unsatisfactory by various members.

Severe economic difficulties developed during the first half of 1950, causing several political crises. In June General Ali Razmara accepted the premiership. A vigorous executive, he succeeded in improving the economic situation. He strongly opposed nationalization of the oil industry, however, and on March 7, 1951, he was assassinated by a nationalist fanatic.


Within a week of Razmara's assassination the Majlis passed a bill nationalizing the oil industry; however, the new prime minister, Hasain Ala, made no attempt to take over the property of the British company. As a result his government fell on April 27. He was succeeded by Muhammad Mossadegh, a leader of a coalition of nationalist groups called the National Front and a supporter of oil nationalization, and on April 29 a law evicting the Anglo-Iranian Oil Company was approved by parliament. Attempts to settle the ensuing crisis in British-Iranian relations through direct negotiation between the two countries ended in failure. The efforts of the United States to mediate the dispute were without success. On October 3, 1951, Great Britain, deciding against the use of force, acceded to an Iranian ultimatum and withdrew the company's technical staff from the Abadan refinery. Later in the month, when Great Britain brought the dispute before the UN Security Council, Prime Minister Mossadegh flew to New York City to present the case for Iran. The council agreed to postpone debate until the International Court determined whether it had authority to deal with the dispute. On December 26 Iran rejected a proposal made by the International Bank for Reconstruction and Development (World Bank) that the oil industry be administered by the bank or by some other international authority pending final settlement. In May 1952 Mossadegh appeared before the International Court at The Hague and argued that it had no jurisdiction in the case.

Elections for the lower house of parliament had been completed during this time, and early in July Mossadegh, having resigned in accordance with constitutional procedure, was requested by the shah to resume his office. Mossadegh's acceptance was contingent on various conditions, notably that he receive control of the army and the right to rule by decree for six months. The shah, constitutional head of the army, rejected the former condition, and on July 16 Mossadegh resigned. Former Prime Minister Ahmad Qavam agreed the next day to form a new government. Mossadegh's supporters responded to this development with riotous demonstrations and a general strike on July 21, which forced Qavam's resignation. On July 22 Mossadegh was designated prime minister; the same day the International Court ruled that it had no jurisdiction in the Anglo-Iranian dispute. The lower house subsequently granted Mossadegh unlimited power for six months.

Mossadegh's Fall

On August 30, 1952, Iran turned down a joint Anglo-American proposal designed to break the oil deadlock. In the proposal Great Britain for the first time accepted the Iranian nationalization law as valid, but still insisted that compensation be based on potential revenue losses as well as on physical assets of the Anglo-Iranian Oil Company. Iran broke off diplomatic relations with Great Britain on October 22.

Early in 1953 the parliament extended Mossadegh's dictatorial powers for another year. The prime minister demanded that the shah be stripped of power.

The dissension between pro- and anti-Mossadegh forces reached a climax during the summer of 1953. The premier dissolved the lower house on the basis of a plebiscite, held from August 3 through 10, in which he suspended the secret ballot. The shah, who opposed many of Mossadegh's policies, including his uncompromising stand on the oil question, dismissed the prime minister on August 13. Mossadegh refused to yield his office, his followers rioted against the royalists, and on August 16 the shah fled to Rome. After three days of bloody riots the royalists, supported by the army and police, won control of Tehran, and Mossadegh and several aides were placed under arrest. On August 22 the shah returned in triumph; the next day General Fazullah Zahedi, who had been previously designated prime minister by the shah, formed a new government. On September 5 the U.S. government granted Iran a $45-million emergency loan. Two months later Iran resumed diplomatic relations with Great Britain. Mossadegh was sentenced on December 2 to three years' solitary confinement for leading a revolt against the shah.

New Oil Agreements

The Iranian electorate went to the polls in March 1954 to elect a new lower house of parliament. During the voting, which reportedly was attended by widespread fraud, government supporters assaulted hundreds of alleged Communists and opponents of the Zahedi regime near polling places in Tehran.

Beginning on April 14 the Iranian government and representatives of an eight-company petroleum consortium, including the Anglo-Iranian Oil Company and three U.S. firms, held discussions on terms for the reactivation of the nationalized oil industry. The conferees concluded a pact on August 5, under which the consortium agreed to operate the industry, market the oil output, share the profits equally with Iran, and compensate the Anglo-Iranian Oil Company for its seized property. International interest in Iran's petroleum resources remained strong, and in July 1957 Iran announced the formation of an Iranian-Italian oil combine. The transaction aroused interest, for it guaranteed Iran a margin of profit greater than any previously obtained by Middle Eastern countries in their dealings with European firms. The following year the Iranian government and American oil interests in Iran concluded an agreement for an unprecedented 25-75 percent division of profits in favor of Iran.

The Shah's Growing Power

After he was restored to his throne with the aid of the United States in 1953, Shah Muhammad Reza Pahlavi became increasingly confident and secure in his ruling position and began to devote more attention to his dynastic aspirations. He had divorced his first wife in 1948 because she had borne him no male heir, and in 1959 he dissolved his second marriage for the same reason. He remarried in 1959, and the new queen gave birth to a son, Prince Reza Pahlavi, the following year.

At the same time the shah began to exercise increasing control over the government, keeping it closely aligned with the United States. In March 1959 Iran signed a defense agreement with the United States. On July 23, 1960, Iran recognized Israel, a political move which led to difficulties with Egypt, and the Arab League announced its decision to extend its boycott of Israel to include Iran.

Elections for the lower house of the parliament were held in August 1960. They were annulled by the shah on September 1, after the opposition had charged that they had been rigged by the government. The deputies chosen in the next elections, which took place in January 1961, held office until May 9, when both houses of parliament were dissolved. The shah thereupon gave Prime Minister Ali Amini the power to rule by decree; soon after, opposition elements loosely grouped themselves into a so-called National Front.

On October 5, 1961, the shah created the Pahlavi Dynasty Trust with a donation equal in value to $133 million, the bulk of his remaining fortune. The income from the trust was to be used for social and educational purposes. The first transfers of land from large estates to peasant farmers under a newly enacted law took place on March 3, 1962. Conservative and religious opposition to the land program, part of a wider reform program known as the White Revolution, led to uprisings in June 1963, but by 1966 all large and middle-sized estates had been broken up, to the benefit of some 4 million farming families. Throughout the remainder of the 1960s the shah continued and expanded programs of land distribution, improvement of domestic industries, and diversification of export trade. Economic growth led to an impressive rise in the national standard of living.

Coronation and Changing Policies

The shah was formally crowned on October 26, 1967. Although he had ruled the country for 26 years, the ceremony had been postponed until he had a male heir and Iran had attained social stability and economic progress.

By the time of his coronation the shah's rule had become virtually absolute, and his foreign policy was less dependent on the United States than it had been before. In the late 1960s and early 1970s, he strengthened Iran's international relations with Communist countries as well as the West. In the early 1970s Iran also drew closer to the Arab bloc countries, except for Iraq, with which it was disputing territorial rights in the Shatt al Arab and possession of several islands in the Persian Gulf. In 1971 Iran occupied these islands, and Iraq broke off diplomatic relations. The two countries temporarily resolved their differences and signed a pact in March 1975.

In that same month a major change took place in Iranian domestic politics. On March 2, the shah announced the end of the multiparty system and the formation of a single-party system, the Iran National Resurgence Party. Elections were held in June, and a new national assembly was formed.

Despite growing prosperity during the 1970s, owing to greatly increased oil revenues, opposition to the shah was widespread, fanned mainly by conservative religious leaders. The shah's responses to such opposition were increasingly repressive, and he relied heavily on his secret police, the Savak, which was much dreaded for its harsh methods. In the late 1970s there were antigovernment demonstrations, both in Iran and abroad, over alleged human rights violations, most of which could be traced to the Savak. In 1978, riots in several Iranian cities were led by the conservative Shiite Muslims, who wanted the nation governed by Islamic law. They were directed-from his refuge in France-by Ayatollah Ruhollah Khomeini, a revered Muslim clergyman and long-time foe of the Pahlavi regime, who had been exiled in 1963. By late autumn the country was virtually in a state of civil war, and in January 1979 the ayatollah's followers forced the shah to flee abroad, ending his 37-year reign. Shortly afterward, Khomeini returned to Iran in triumph.

Islamic Republic

Having toppled the shah, Khomeini, supported by the clergy and a large segment of the population, presided over the establishment of an Islamic republic. The new regime ended the country's close relationship with the United States and executed scores of Savak members and other supporters of the shah. In November 1979, after the shah had been allowed entry into the United States for medical care, militant Iranians stormed the U.S. embassy in Tehran, taking 66 Americans hostage. Thirteen were soon released, but for the other 53, Iran demanded a U.S. apology for acts committed in support of the shah, his return to face trial (moot after his death in July 1980), and return of the billions of dollars that he was said to have hoarded abroad.

As the hostage dispute dragged on-they were finally released in January 1981-the regime tried to create a new governmental machinery, while coping with economic chaos, internal unrest, and external threats. A new constitution was approved in December 1979, and presidential elections were held in January 1980. The voters chose Abolhassan Bani-Sadr, a Western-educated liberal economist and Khomeini collaborator. Parliamentary elections, however, were won by the clergy, who opposed Bani-Sadr; parliament chose a fundamentalist prime minister, Muhammad Ali Rajai, who also was at odds with the new president. This rift greatly weakened the regime, while some of Iran's minorities-the Kurds in the west, the Azeris in the north, and the Arabs in Khuzestan-took up arms against the government in an attempt to win autonomy. In September 1980 Iraq demanded a revision of the agreement of March 1975 and autonomy for the Arab minority. When these demands were rejected, Iraq unilaterally abrogated the 1975 agreement and invaded Iran, capturing much of oil-rich Khuzestan by December.

By June 1981, the clergy dominated parliament and Prime Minister Rajai had outmaneuvered President Bani-Sadr, who was removed from office and went into exile, while Rajai succeeded him as president. A week after Bani-Sadr's ouster, a bomb blast killed 74 political and religious leaders. Rajai and his successor as prime minister were killed in an explosion in August. The government responded to the assassinations with a campaign of severe reprisals. After elections were held in October, Hojatolislam Said Ali Khamenei became Iran's third president in a year.

In late 1981 Iran went on the offensive in its war with Iraq. By May 1982 Iraqi forces had been driven out of much of the territory overrun in 1980. In the ensuing stalemate, both sides attacked shipping in the Persian Gulf, indirectly drawing other Gulf nations-and later the United States-into the conflict. Iran and Iraq finally agreed to a cease-fire as of August 20, 1988, suspending a war that had cost the two nations an estimated total of 1 million dead and 1.7 million wounded.

When Khomeini died in June 1989, President Khamenei became Iran's supreme leader. In July Ali Akbar Hashemi Rafsanjani, former speaker of parliament, was elected president and significant amendments were made to the constitution to resolve conflicts between the Majlis and the Council of Guardians. In June 1990 a massive earthquake in northwestern Iran took at least 40,000 lives. Iran condemned both Iraq's invasion of Kuwait in August and the subsequent deployment of U.S. troops in Saudi Arabia, but resumed diplomatic relations with Iraq, which dropped its territorial claims against Iran. In the Persian Gulf War (1991), Iran remained officially neutral, but provided refuge for more than 100 Iraqi warplanes, which it later seized. After hostilities between allied and Iraqi forces ended, Iran helped Shiite rebels in southern Iraq against the Baghdad government. Rafsanjani supporters won a parliamentary majority in 1992.

Iran's relations with the West began to improve under Rafsanjani's leadership. This betterment in relations was due in part to Rafsanjani's role in obtaining the release of Western hostages held by pro-Iranian Shiite groups in Lebanon, the last of whom was released in 1992. The Iranian economy fared poorly under Rafsanjani as the national debt grew and inflation rose sharply. In January 1993 Rafsanjani reaffirmed the 1989 fatwa (death sentence) against Indian-born author Salman Rushdie for his book The Satanic Verses (1988), which was considered offensive to Islam. Iran also continued to deny that it is an international sponsor of terrorism and turned aside accusations by both Algeria and Egypt that Iran sponsored terrorist groups in their countries. In June 1993 Rafsanjani was reelected president.

In May 1995 U.S. president Bill Clinton cut all trade and investment with Iran, including purchases of crude oil by American companies for resale on the world market. United States officials believed Iran was planning to develop weapons of mass destruction and was supporting international terrorism. Iran found other buyers for its oil among Western countries who did not join the boycott. In January 1996 Iran and Russia concluded a controversial agreement to complete a nuclear power plant at Bushehr which had been begun by West Germany 12 years earlier. Construction started soon thereafter. International critics feared the plant would give Iran the ability to build nuclear weapons. In May 1997 Mohammed Khatami was elected president of Iran by a wide margin. (President Rafsanjani was prohibited by the constitution from seeking a third term.) Khatami, who campaigned for tolerance and social reform, had been minister of culture from 1982 until 1992, when conservative critics forced him to resign.