Report: U.S. Missteps Led To Shah's Overthrow

Scholars who study the Iranian Revolution of 1979 have paid a lot of attention to the internal factors that precipitated revolt. Now, a new study argues that the United States secretly helped create the conditions that led to the overthrow of its ally, the Shah. Andrew Scott Cooper, who wrote the report using previously classified information, talks about the mistakes that led to the demise of the Shah.

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Oil prices fluctuating wildly, countries threatening supply cuts, all with a worldwide recession looming. Today's energy scene bears more than a passing resemblance to the one a generation ago in the mid-1970s when Iran was the world's second biggest oil exporter and its shah, Reza Pahlavi, was America's staunch ally. A new report using previously classified information says American mistakes helped lead to the demise of the shah in the Iranian revolution of 1979. Andrew Scott Cooper wrote that report, and he joins us now by phone from New Zealand. Thanks for being with us, Andrew Scott Cooper.

Mr. ANDREW SCOTT COOPER (Contributor, Middle East Journal; PhD candidate, Victoria University, New Zealand): Thank you.

LYDEN: You used a lot of information from the private papers of former National Security Adviser Brent Scowcroft who worked, of course, for both Presidents Nixon and Ford back in the '70s. Before we get to some of the political dimensions of this, could you remind us how economically interdependent America and Iran were at the time?

Mr. COOPER: Yes. Iran, at that time, was the most powerful member of OPEC. So, in essence, the shah was able to say to other OPEC members, I think oil prices should go up. And that's what happens at the end of 1973, when we have the oil shock. At the same time, he is the closest U.S. ally in West Asia and the Persian Gulf. And his armed forces guarded the Gulf oil supply. So economically, the U.S. was dependent on arming a man who could really get OPEC to move oil prices at will.

LYDEN: Let's get to the showdown, the OPEC summit in Doha in 1976. What do these previously classified papers tell us about this moment that we didn't know before?

Mr. COOPER: We now know that in the months leading up to the summit, President Ford and his advisers reached out to the most powerful members of OPEC: Iran, Saudi Arabia, Venezuela. And they said, look, the global financial system has reached the brink. We could have banking failures. We could have the collapse of governments in Western Europe. And Ford was asking them to restrain their desire to increase oil prices again at Doha. And the shah basically said to Ford, look, you know, I've already passed over one oil price increase this year because it's your election. And I can't do it again, because my economy's in trouble.

LYDEN: And so, what happened then that would deal Iran out and make the Saudis the new staunch American ally?

Mr. COOPER: The Saudis cut a deal with the Ford administration. They then went for broke in Doha. And they in fact told the rest of the OPEC members, you raise oil prices if you want to. We're not only going to undercut you and sell our oil at a cheaper price, we're going to try and flood the market. Now this is a very dramatic moment in the history of OPEC. And in fact what it did was it threw the international oil markets into turbulence for the next six months. And this is really the period when we see a fiscal crisis emerging in Iran.

LYDEN: You call this a Pyrrhic victory for the Americans because in your view it helped lead to the overthrow of the shah. You also make a parallel between the shah in the 1970s and the conduct of Iranian President Ahmadinejad today when it comes to how he gambles or bets with his own economic policies.

Mr. COOPER: Yes, I'm fascinated by the parallels. We have an Iranian leader who's enjoyed vast Iranian oil revenues. And he has chosen to pump all those petrodollars back into the Iranian economy. And economies are very fragile things. They have to be able to absorb billions of dollars of surplus petrodollars. And so, right now in Iran you're seeing inflation at about 30 percent. You're seeing double-digit levels of unemployment. You're seeing a vast budget deficit. So 30 years later, the U.S. and Iran are still hostages to the fortunes of the international oil markets, and there is a particular irony in that position.

LYDEN: Andrew Scott Cooper, his article is called "Showdown at Doha: The Secret Oil Deal That Helped Sink the Shah of Iran." It's in the new issue of the Middle East Journal. Thank you very much for being with us.

Mr. COOPER: Thank you for having me.

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