The Prize: The Epic Quest for Oil, Money, and Power

by Daniel Yergin

Still, in the final weeks of the Truman Administration and the first of the Eisenhower Administration, the United States launched yet another diplomatic effort to work out an oil settlement between Iran and Britain. After much frustrating discussion, Mossadegh once again said no. Meanwhile, conditions in Iran had deteriorated even further. Before nationalization, oil exports had generated two-thirds of the country’s foreign exchange and half of government revenues. But there had been no oil revenues for two years, inflation was rampant, and the economy was falling apart. The country was much worse off than before nationalization. Law and order were collapsing; the chief of police in Tehran was kidnaped and murdered. Moreover, Mossadegh showed little gift for governing. He conducted his Cabinet meetings from his bed. In the early months of 1953, he tried to bolster his weakening domestic position by taking more power in his own hands—extending martial law, governing by decree, seizing control of military appointments, intimidating and silencing opposition, abolishing the upper house of the parliament and dissolving the lower, and carrying out a Soviet-style plebiscite that gave him a 99 percent victory. Many nationalists and reformers, who had once supported Mossadegh, were antagonized by his efforts to monopolize power and his increasing reliance on “mobocracy” and the Tudeh party. The religious fundamentalists also turned against him as he sought to extend his power. They...