Sanctioning Iran: Foreign Policy 101

( – promoted by buhdydharma )

Philip Agee died on 9 January of this year in Havana, Cuba. He was 72.

ageeAgee joined the Central Intelligence Agency in 1957 and worked as a case officer in several Latin American countries. He later claimed: “My eyes began to open little by little down there as I began to realize more and more that all of the things that I and my colleagues were doing in the CIA had one goal which was that we were supporting the traditional power structures in Latin America. These power structures had been in place for centuries, wherein a relative few families were able to control the wealth and income and power of the state and the economy, to the exclusion of the majority of the population in many countries. The only glue that kept this system together was political repression. I was involved in this. Eventually I decided I didn’t want anything more to do with that.”


Agee resigned in 1969. His book, Inside the Company: CIA Diary, was an instant best-seller and was eventually published in over thirty languages. An Agee interview with Amy Goodman on Democracy Now is available here.

One very important term often used by our government, military and corporate leaders is one which is almost never clealy defined. It hints at noble ideals. As a naive schoolboy in the ’50s or as an indoctrinated enlisted Marine in the late ’60s concepts such as spreading freedom and democracy, and freeing the world of injustice might have come to mind. The term is “US strategic interests”, or simply “our national interests”.

Agee wrote that US interests are defined traditionally (scroll down to the section on “Founding”) as unfettered access to the primary products and raw materials, to the labor and to the markets of foreign countries.

Unfettered access… Ponder this for a moment.

Understanding this is one of the keys to understanding US Foreign Policy, to understanding why we placed sanctions on Iraq and why we currently have sanctions against Iran, and have had since 1979. But this is not the first time we have joined in the sanctioning of Iran, indeed we have imposed sanctions on many countries.

In the past few decades, the institution of economic sanctions has become a widely used method of international governance. Under Article 16 of the the UN Charter, the UN Security Council is able to use economic coercion to address “threats of aggression” and “breaches of peace.” On only two occasions, from 1945 to 1990 did the UN only approve economic sanctions. However, since 1990 the Security Council has imposed sanctions on eleven nation-states, including Libya, Somalia, Haiti, and Liberia. In the last sixty years, the United States has unilaterally or with other nations imposed over forty sanctions on various countries…

What is strange and dangerous about economic warfare is that it is politically safe. In other words, many people seem to think that sanctions are simply a mild form of punishment, an act to persuade without going to war. The majority of the U.S. public supports sanctions against Iran, while opposing a military invasion of Iran. Indeed, economic sanctions is a financially better option for the United States and it is questionable whether a military option is even possible at this point.


The British Oil Concession in Persia – The Early Years

Much of the following sections are summarized from a book by William Engdahl, A Century of War. All blockquotes are from this book unless a link to another source is shown.

In 1901 an Australian geologist, William D’Arcy who had spent years in Persia pursuing his interests in religion and oil, for the equivalent of $20,000 up front, signed a 60 year, exclusive oil concession agreement with the then current Shah. In return Persia would receive a 16% royalty on the sale of any petroleum discovered. In 1905, as D’Arcy was in the process of signing a joint exploration agreement with the French, the British, through their “ace of spies” Sidney Reilly posing as a priest, persuaded the religious D’Arcy to sign over his exclusive rights to Persian oil to a British company, Anglo-Persian Oil Company, which later would be part of the transition to BP.

Thus, Britain had secured her first major source of petroleum.

Post WWII Era

In the years following WWII Britain’s empire was in a state of decline. Former colonies gained their independence and so it became necessary to re-prioritize foreign interests. The Suez canal, through which oil flowed from the Middle East to Europe, and the oil in Iran, controlled through the Anglo-Persian Oil Company, became top priorities.

In 1947 Iran proposed that Britain increase the share of Iran’s revenue from the Anglo-Iranian oil company. Iran asked for a 50-50 split. The British tactic was to stall but in 1951 Mohammed Mossadegh who, as a member of parliament had led the movement for renegotiation of the oil agreement with Britain, became prime minister. In the meantime the Washington and London began making claims that Mossadegh was an extremist, a communist, a Russian proxy.


As for the (US) oil companies, a 1947 planning document entitled “United States Petroleum Policy” put it as follows: the US should seek the “removal or modification of existent barriers to the expansion of American foreign oil operations” and to “…promote…the entry of additional American firms into all phases of foreign oil operations.”

… with the postwar decline of the British Empire and ascendancy of US military and economic power, the US gained control of the lion’s share of Middle East oil. In 1948 the all-US consortium Aramco (Mobil, Texaco, and what became Exxon and Chevron) with exclusive oil rights in Saudi Arabia was formed, after the US government helped Mobil and Exxon back out of an earlier agreement with British Petroleum (BP) and Shell. In 1950 the companies were allowed to meet King Ibn Saud’s demands for a fifty percent share by paying it in lieu of US taxes. This arrangement undercut Britain in Iran, where the government of Mohammed Mossadegh demanded the same fifty percent.


Iran also argued, unsuccessfully, that the Standard Oil Companies of the US had also agreed to a 50-50 split with the Venezuelan Government.

Nationalization and Sanctions

By late April of 1951, after continued British refusals to discuss revisions of the concession agreement, the Iranian Parliament had gone ahead with an earlier movement led by Mossadegh to nationalize with fair compensation, which was fully within Iran’s legal rights. Iran also offered Britain the same level of oil supply as before nationalization.

In British eyes, Iran had committed the unforgivable sin. It had effectively acted to assert national interest over British interests. Britain promptly threatened retaliation and within days British naval forces arrived near Abadan (near Basra in Iraq)… Abadan was the site of the world’s largest oil refinery, part of Anglo-Iranian Oil Company.

Sanctions followed, and by September of 1951:

Britain had declared full economic sanctions against Iran, including an embargo against Iranian oil shipments as well as a freeze on all Iranian assets in British banks abroad. British warships were stationed just outside Iranian coastal waters and land and air forces were dispatched to Basra in British controlled Iraq, close to the Abadan refinery complex.

The British embargo was joined by all of the major Anglo-American oil companies. Economic strangulation was London’s and Washington’s response to assertions of national sovereignty from developing states which interfered with their vital assets. (unfettered access denied)

Sanctions took their toll on the economy and the people of Iran. Oil revenues had dropped severely from $400 million in 1950 to an insignificant amount. Mossadegh himself successfully argued his case in the World Court, but as Engdahl writes, “the American and British response was ready”.

The Coup – Operation Ajax

The CIA-with British assistance-undermined Mossadegh’s government by bribing influential figures, planting false reports in newspapers and provoking street violence. Led by an agent named Kermit Roosevelt, the grandson of President Theodore Roosevelt, the CIA leaned on a young, insecure Shah to issue a decree dismissing Mossadegh as prime minister. By the end of Operation Ajax, some 300 people had died in firefights in the streets of Tehran.


This was August of 1953. Do these tactics look familiar?

The Shah

Reza Shah Pahlevi was backed by the Americans and the British. Economic sanctions were lifted. The Shah supported women’s rights and allowed them to vote however he resorted to one-party authoritarian rule. Torture, censorship and intense surveillance were used to control the people.

The Shah’s brutal secret police force, Savak, formed under the guidance of CIA in 1957 and personnel trained by Mossad (Israel’s secret service), to directly control all facets of political life in Iran. Its main task was to suppress opposition to the Shah’s government and keep the people’s political and social knowledge as minimal as possible. Savak was notorious throughout Iran for its brutal methods.

Over the years, Savak became a law unto itself, having legal authority to arrest, detain, brutally interrogate and torture suspected people indefinitely. Savak operated its own prisons in Tehran, such as Qezel-Qalaeh and Evin facilities and many suspected places throughout the country as well. Many of those activities were carried out without any institutional checks.


By 1954 the British, once again, and now joined by the Americans, had access to Iran’s oil. Under a 25 year extraction agreement Anglo-Iranian Oil, which had by then become BP, obtained 40% of the D’Arcy concession and Royal Dutch Shell (despite the name it is a British company) got 14%. The American oil companies divided 40% and a French oil company, CFP, received 6 percent.

During the 1970’s, with encouragement from the US, Iran began pursuing nuclear power.  

President Gerald Ford signed a directive in 1976 offering Tehran the chance to buy and operate a U.S.-built reprocessing facility for extracting plutonium from nuclear reactor fuel. The deal was for a complete ‘nuclear fuel cycle’. At the time, Richard Cheney was the White House Chief of Staff, and Donald Rumsfeld was the Secretary of Defense. The Ford strategy paper said the “introduction of nuclear power will both provide for the growing needs of Iran’s economy and free remaining oil reserves for export or conversion to petrochemicals”.

From Wikipedia

1978 – Renegotiating the Oil Extraction Agreement

The negotiations between BP and the Shah’s government collapsed in November of 1978. The British had demanded exclusive rights to Iran’s future oil output. Meanwhile Iran was pursuing independence in its oil sales policies and had potential buyers lined up.

Just two months prior, a lead editorial in Iran’s Kayhan International, stated that the prior 75 year relationship with the BP consortium “has not been satisfactory for Iran  … Looking to the future, the National Iranian Oil Company should plan to handle all operations by itself”.

It had become clear. Iran no longer needed the British and American oil companies.

1979 – Toppling the Shah

In the US, also in November, President Carter set up an Iran Task Force under NSC’s Brzezinski. George Ball headed this task force which recommended that the US end support for the Shah and instead support the Islamic fundamentalist, Ayatollah Khomeini, who opposed the Shah.

London was blackmailing and putting enormous economic pressure on the Shah’s regime by refusing to buy Iranian oil production, taking only 3 million or so barrels daily of an agreed minimum of 5 million barrels per day. This imposed dramatic revenue pressures on Iran, which provided the context in which religious discontent against the Shah could be fanned by trained agitators deployed by British and US intelligence. In addition, strikes among oil workers at this critical juncture crippled Iranian oil production.

As Iran’s domestic economic troubles grew, American ‘security’ advisers to the Shah’s Savak secret police implemented a policy of even more brutal repression, in a manner calculated to maximize popular antipathy to the Shah. At the same time, the Carter administration cynically began protesting abuses of ‘human rights’ under the Shah.

Anglo-American intelligence was committed to bringing down the Shah. The government owned BBC allowed the Ayatolla a full propaganda platform while denying the Shah a chance to respond. In January of 1979 the Shah fled Iran and by February the Ayatolla Khomeini had established control in Tehran.

Sanctions Continue

Little has changed. The new bogeyman is terrorism. The major Anglo-American oil companies still do not have unfettered access to Iranian oil.

The United States has maintained various sanctions against Iran since 1979, following the seizure of the U.S. embassy in Tehran, on November 4 of that year. In March 2003, President Bush extended sanctions originally imposed in 1995 for another year, citing Iran’s “support for international terrorism, efforts to undermine the Middle East peace process, and acquisition of weapons of mass destruction.” In March and May 1995, President Clinton had signed two Executive Orders prohibiting U.S. companies and their foreign subsidiaries from conducting business with Iran. Executive Order 12957 specifically banned any “contract for the financing of the development of petroleum resources located in Iran.”


The great game continues. The latest NIE reports that Iran does not have a nuclear weapons program. The IAEA has declared that there is no evidence of a weapons program. Just as it seemed that Iran would be given a clean bill of health with respect to its nuclear power program (begun under the Shah) computer data has mysteriously appeared raising further questions about past nuclear related activities.

From Asia Times Online

The George W Bush administration has long pushed the “laptop documents” – 1,000 pages of technical documents supposedly from a stolen Iranian laptop – as hard evidence of Iranian intentions to build a nuclear weapon. Now charges based on those documents pose the only remaining obstacles to the International Atomic Energy Agency (IAEA) declaring that Iran has resolved all unanswered questions about its nuclear program.

But those documents have also been regarded with great suspicion by US and foreign analysts. German officials identified the source of the laptop documents in November 2004 as the Mujahideen e-Khalq (MEK), which along with its political arm, the National Council of Resistance in Iran (NCRI), is listed by the US State Department as a terrorist organization.

There are some indications, moreover, that the MEK obtained the documents not from an Iranian source but from Israel’s Mossad.

Hopefully some will find this diary enlightening in a modest attempt to help understand what “our national interests” are and how they play an important part in establishing US foreign policy. Iran is a strategically important country and is convenient and timely to use as an example. There are plenty of others.


Skip to comment form

  1. Each of the dates could make a diary in itself. The history of U.S. imperialism would make a most worthwhile educational series (though I’m not sure public television is ready to pick it up just yet).

    Sorry to hear about Philip Agee. He did some good work at informing the public about what was going on.

    Consider doing a series, TST. It is important for people to understand that these policies follow an unbroken line from one administration to the next, and from one party to the other.

  2. goes well with LithiumColas. National interests and security are two words that always make me cringe. It is apparent that it’s only corporate interests that are being served and even those ‘interest’ are delusional, as they are not cognizant of anything other then momentary profit.

    Crisis capitalism is not ‘free’ market it is piracy and the bloody history of our insane policies of endless wars for ‘dominance’ and geopolitics is not going to work. Globalization is a two way street and I for one hope that the US is stoppable in backing these doomed policies which make a mockery of democracy and will take down the rest of the world with it’s insane lust for power and profit.        

    • Edger on April 29, 2008 at 19:51

    To paraphrase Greg Palast from an entirely different context…

    Everyone should read this, then quit listening to politicians and riot.”

  3. Phillip Agee did not post on Booman Tribune as does Larry Johnson who is an advocate of torture and calls Iraqi’s Hadjis and worked in Central America for the CIA…and what did the CIA do in Central America…they destroyed entire nations.

    Markos Moulitsas has bragged about his involvement with the CIA saying he would have no problem working for them….

    And these are “progressive, liberal” blogs….

    What they are in fact are blogs made up of people who have decieved themselves into imagining they are liberal when in fact they support the CIA.

    The CIA is probably one of the dumbest organizations on Earth. They have a lot of money and technology and the dumbest people on Earth to operate that technology..

    A large portion of the CIA is made up of Mormons.

    The track record of the CIA speaks for itself. I challenge anyone to disclose anything they have ever done that has benefited anyone…even large corporations for any enduring period of time….

    There is nothing….the overthrow of Mossedegh has led to the Iraq war and the coming bobming of Iran which the CIA is currently involved in as well with their actual presence in Iran as scouts.

    This is a dispicable organization and anyone who associates with them or supports them cannot possibly call themselves “liberal”

    • jim p on April 30, 2008 at 02:52

    An interesting side-note (and sorry I don’t have links handy) is that the use of the Ayatollah and religious fundamentalism was, at least for the British, a tried and true method, going back to the 1850s in Egypt.

    The geniuses of their day saw fundamentalism as a check on the rising secular nationalism that was sweeping the Arab-world colonies. So they financed, and made connections for al-Afghani, the prime mover behind creations like Egypt’s Muslim Brotherhood, the grandfather of al-qaeda. (Oddly, al-Afghani and his main disciples were members of French and/or British Freemason groups–where Western intelligence people used to hang out. Not a conspiracy theory, just the historical record.

    It seems the Imperial class–anywhere, anytime–comes to imagine itself as God-like, mistaking (as one person observed about the neocons) a degree of power for omnipotence. In reality the last century of misery almost all comes from the short-sighted, and slimy, “national security” projects their ilk invents.

  4. the war mongering has nothing whatsoever to do with Iran wanting Euros for oil!

  5. handle come from the cemetery near Con Thien?

    • OPOL on April 30, 2008 at 15:15

    Beautifully done my friend.  Kudos.

    • Valtin on April 30, 2008 at 22:25

    And thanks so much for profiling, even briefly, the life and contribution of Philip Agee. He was a very brave man and stood up against injustice and imperialist power, spending his last days in exile. He is, of course, hated by the CIA crowd, and that includes mainstream Democratic “liberals”.

    Agee was a hero.

Comments have been disabled.