The Fall of the Shah: 40 Years Later

By George Friedman 

Yesterday, on the 40th anniversary of the Iranian Revolution, we published an articleexplaining what the revolution can teach us about the economic and political problems facing Iran now. Today, I’d like to focus on the geopolitical implications of the revolution that saw the overthrow of the Shah of Iran, Mohammad Reza Pahlavi, and the rise of Ayatollah Ruhollah Khomeini. It was a formidable time for the country, but the existing geopolitics of the region remained largely intact.

Most observers didn’t expect the shah to fall, although many claimed afterward that they had predicted it. The shah, who was essentially installed by the United States and Britain, was used as a bulwark of the American containment strategy. He unseated democratically elected Prime Minister Mohammad Mossadegh, who the U.S. feared was aligned with the Soviets, and helped to block Soviet access to the Persian Gulf. He claimed to be the heir to the Iranian monarchy, but in reality, he sat on the throne because of a coup staged in 1925 by his father, Reza Shah Pahlavi, a military officer who himself had no connections to the long line of Persian monarchs.

Mohammad Reza Pahlavi enjoyed immense wealth but left his people profoundly unsatisfied, both economically and spiritually. Emulating Turkey’s Mustafa Kemal Ataturk, his father had sought a secular, militarist and authoritarian path to modernization. Iran’s merchant class didn’t care much about the modernization plans and demanded a cut of the country’s wealth. The shah appeared indifferent to their plight.

Khomeini did not. He bound up the grievances of the merchants and the peasants with the tenets of Shiite Islam. While sitting in exile in Paris, he sent copies of his sermons and speeches in which he laid out how the shah had betrayed Islam and stolen the wealth of the nation through his lavish and lascivious lifestyle. Experts dismissed him and the growing dissatisfaction, believing that discontent was a constant reality in Iran and that the shah could contain it.

From the American point of view, the shah was a great comfort. In 1973, OPEC, led by Saudi Arabia, had cut off oil shipments to the United States and parts of Europe. At the time, the Saudis were involved in the Arab-Israeli War and sought to outflank Soviet-sponsored Arab movements, especially Palestinian ones. The Soviets had supported coups in Iraq and Syria and backed paramilitary groups from both countries that were formally designed to confront Israel but were actually far more focused on Saudi Arabia. If Saudi Arabia could be destabilized and the flow of oil interrupted, the Soviets thought, the position of the United States and Western Europe would be vastly weakened. 

But the Saudis beat the Soviets to the punch by imposing an oil embargo themselves, undercutting Soviet attempts to make it appear that Saudi Arabia was an American puppet. The price of oil soared, creating a global recession. For the United States, the embargo was a mixture of pain and pleasure. On one hand, it caused massive economic disruption. On the other, it was Saudi Arabia, not a Soviet-linked Palestinian group, presiding over an Arab renaissance.

Iran, an enemy of Saudi Arabia, continued to ship oil to the West and made a lot of money in the process, which it largely spent on defense. There was serious talk of Iran becoming a regional hegemon and a nuclear power. The U.S. didn’t vigorously object to any of this. Given the global oil shortage, even after the embargo had ended, the United States had two overriding interests: to contain the Soviet Union and its apparent proxy, Iraq, and to ensure access to the Persian Gulf through the Strait of Hormuz.

U.S. intelligence worked closely with SAVAK, the shah’s intelligence service. The agency became Washington’s chief source of information on Iran – but SAVAK didn’t transmit any warning about the uprising to the U.S., either because it didn’t want to or because it didn’t anticipate the level of the unrest. Moreover, the United States’ other intelligence sources in Iran were part of the elite – the higher the sources, the greater the knowledge they can share, or so the U.S. believed. The problem, however, was that the elites were profiting from their ties to the regime and so were unlikely to reveal evidence of its demise until it was too late.

More important, it’s not easy to find sources who know when uprisings will occur and how they will turn out. The last people to know the shah was going to fall were those in the powerful classes, on whom the U.S. relied for intelligence. The idea that an extreme Shiite leader, sitting in exile in Paris, could manage an uprising against the man who could have brought the country to regional hegemony ran counter to all notions of power and continuity in Washington. President Jimmy Carter went out of his way to show his support for the shah almost to the end. It was inconceivable that the powerful would not remain powerful, or that a trained army could not defeat a rabble of protesters.

Those outside the government were equally deluded. Human rights groups loathed the shah for torturing and murdering his people. They made the same mistake that similar groups often make: believing that if a vile government is overthrown, what replaces it will be better. To appease his dissenters, Khomeini appointed a moderate, Mehdi Bazargan, as prime minister. But Bazargan’s liberal positions came into conflict with those of the radical Shiites who controlled the revolution, and his government fell.

The U.S. learned two lessons from this experience. First, you can’t rely solely on official intelligence sources to figure out what’s happening on the ground. Sometimes, the most valuable piece of intel is the reality staring you in the face. Second, geopolitics can be shifted but not obliterated. Iran under an Islamic regime was as hostile to Iraq and the Saudis and ambivalent toward the Kurds as it was under a secular one. Some things changed (Iran became hostile toward the United States), but other things stayed the same (its tensions with the Soviets continued). And as hostile as the U.S.-Iran relationship became, the U.S. continued to help supply Iran with weapons (hence the Iran-Contra affair). Geopolitically, regime change doesn’t alter as much as you might expect.

I’m still surprised at the failure of truly intelligent men and women in and out of government to understand that the shah was about to fall. In the 1980s, many of us were equally unable to grasp that the Soviets were hanging on for dear life. What is so obvious in retrospect was shrouded in the moment. But it shouldn’t have been. It was there for all to see, but recognizing it required looking behind the appearance of power and breaking the habit of believing that things always stay the same. The fall of the shah meant many things, but the failure to foresee his demise was ultimately about a lack of imagination and the inability to grasp that what was true yesterday might not be true tomorrow.