How the West Lost Iran: Oil, Coups, and the Road to Revolution - Part 1

0:00Today's podcast is all about Iran, but we are giving you the economic history of Iran from the 1940s all the way up to the 1980s. This is part one of a two-parter, which will hopefully give you a little bit more perspective, a little bit more depth, and allow you or aid you in understanding what is going on in the Middle East right now. That's all coming up in a couple of minutes. Here at Blue Apron, we've been thinking a lot about the whole cooking thing. And we've decided, you shouldn't have to cook. Introducing Dish by Blue Apron. Pre-made meals that are ready in five minutes or less. At least 20 grams of protein.

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1:30To understand the economy, you have to understand human nature. This podcast is powered by Acast.

1:53David McWilliams: Welcome to the podcast. Those of you of a certain vintage will recognise that guitar riff as a pretty iconic riff by the police message in a bottle. You will ask yourself, what the hell are they listening to the police at the top of a podcast, which is all going to be a two-part podcast about Iran, the Middle East, America, Trump, politics, geography, economics, finance. And Wesley Disco. Exactly. We will answer that in the course of the podcast because the police loom large in this story. This is going to be the first of two parts about American intervention in Iran specifically, in the Middle East in general, but in Iran specifically.

2:37What we're going to do is try and give a little bit of context, a little bit of history, a little bit of economic history as to what has been over the past 70 years,

2:51David McWilliams: on and off intervention. And when I say intervention, intervention, it's not just here's a few quid and do the right thing. We're talking about absolute decapitation of leaders. So the idea that what we're seeing in the last couple of days in Iran is a new thing is not the case. This has been part and parcel of Western policy towards Iran for quite some time. And when I say Western, I don't just mean European capitalists. We're all going to involve our Russian friends, Soviets in this. And we're going to give you a whistle-stop tour of the region, of the economics of the region. And hopefully that will arm you slightly better to discuss this issue.

3:32One of the reasons I'm standing back and hoping to give you a little bit of depth, a little bit of perspective, a little bit of history, a little bit of economics on that, is that I'm not too sure about you, but I am absolutely sick of going online and seeing people's own ideological battles being fought out over the grave of Iranians, over the rubble of Iran, people pointing the finger, people saying you're this, that and the other. Absolute case, as far as I can see. I'm not sure about you, but maybe you agree with me, of all sorts of heat and very little light being shed upon the issue. And this is particularly the case from my impression of Irish Twitter, but Twitter or X around the world has just become a forum for people shouting at each other without really giving any context.

4:27So John, that is it. I like the way you moved there.

4:30David McWilliams: Not like Jagger, but you moved there with the police reference, John. Yeah, well, he brought me straight back to Wesley. But I'll tell you the other thing, though, Mac, about Iran and the whole thing. Growing up, we knew nothing about Iran, you know, apart from a little blip on the news here and there. But my eyes were open to that whole region, as I've said to you before, when I worked in the BBC World Service, because I worked in the Persian service. Yes, I know. It's fascinating. It was fascinating. They're such a fascinating people. And one of the things I learned since we're talking about music as well is I used to work with one of the producers there, a guy called Bezad Balur.

5:12And he used to produce the kind of youth program on Iranian art and culture and music in particular. But one thing that he was saying to me was that heavy metal is enormous in Iran, especially Tehran. No way. They've loads of bands, but it's all underground. That's the best place for heavy metal, by the way. But you have all these kind of Slipknot and Pantera kind of tribute bands. It's an amazing scene, apparently. So after this, whatever happens in this particular conflict, one of the outcomes might be a whole new Eastern metal genre coming out of Tehran.

5:58David McWilliams: Eastern metal, I'm telling you, I love it. You heard it here first. You heard it here first. Muller metal is what we're going to call it. Muller metal. Right? Anyway, let us kick off. So what I want to do is, what I want to do is I want to talk to you about geography, about history, about economics and finance. But the first thing I'd like you to do when you're thinking about Iran is to visualize where it is. If you can't do this, just go on Google Maps as you're listening to this, or maybe after or maybe before, and just look at where Iran is in the world. Iran is in the center of the world. It is the center of the world.

6:40It is bang in the middle of the old Silk Road. It is, in effect, the buckle of the Belt and Road Initiative, which was China's initiative to try and build non-maritime links with Europe. It is exactly where Marco Polo would have walked through on the Silk Road. If you look at it, what you have is you have, take even the Straits of Hormuz, that little channel between what is in effect the Arabian Peninsula and the landmass in Central Asia, of which Iran is the first major country. That particular little strait, again, look at the map.

7:21David McWilliams: It's that little strait of water between, just around Dubai. 20 % of all the world's energy flows through that every single day. Wow. And 90%, 90 % of all Iranian oil goes to China through that particular choke point. And choke point is exactly what's happening primarily because that is the weakness of the global economy. So if you look at those maritime routes, and again, that maritime route goes down to Asia, Southeast Asia, India, China. This is not just a regional story. This is a massive, massive global story. And I also want you to imagine maybe lying on your side and looking up on the map from Iran.

8:12And what you see then is the Caucasus, the Caucasus mantles, the Hindu Kush. What you're seeing then, of course, is the underbelly of what was the Soviet Union, the underbelly now of Russia. So it's not necessarily an East versus West story. It's also a Russia versus America, Russia versus Israel, Russia versus Western Europe story. playing out there. And again, that's what I want to do. You want to look at the trade flows, the investment flows, the migratory flows. And what you see is that it is all about geography. The geography of Iran places it, as I said, at the center of the world. And John, it's funny, you said when we were young, we knew nothing about it.

9:01We knew nothing about it because we are condemned to live in a tiny, maybe inconsequential island in the Atlantic. Whereas for the last 2 ,000 years, culture has actually emanated from what is now regarded as the Middle East, Iran, etc. We know it's an unusual misnomer. It doesn't really explain, Middle East doesn't explain where these places are. But again, what I want you to do is look at the fact that Iran, right up against Turkey, massive regional power, right up against Saudi Arabia, massive regional power. We now know very close to Israel, again, which is a massive disproportionate power in the region given its size.

9:48And one thing we know in the last 18 months is that Israel has become a far more dangerous and formidable entity in the region. And then, of course, you look to the right-hand side. If you're looking at the map, you've got Pakistan, you have India, and further out, you have Vietnam, and you have into China. So this is a hugely, hugely important player. And what I'm going to do is I'm going to tell the story through the eyes of Britain, through the eyes of America, and through the eyes of Russia. because they're the three players that have been involved in Iran as extra interfering forces over the past, let's say, 70 years.

10:31And we're going to try and go for this podcast, John, we're going to go from 1940s all the way up to the Iranian Revolution. And then part two of the podcast, we're going to go from the Iranian Revolution all the way up to October 7th. But we're going to try and look at it as much as we can through economic and geostrategic lenses rather than giving our view of religion and all that other good stuff. So let's go. Okay, Mike. So we're starting back in the 40s, as you say. So just coming close to the end of the war, there were a number of conferences with the Brits, the Americans, the Russians. One of those conferences was in the Oberai Hotel in Giza in Cairo.

11:15And I know that because that's where I honeymooned. It's a fabulous place.

11:19David McWilliams: Oh, that's so sweet. That's so sweet. But I know the other one we spoke about before was in Crimea and there was one in Potsdam. But the other one was in Tehran, which wasn't close to the action, as it were, at all. Why was that? And what happened at that? Because that kind of sets the scene a bit. Excellent, excellent question, Sean. So in 1944, Churchill, Stalin, and Roosevelt met in Tehran. And again, as you say, why Tehran? The theater of war in the Second World War was in Japan, in the Pacific, and in Europe, and close to the Atlantic. So what they were doing in Tehran, what they were doing in Tehran is they were basically carving up the world between the Soviet Union, which was likely to be the winner, the Americans, which were likely to be the winners, and the British, who were not only likely to be on the winning side, but also had had extraordinary deep relationships with Iran, way, way more significant than the Americans.

12:33And what this podcast is going to be about, really, is how the British got elbowed out by the Americans in Iran over the course of the second half of the 20th century and had the Americans framed its entire policy towards Iran, one, on sort of a mini rivalry with the British, but number two, the main rivalry was with the Soviet Union. Because the amazing thing is that Hitler actually wanted to get his hands on the oil of Iran. And the idea was that they would go down through the Caspian Sea. So the Germans at Operation Barbarossa would actually turn right, go down to the Caspian Sea and take the oil-rich area of what is now Azerbaijan and northern Iran.

13:31And of course, they got stopped at Stalingrad, which was in their way, and they never made it. But that had always alerted everybody to the fact that Hitler's strategic interests were to acquire as much of the oil and energy of that area. Because of course, he was running out of energy at that stage. They just had energy from Romania, so they didn't have any oil. So that's where we start. It's an extraordinary story.

13:57David McWilliams: So we start there, but the backdrop is... the declining British Empire, the ascending American Empire, and the ascending Soviet Empire. So basically what happened was America was essentially the number one power in the world, but Russia, or Soviet Union, was the number two power in the world. And both of those powers wanted a piece of the action of Tehran, not just because of the money. In fact, the English were more interested in the money, but it was due to the fact that the Americans wanted to surround the Soviet Union. As soon as it became apparent that the Cold War was going to be a thing after the Second World War, the Americans wanted to surround the Soviet Union with American bases.

14:48Right. And the major base was going to be in Turkey, which was a NATO member. And the second major base was going to be in Pakistan, which the Americans sided with after the division of the Raj, because they thought that they needed a bulwark against the Soviets in that part of the world. And the third piece of the jigsaw for the Americans was Iran. Yeah. So the Americans, in effect, identified Iran as not only a place where they could get oil out of, but more importantly, a strategic military asset through which they could launch an attack at the Soviet Union if they had to. The British's interest was quite different.

15:29Originally, the British interest in Iran was both geographic or geostrategic and financial. Geostrategic because Iran was on the way to India to jewel the crown. And I don't think anybody thought, even in 1943, that Britain would give up India by 1948. They were talking about NATO before the end of the war? They were talking about NATO. The Americans were aware that after the defeat of Germany, there would be an ideological battle between the Soviets and themselves. Because Stalin made no secret of that. And of course, even at the very end of the Second World War, senior Nazis still clung on to the belief that they could do a deal with the Americans and turn around and fight the Russians in the East under the banner of anti -communism.

16:22And that was very much actually played out at Nuremberg trials, that that was the strategy of the senior Nazis. Right. Okay, gotcha. It was a marriage of convenience. Both of them wanted to destroy Nazi Germany, the Soviets and the Americans. But once Nazi Germany was out of the way with, then the ideological difference between both of these sides would come to the fore. And again, what we always think as Europeans that these battles played out in Germany and in Italy, Yugoslavia, as we talked about last week. No, they played out all over the world. And one of those places, of course, was Iran.

16:56So now what you might detect, John,

16:58David McWilliams: is the fact that what we're talking about is three great powers talking about the fate of a nation without actually asking the nation itself what they wanted in all this. The Iranians. Wouldn't be the first time. Wouldn't be the first time. And I'll give you a great example, because we're going to talk about an Iranian prime minister who was deposed by a CIA British coup in 1953, who was called Mohammed Mossadegh. And in effect, this is where it all starts. Yes. Musadek is the spiritual, let's say the Ayatollah Komeni and Sinwar and Nasser and all these people are basically the spiritual sons of Musadek, right?

17:37Musadek was a democratic politician from Iran, ended up being the prime minister.

17:43David McWilliams: But can you imagine how the British referred to him? Because they were trying to negotiate with everybody after the war. And they referred to him, okay? One British official wrote, Busadek, he was a man who looks rather like a cab horse. Oh, Jesus. Slightly deaf, so that when he listens with a strained but otherwise expressionist look on his face, he conducts conversations at a distance of about six inches at a range from which he diffuses slight reek of opium. Wow. If that's not a classic colonial way of looking down at the nation, right? Exactly, exactly. But what was really going on was that the British company called BP, British Persian Oil, which became Anglo-Iranian, was the major oil company in the area, which had secured the concessions from the Iranian government.

18:41David McWilliams: The reason it secured the concessions is that the British had imposed or actually had created the Shah. The Pahlavi dynasty was created by Britain. And just in 1942, I'll give you an example. The British government received£6 million in tax revenues from Anglo-Iranians' activities in Iran. The Iranian government received barely 60 % of this figure. So the British were taking out more money from Iran than they were giving. So obviously, what had happened was Britain had a massive financial interest in keeping Iran's national resource, oil, in British hands. And all of British policy in the end of the 40s was framed against that background, which proved to be disastrous because it sparked anti-British feeling, which actually did not go away for a long, long time.

19:39And it's the hangover of that still now, isn't it? That's part of the hangover. That's absolutely part of the hangover. But in effect, if you remember the East India Company, the way in which Britain created a company to use the resources of India, it was the same sort of worldview in Iran, except the world was changing. And Britain as an empire was beginning to actually lose control. So again, you've got to see the British involvement in Iran against the background of an empire, which eventually lost the jewel of the crown, which was India in 1948. Yeah. So Britain understood, I think it's fair to say that Whitehall understood they didn't have the power.

20:25They didn't have the manpower. They didn't have the financial power to keep the empire. But what they did want was keeping the stream of income that was going from Iran to London via dividends in the oil company, right? And this, of course, absolutely pissed off the Iranians. So again, what you're thinking is Britain is at this stage now beginning to be humiliated on the world stage. They have a civil war in India after partition of India. You have 11 million refugees. You have British people stranded. There was total chaos. Even before that, the British had lost Malaysia. They had lost Singapore.

21:07So there was a sense that the empire was on its knees. But yet, the stream of income from the oil companies was very, very important to them. And that's what they clung on to. And that's what pissed off the Iranians, particularly Mossadegh, who's going to come back into our story in a minute or two. The Americans, on the other hand, John, were much more interested in keeping the Soviets out than making money in Iran. This is an interesting thing. So the Americans decided what they would do is they would cut deals with the Iranians that gave the Iranian government far more dividends than the deals the British were cutting with them on the oil side.

21:46Why? Because the Iranians realized that the short-term benefit to the balance sheet of extracting huge amounts of Iranian resources was not worth the long-term benefit of keeping the Iranians on side in order to keep the Russians and the Soviets out of the region. because, of course, the Americans were well aware that the region also included Qatar, Kuwait, Bahrain, United Arab Emirates, and, of course, Saudi Arabia, the jewel in the oil crown. So the Americans were playing a long-term game. The Brits weren't, right? But into this mix comes a new agency called the CIA, the Central Intelligence Agency, which was set up in effect in 1952.

22:37Now, a year prior to that, Mossadegh has been elected prime minister of Iran. Yeah.

22:44David McWilliams: And his central idea... Improper democratic elections. Democratic elections through the parliament. Yeah. And basically what he said was, and this is a quote from Mossadegh, he said, If I become prime minister, I have no intention of coming to terms with the British. Instead, he went on, he said, I would seal the oil wells with mud. So what he is basically saying is that we need to kick these people out of the country to become sovereign, et cetera, to gain our own power. This is, John, where I think the beginning of the anti-Western feeling comes in Iran. Right. That the Iranian sense of independence and sovereignty was always besmirched by the colonial interests of, in this case, it happened to be Britain, and, of course, the colonial, you can't call it colonial, the geostrategic interests of the Soviet Union.

23:43The Americans were the good guys in the beginning. This is the interesting thing. The Americans came in. And the Iranians saw them as the good guys? The Iranians saw them as the good guys because the Americans were prepared to do more deals with the Iranians. They were better to cut them better deals to actually take the Iranian side. And the Iranians saw the Americans as a kind of an honest broker. Okay. Until, John,

24:12David McWilliams: a man enters the fray. Who'dah? That man is called Miles Copeland. Miles Copeland is a CIA operative, the very first one, but also a musician, John. I know where you're going with this. And a musical promoter. So he is the Dennis Desmond of CIA operatives. Right. And he is the father of Stuart Copeland, who went on to be the drummer of The Police. That is incredible. That is incredible. Because Stuart Copeland is probably my favorite drummer ever. Him and John Bonham. But that's an incredible connection. It's a little fun fact. So Miles Copeland was part of this new agency called the Central Intelligence Agency.

24:59Right. And at the beginning, the Americans didn't really know what to do with it. Because in the beginning, the CIA was meant to be, as the name suggests, an information gathering agency, an intelligence agency. Yeah. But they sent Americans into the field. Those Americans were kind of diplomats with relations to the army. They could speak foreign languages. They were very adept at foreign cultures. They were very sophisticated people. Their original mandate in the CIA was simply to collect intelligence for Washington so they knew what was going on on the ground in all these countries, so they didn't have to rely on domestic political sources alone.

25:44That's where they started. Where they ended was in regime change. And the very first effort of that was a coup orchestrated by the CIA and by the British. But at the instigation of the British, so much so that Eisenhower and Churchill were aware that this was happening. We have evidence that they knew this was going ahead. And the ultimate aim was to get rid of Mossadegh. For the British, getting rid of Mossadegh was all about money. For the Americans getting rid of Mossadegh was to actually stop him from having an alliance with the Russians. Because the Russians were interested in sending a huge amount of technological capability down to Iran and using Iran to actually breach into the rest of the Middle East.

26:36And into this comes the father of the drummer, Miles Copeland. That's incredible. But what's also incredible is the hypocrisy of it. It's got to go down as the most hypocritical act by not just the British, but particularly the Americans as they were driving home the whole democracy message around the world, you know? I agree with you, but you've got to understand this is the era of the Korean War. This is the era of divided countries. This is the era where the Americans are bogged down in Korea, fighting an ideological war. This is the era where the Soviets are very, very happy to also create their puppets.

27:21So the Americans are looking at Mossadegh and thinking, could this man become the Kim Il-sung of the region,

27:30David McWilliams: i.e. the dear leader? And of course, there was a really good chance of this because Stalin wouldn't have been above creating all sorts of nonsense. But that's the background noise. It's the kind of Cold War. It's kind of James Bond-y stuff, right? It's James Bond. It's from Russia with love, all that sort of stuff. But the upshot is the Americans then said, okay, if we're going to do this coup, we need to have a geezer in place who is sufficiently credible. Who is that geezer? It is the son of the Shah of Iran. So they went to the monarch, which was an existing monarch, and they co-opted him into the game.

28:10So unlike our friends now, Mr. Trump, etc., who don't even have a figurehead around which to actually base the opposition, the Americans and the British said, look, we'll take this guy, the son of the Shah, we'll elevate him, he's already in line for the throne, and we will give him absolute power. And because he is an Iranian, but in actual fact he wasn't Iranian, his mother was actually Georgian, which again is an unusual thing, yes. Yeah, okay. what we will do is we will at least have a totemic figurehead around which to base the opposition to Mossadegh. And so when Mossadegh goes and they deposed him, so they decapitated the Mossadegh regime, which was democratic, which was left-leaning, which was nationalistic, which was an Iranian government.

29:05And what they put in was, in effect, an American puppet. In fact, Iran, you could argue, became the first real client state of the United States from 1953.

29:19David McWilliams: And who's responsible for it? The man who spawned the drummer of the police. That's incredible. But can I ask you then, And what was the Shah at the time? What was their position in Iran? Did they have any power? Like, who was the Shah? And who was that family? Very good question. Very, very good question. So there has been the Kecock throne, as they call it. For 2 ,000 years, there were kings of Iran. And then there was a revolution in Iran in 1921, which was exactly, I mean, if you think the Soviet revolution in 1917 was the beginning of a revolutionary period. And in order to try and create some stability in Iran, the British, who were very, very involved in the oil industry and in the colonial effort in Iran, found a colonel, as they always do, in the army who could be turned into a new Shah.

30:21Right, gotcha. And they did that. So they just got a geezer who was loyal and an army guy. So his son is the Shah. But the point is, at the time, it was morphing towards a constitutional monarchy

30:36David McWilliams: along the lines of Britain, actually. Not an absolute monarchy. What the Americans did from the 1950s is they, in effect, turned the place into an absolute monarchy under the Shah. Now, why did they do that? was because they were worried about the Russians. How they did that is for the six months before the coup, they flooded the place with American money. They had the voice of America. But interestingly, do you know who they bought off and gave money to? The Ayatollah Kashani, who was one of the main mullahs. So interestingly, the mullahs were on the side of the Americans in the 50s. Now, why was that?

31:17David McWilliams: because the Americans, despite being Christians, believed in God. What did Stalin not believe in? God. Stalin was an atheist. So the Mullis thought, well, look, hold on a second. If we're going to get involved with foreigners, we shouldn't get involved with communists because they are explicit atheists. They're anti-religious. The Americans at least have their own religion. Whether it's Muslim or not doesn't matter. They will tolerate us. So ironically, the mullahs got into bed with the Americans in order not to oppose the deposition of Mossadegh. Fascinating stuff. That's incredible. But they clearly didn't understand the Americans and the American mind.

32:05They didn't understand the Americans. So in the 50s, the Americans have Mossadegh. But the other reason, and this is which brings us forward a bit, that the British agitated to get rid of Mossadegh was a place which doesn't look adjacent to Iran at all, but is a similar choke point, which was Suez, Suez Canal, very close to where you were on your honeymoon. So the British said to the Americans, look, if we allow this guy, Mossadegh, to nationalize the oil resources of Iran, this will set off a series or trigger a series of events which will lead to the new Egyptian prime minister, Nassar, nationalizing the other jewel in the crown, which is Suez.

32:58Now, why were the Brits so obsessed with Suez? Because Suez was the passage to India. Yes. And that had been absolutely part of the British geostrategic Gibraltar, Suez, these sort of areas. Amman, Yemen, everywhere there was a choke point, the British Navy controlled.

33:18David McWilliams: Straits of Hormuz, Yemen, Suez, Gibraltar, every place where geography squeezed water into a tiny little place, the Brits took over as a general rule. so interestingly then Suez is the next port of call for our discussion John okay well let's just park the ship there for a moment and do a bit of this

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35:09Mike, we've gone through the history up until now, from the 40s up until the Suez crisis. So talk to us about that. Explain from here on. Okay, so Suez, very briefly, a very, very charismatic corporal in the Egyptian army. Again, another coup d 'etat. There's coup d 'etats going on all over the shop now, John. All over the gaff, right?

35:30David McWilliams: It's all in vogue. Nasser emerges. And Nasser's idea was very much like Mossadegh. He said, look, we Arabs, even though Mossadegh was an Arab who's Persian, but he's basically, you know, like the Persians, we have a choice. Either we become a pawn between the Soviets and the Americans, and we are played by them. They play us. We try to play them. But he said, Arabs are a very proud culture. They are a huge landmass. We are not unified because we have all these, we have Syria, we have Iraq, we have Saudi Arabia, we have Egypt, we have Jordan, we have Lebanon. We don't have a unified country. We have a unified language, we have a unified culture, and we have a unified interest, which is to create a pan-Arabist movement, a pan-Arabist party, and a pan-Arabist power that can unify all the Arabs together.

36:30And we have oil, right? Yeah, yeah, yeah, yeah. And this was a massive, massive threat to the West, because what the West was shit scared of was Arabs that are unified. And it was an incredibly - Wealthy Arabs that are unified. Wealthy Arabs. But imagine, you know, the most extraordinary thing, I've always thought about it, right? The European Union has 28 different countries, 20 different languages, lots of different religions, etc. We have managed in Europe to create a single market, a single entity, a European Union. The Arabs haven't managed that from Morocco to Saudi Arabia. They have the same culture, they have the same language, they have the same land mass.

37:19So it's something that the West has always, and the Soviets, have always tried to keep the Arabs apart from each other. Nasser said, and even still now, Nasser said, no, let's have a pan-Arabist movement, which terrified the West. And the lightning rod for that was the Suez crisis. So basically, Nasser said, I'm going to nationalize the Suez. France and Britain freaked out. Yeah. Together with the Israelis, they formed a secret deal that they would invade and take over the Suez. And of course, the Americans, and again, this comes back to the Americans at the time, balked at that idea. The Americans said, this is not a good look, that white European ex-colonists and settlers from Israel are actually ganging up on the original inhabitants of the region, the Arabs.

38:15Again, what you see, and of course, the Brits had to climb down, the Americans withdrew support, the Suez crisis was probably the nail in the coffin for both French and British interests and military power in the region. And what it also galvanized was Arab identification explicitly that the Israelis were, in effect, the settlers in the region. They were put there to enhance Western interests, and they were the main recipients of Western money. There had been, up until then, lots of Arabs who said, look, we can accommodate the Jews, we can deal with the Jews, etc. But once it was exposed at Suez that the Israelis were in cahoots with the French and the British against the Egyptians and against the Arab cause, this, again, I think, created the totemic idea that Israel was uniquely unwelcome in the region.

39:21So just to recap then, the first major blow that the Iranians felt was that it was the, after holding democratic elections, the removal of Mossadegh and the imposing of the Shah. And then a further slap in the face is the presence of Israel kind of as a Western agent.

39:46David McWilliams: Well, the formation of Israel is 1948. So that's all part of the whole thing. Yeah. And then you've got Arabs attacking the Israelis, the Israelis fighting back. the sense the Israeli state was set up by the United Nations was basically for many, many Arabs and, of course, for Persians. This was an illegitimate state in the middle. In 1948, the Israelis beat the Arabs in their first war against the Arabs. But in 1957, the idea that the Israelis were absolutely in the pockets of the West was cemented by Suez. Yeah. And then the final part of why Suez is important is Suez marks the beginning really of the American era in the Middle East.

40:34So the Brits and the French have neither the firepower, the financial power, nor the credibility to actually shoulder what they would regard as Western interests in the Middle East. And they cede power and they cede that area to the Americans who took it up with gusto. And one of the first places, the primary places, the Americans decided was going to be the area that they were going to win or lose against the Soviets was in Iran. Right. And they threw enormous amounts of money at the Shah through the 1960s. Yeah. They had this modernization idea. They had huge American soft loans. American large oil companies went in and drilled for oil, created the infrastructure.

41:19And in effect, Iran became a client state of the United States throughout the 1960s. And with all that money, the Shah was living the life of Riley, big luxurious palaces, throwing big parties, all that kind of stuff, while your average Iranian was poor, was just trying to get by.

41:42David McWilliams: Well, you're absolutely right. There was an expression during the Shah's regime called the 1 ,000 families. They were actually 1 ,000 families that ran Iran, that got all the licenses, had all the interests, had all the property. And it was, in effect, a massive transfer of wealth to those people via the Shah under the auspices of the Americans. because the Americans were obsessed in the 1950s by anti-communist idea and the 1960s, right? So think about it, it's the Cuban Missile Crisis, it's all these sort of things. And the Americans were quite happy to have their own, in effect, their own bastard in there.

42:28David McWilliams: And as long as that guy kept order and kept the Russians out, they looked the other way. And the Shah was exactly that. So the regime becomes more and more corrupt. The wealth gets funneled to fewer and fewer families. The vast majority of Iranians are not participating in this wealth creation. It's not that they're all abject in poverty, but they're not participating in the same way. But of course, what you get in all these things is you get big movements for reform and education. You start getting more people educated. People are getting now very, very fed up. Again, the more educated the young people are, the more likely they are to be left-wing.

43:10So again, what the Americans are looking at is an increasing incursion of the Soviets into the minds of young Iranians during the 1970s.

43:19David McWilliams: But one of the most adept critics of the Iranian regime was a man called Musa V. Khomeini, Ayatollah Khomeini. And he said in 1965 to the Shah, He wrote an open letter, right? He said, Your Excellency Mr. Shah, let me give you a piece of advice. You miserable wretch, isn't it time for you to think and reflect a little and ponder on where this is all leading you? Mr. Shah, do you want me to say that you don't believe in Islam and kick you out of Iran? This was an open letter from, right? And of course, Shah kicked him out of Iran, sent him into exile, and we know what happened then. Lots of love, Khomeini.

44:07David McWilliams: Yeah, lots of yours. Yours, the Ayatollah. Yeah, yeah. Heart emojis, right? So at this time, from the 60s into the 70s, right, something else is happening all over the region, which is that the various dictators and military governments are spending a fortune on arms. In effect, they're turning their oil revenue into arms, okay? I'll give you one statistic, right? Iran's military spending went from 1963 from$293 million to$7.3 billion 15 years later. They were buying everything. And this is where the oil companies, the military industrial complex, and the stooges of America end up running the Middle East.

44:57And this is all the way through the 1970s. You have corruption. You have the recently educated young people not getting a slice of the action. You have the religious people, through the eyes of their exiled leader, the Ayatollah Khamenei, also feeling that this decadent, degenerate, sexually liberal, non-Islamic government is in effect undermining the essence of the Islamic nation of Iran. So you have secular forces, you have religious forces, you have geopolitical forces,

45:36David McWilliams: you have the Soviets creating a hassle, all the while our friend, the Shah, is buying swanky clothes, having affairs, living, as you said, high in the hog. The writing is certainly on the wall at this stage. The writing's certainly on the wall. We don't need to get into what happened, why it happened. We'll probably end this podcast here, John, by saying the Iranian Revolution of 1978. 1979, but 1978 was one of those revolutions that it is amazing now when you look back on it, that the Americans were taken by surprise. And the reason I believe the Americans were taken by surprise is their only lens in Washington through which they saw and rendered something legitimate or illegitimate was whether this individual or this regime was a bulwark against Moscow.

46:30Yeah. And as long as it was a bulwark against Moscow, they really didn't care. So what you have is the Americans becoming, in a way, obsessed by anti-Soviet behavior, while all the while the Iranian street, whether it's secular street or religious street, is becoming obsessed with actually trying to get a little bit of the oil revenues for themselves and a little bit of democracy for themselves and a little bit of what you would call progress from themselves. So very, very soon the Shah becomes emblematic of the problem. The Americans have all their eggs in one basket. The Soviets are happy to create all sorts of skirmishes and all sorts of mini-revolts.

47:20And by 1978, the whole thing spills over. We'll just leave it at the fact that the Ayatollah Khamenei is up against one of the more ineffectual American presidents, Jimmy Carter. Jimmy Carter was a man of peace. He was a nice guy. He didn't want to get involved. He really couldn't really understand the region. All the while, American policy was being driven by spooks, CIA agents, etc. etc. And by the time we get to the late 1970s, as you said, the revolution is on the cards. It happens by 1979. The Americans are holed up in their embassy hostage to the various student movements. And we have the declaration of the Islamic Republic of Iran.

48:11And that is where we will leave it. It is a story, John, of geography, of economics, of mismanagement, of greed, of colonialism, of Sovietism versus Americanism. It's a story of the end of the British Empire. It's a story of the emergence of the Americans. It's also the story of clumsy American intervention. and it is also the basis of today's attack on Iran because the Ayatollah Khomeini, who dies in the 1980s, gives the reign over to the Ayatollah Khomeini, who was killed last Saturday morning by an Israeli airstrike. We will leave it there and we will come back to part two, John, on Tuesday.

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