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Friday, August 7, 2015

It Was the First Time the CIA Overthrew a Government…

By Nick Giambruno


62 years later, the aftermath is still troubling global politics.
Operation Ajax was a pivotal moment in US and world history. It was the first time the CIA overthrew a government.

Yet even today the US government would rather not talk about it. That’s why it remains an unknown story for many Americans.

The year was 1953. The objective was to oust Mohammad Mossadegh, the elected leader of the Majlis, Iran’s parliament.

Mossadegh was not a communist or a radical Islamist. He didn’t follow any objectionable ideology. Instead, he was a secular nationalist. But he was inconvenient.

Like many Iranians, he was proud of his Persian heritage. (Until 1935, Iran was still known as Persia.) Persia once was an imperial civilization, like Rome. Twentieth-century nationalists channeled that glorious past, and they were keen on independence.

So it’s no surprise Mossadegh was earnest about ridding the country’s politics of foreign influence.
At the time, Great Britain was the most active outside power in Iran.

For decades the British had enjoyed a sweetheart oil deal struck with a former, corrupt Iranian leader. It allowed them to control Iran’s petroleum industry and, by extension, the country’s entire economy.
To nationalists like Mossadegh, this was intolerable and infuriating. It would be like China getting a sweetheart deal from President Obama for control of the US auto industry. No red-blooded American would stand for such a thing.

It was the early 1950s. The smoke from World War II, a war that killed over 60 million people, still lingered. The horrors were fresh in everyone’s mind. Access to oil had been a decisive factor in that war. Had Hitler succeeded in securing his supply in 1942, the world might look very different today.
It was a concept not lost on the British. If any country wanted to win a big war, it needed oil. Lots of it. It was a matter of life and death.

Iran was a major source of oil for the British. Access to it was a strategic military asset of the highest order. One the British would not give up for any price.

Mossadegh understood this. He concluded that the only way to claw back the oil industry was to nationalize it. On May 1, 1951, he did just that. Shortly afterward, he stated:
Another important consideration is that by the elimination of the power of the British company, we would also eliminate corruption and intrigue, by means of which the internal affairs of our country have been influenced. Once this tutelage has ceased, Iran will have achieved its economic and political independence.

The British were not about to give up. They hatched a plot to regain their influence in Iran. But they couldn’t do it alone. They would need help from the US. But the US just wasn’t interested. So the British undertook a campaign to paint Mossadegh as a communist.

The Brits played America’s Cold-War fears like a piano. They convinced the US government that the commies were making inroads in Iran. Given that Iran was just south of the expanding Soviet Union, the story was plausible… but not true.

In the end, it worked. The Americans came on board. Operation Ajax was born. The objective: overthrow Mossadegh’s elected government and replace it with something more pliable.
MI6, the UK’s foreign spy agency, and the CIA would organize the coup. Kermit Roosevelt, a grandson of former US President Teddy Roosevelt, was the CIA officer in charge.
The goal was to return the monarchy of Mohammad Reza Shah Pahlavi (also known as “the Shah”) to power. (In Farsi, the Persian language, “shah” means “king.”)

The CIA and MI6 used classic methods of subterfuge. They paid Iranian goons to pose as communists and wreak havoc in Tehran, the Iranian capital, and vandalize its business district. The police couldn’t restrain them, and the violence grew.

The coup plotters knew such events would disgust ordinary Iranians, who were fearful of communism. It would cause them to demand action. That action would include the Iranian military stepping in. As part of the plot, the CIA and MI6 had corrupted key Iranian generals for just this moment.

As if on cue, the generals took charge and deposed Mossadegh’s government. The Iranian people didn’t resist. Instead, they cheered. They thought the military was saving them from a violent communist revolution.

Mossadegh’s government was out of the way. The coup’s operatives in the Iranian military had seized power. The path had been cleared for the Shah.

The Shah knew he owed his position to the US and UK. What they giveth, they could taketh away. The Shah was more than willing to do whatever the US and UK wanted him to do. Operation Ajax was a success… but it would not be an enduring one.

The Iranian people would eventually figure out what really happened. Many of them would come to despise the Shah as a puppet of a foreign power. To maintain his position, the Shah became more despotic… which only fed the opposition.

In 1979, 26 years after Operation Ajax, a popular uprising overthrew the Shah. A power struggle ensued, and Ayatollah Khomeini’s Islamist forces prevailed. The Islamic Republic of Iran was born. This time, it was an anti-American government that came to power. Decades of animosity followed, and it continues to this day.

It’s unthinkable to most that the Islamic Republic of Iran could offer any sort of investment opportunity. Many find the mere mention of the country distasteful.

There’s another country that most would have considered unthinkable to invest in at one time. Many got hot under the collar just at the mention of its name too: the People’s Republic of China.
If you had followed their thinking, you would have missed out on one of recent history’s most powerful economic booms. That’s precisely why you should ditch the conventional wisdom when it comes to thinking about profiting from Iran. If you don’t, you could be letting a once-in-a-generation opportunity pass you by.

Recently, I discussed investing in Iran with legendary investor Jim Rogers. He told us:
I bought Iranian shares in 1993, and over the next few years, [they] went up something like 47 times, so it was an astonishing success.

That was then. Now, additional sanctions make investing directly in Iran off limits to Americans and most Europeans. But that could soon change.

The conclusion of the negotiations on Iran’s nuclear program means the economic floodgates will open. Persia will once again be open for business. It would be a big deal: Iran’s $370 billion economy is by far the largest still excluded from the international financial system.

Iran has the world’s third-largest proven oil reserves (10% of the world’s total) and the second-largest proven natural gas reserves (17% of the world’s total). A tremendous amount of wealth is waiting to be developed.

Iran’s economy is not all about natural resources. The country is home to advanced nanotechnologies and the Middle East’s largest car manufacturer. Its young population of 78 million yearns for iPhones and other Western products, and there’s enormous built-up demand. That demand is getting ready to explode like Mt. St. Helens.

European and Asian companies have been scrambling to Tehran to line up business deals.
In short, the opening of Iran is a massive opportunity.

Even if the West doesn’t lift the sanctions, Iran will simply turn to the East to do business. Either way, the Iranian economy is on course to experience one of the greatest booms in recent history. It’s on a scale the world hasn’t seen since the opening of China. Opportunities like this don’t happen every day, every year, or even every decade.

But for the average American, Iran is at the bottom of the list of potential investment destinations. That’s what more than 30 years of hostility and charter membership in the “Axis of Evil” will do.
The sentiment couldn’t get any worse. As a contrarian, that’s just how I like it. But only if there is a solid reason to believe that the negative sentiment is misplaced. In the case of Iran, I am certain that it is.

In the not-so-distant past, I used to live in the United Arab Emirates… right across the Persian Gulf from Iran. Being there gave me the chance to see the country firsthand.

On the Ground in Iran

Hands down, Iran is the most fascinating country I’ve ever been to.
I’ve been to almost every country in the Middle East. Iran stands out for a number of reasons. Unlike most other states in the Middle East, Persia is not an artificial construct. By race, religion, and social history, it is a nation. And European bureaucrats didn’t dream up Iran by drawing zig-zags on a map. The map reflects the geographic reality of a country with natural, fortress-like, mountain borders.
For an American, getting there isn’t easy. But that’s part of the allure.

You can’t simply hop on a flight to Tehran from New York, like you would to Vancouver or London. You can’t enter the country unless the Iranian government has granted you permission in advance. And they take their careful time.

The US has no diplomatic relations with Iran. There is no Iranian embassy or consulate in the US at which to apply for a visa, but there is an Iranian interests section in the Pakistani embassy in Washington, DC, that can handle such requests. I was living near Dubai at the time, so it was easier for me to go to the Iranian consulate there.

But you can’t just drop in to the Iranian consulate and apply for a tourist visa. You have to work with an authorized service to assist you in the process, which is what I did. After I submitted my paperwork and waited a number of weeks, and then waited another couple of weeks, the Iranian government approved my application.

I immediately noticed that the Iranian visa in my passport was not the kind of cheap stamp you often get from Third-World countries. Instead it carried holograms and other anti-counterfeiting features. Things that are associated with documents from developed countries. It was a clue that Iran, a seemingly isolated and underdeveloped place, was more sophisticated than I had expected.
Sanctions have disconnected Iran from the international financial system. Your ATM and credit cards won’t work there. You need to bring cash (US dollars or euros work best) and exchange it for Iranian rials. Iranians also have increasingly returned to gold as a store of value and medium of exchange. This is no surprise. People in all corners of the globe have used gold this way for thousands of years.
As soon as my flight landed in Tehran, my Iranian “tour guide” greeted me. The Iranian government requires that minders accompany Americans at all times. It’s a result of the Iranian government’s not-necessarily unreasonable paranoia. They’d like to prevent Operation Ajax 2.0.

Having a mandatory tour guide wasn’t all bad. Mine was a dual American-Iranian citizen named Ali. Ali had spent a lot of time in California and spoke perfect American English. He took me everywhere I wanted to go. At the end of some days, Ali would let me go off on my own. This gave me the chance to explore Tehran’s affluent northern suburbs and legendary bazaar.

No matter where I went, everyone was genuinely kind and hospitable… even after figuring out I was American. Not what you would expect for a place known for its “Death to America” chants. It became obvious the average Iranian harbors no hatred for Americans. (For more on what life is really like in Iran, I’d suggest you watch travel writer Rick Steves’ video, Rick Steves’ Iran.)

The trip to Iran helped solidify my belief that the country is the ultimate contrarian opportunity. It revealed the reality hiding behind the frenzied sentiment of conventional thinking. It was just waiting for the right catalyst. And now that catalyst is at hand. The conclusion of the nuclear negotiations and the relaxation of sanctions will release all the massive, built-up economic potential.

The rationale for profiting from the opening of Iran is clear. Finding a practical way to do so is not. There is a way, however… and a good one. One that is easily accessible through any brokerage account to US investors and is completely legal for them. 

For all the details click here to check out the latest issue of Crisis Speculator.
The article was originally published at internationalman.com.