--- category: "Country" tags: - Country - MiddleEast - IranContra - OctoberSurprise - ArmsTrade summary: "Middle Eastern state whose 1953 coup, Israeli-trained secret police, 1979 revolution and hostage crisis, and wartime arms purchases underlie the October Surprise and Iran-Contra affairs." created: 2026-05-13 updated: 2026-09-22 --- ### The Oil Consortium The consortium that resumed operation of Iran's oil industry after the 1951 nationalization of the [[Anglo-Iranian Oil Company]] was assembled between December 1953 and October 1954. Its composition, as set out on April 1, 1954, gave the Anglo-Iranian company 40 per cent, [[Royal Dutch Shell]] 14 per cent, the [[Compagnie Française des Pétroles]] 6 per cent, and 8 per cent each to five American companies: [[Standard Oil]] of New Jersey, [[Socony-Vacuum]], [[Standard Oil of California]], [[Gulf Oil]] and [[The Texas Company]].[^1] A report from the former Under Secretary of State [[Herbert Hoover Jr.]] of January 21, 1954 identified those five as the companies then named in the pending cartel antitrust case.[^2] The 1974 Senate print that published the consortium papers carries a preface by [[Frank Church]] describing two policies of the government in conflict, the prosecution of the international petroleum cartel case and the creation of the Iranian consortium.[^3] On January 20, 1954 Attorney General [[Herbert Brownell Jr.]] advised the National Security Council that the consortium, organized as described, did not violate the antitrust laws, subject to the express reservation of the government's right to continue the pending action against the Standard Oil Company of New Jersey and others.[^4] A joint Iranian-British statement of August 5, 1954 set compensation to the Anglo-Iranian company at 25 million pounds payable over ten years, free of interest.[^5] On September 21, 1954 the Finance Minister introduced into the Majlis a bill to ratify an agreement signed by Iran and the [[National Iranian Oil Company]] on one side and eight companies on the other, including the five American companies;[^6] the Iranian Senate ratified the agreement on October 28, 1954 by 41 votes to 4, with 3 abstentions.[^7] ### The Shah In August 1953 the [[Central Intelligence Agency|CIA]] under [[Allen Dulles]], working with British intelligence, carried out [[Operation AJAX]], the coup that overthrew Prime Minister [[Mohammad Mosaddegh]] and restored [[Mohammad Reza Pahlavi]] to full power; according to [[Ari Ben-Menashe]], [[Miles Copeland]] helped [[Kim Roosevelt|Kermit Roosevelt]] and the Iranian military restore the Shah.[^8][^9] The Shah's internal security service, [[SAVAK]], was established in March 1957 with organizational help from the CIA and the [[Mossad]], which kept a close liaison with it from the mid-1950s; SAVAK watched Iranian students and dissidents abroad, including in the [[United States]].[^10] [[Yaacov Nimrodi]] was Israel's military attaché in [[Tehran]] from 1955 to 1968, and [[Richard Helms]] was sent there as American ambassador in February 1973 after leaving the CIA.[^11][^12] With the intelligence services of [[France]], [[Saudi Arabia]], [[Egypt]] and [[Morocco]], SAVAK belonged to the [[Safari Club]] of the 1970s.[^13] ### Revolution and Hostages The Shah left Iran on January 16, 1979, and [[Ayatollah Ruhollah Khomeini]] returned on February 1; the Islamic Republic was declared on April 1. According to Ben-Menashe, the CIA and SAVAK had asked for Israeli help in December 1978 with a plan to assassinate Khomeini, which the Shah rejected.[^9][^14] On November 4, 1979, students seized the American embassy in Tehran; fifty-two Americans were held for 444 days. During the crisis the CIA and the Pentagon tasked remote viewers hundreds of times on the hostages' whereabouts.[^15][^16] In April 1980 the rescue attempt, [[Operation Eagle Claw]], which [[Richard Secord]] helped plan, ended at the Desert One staging area with eight Americans dead.[^17] ### October Surprise [[Gary Sick]], the [[National Security Council]]'s Iran officer under Ford, Carter and Reagan, alleged in 1991 that the Reagan campaign had negotiated with Iranian representatives to hold the hostages until after the election of November 4, 1980, in exchange for the release of frozen assets and arms through [[Israel]]. In his account the brothers [[Cyrus Hashemi|Cyrus]] and [[Jamshid Hashemi]] arranged meetings in [[Madrid]] in late July 1980 between [[William J. Casey|William Casey]], the campaign manager, and the cleric [[Mehdi Karrubi]]; former French intelligence chief [[Alexandre de Marenches]], through his biographer's sworn testimony, said he arranged meetings between Casey and Iranians in Paris in October 1980. The hostages were freed on January 20, 1981, the day of Reagan's inauguration, and Nimrodi sold Iran's defense ministry Hawk missiles worth 135.8 million dollars that year.[^15] The [[House October Surprise Task Force]] rejected the allegation in January 1993; a Russian intelligence report stating that "William Casey, in 1980, met three times with representatives of the Iranian leadership" reached the task force after it had closed its inquiry, and was later found by [[Robert Parry]] in its files. A Senate inquiry found that Casey had run "potentially dangerous" efforts to collect intelligence on Carter's negotiations.[^18][^19] In 2023 the former Texas House speaker [[Ben Barnes]] said he had accompanied [[John Connally]] on a [[Middle East]] tour in the summer of 1980 on which Connally told Arab leaders to advise Iran to wait for Reagan.[^20] ### The War with Iraq [[Saddam Hussein]]'s [[Iraq]] invaded Iran on September 22, 1980; the war ended with Iran's acceptance of Security Council Resolution 598 on July 20, 1988. From about 1982 the Reagan administration tilted toward Iraq, and the CIA supplied it with satellite imagery of Iranian positions while American intelligence tracked Iraq's use of chemical weapons against Iranian troops.[^21] Israel supplied Iran throughout: according to Ben-Menashe, Prime Minister [[Menachem Begin]] formed the [[Iran-Israel Joint Committee]] in the fall of 1980 to run the trade, and the defense minister, Colonel [[Mohammed Jalali]], met [[Robert Gates]] in Kansas City in July 1987 for assurances that supply would continue.[^14] ### Iran-Contra The arms-for-hostages channel of the [[Iran-Contra Affair]] opened in August 1985 with 96 [[TOW Missile|TOW]] missiles shipped from Israeli stocks through Nimrodi, [[David Kimche]] and [[Al Schwimmer]], with [[Manucher Ghorbanifar]] as the Iranian intermediary and [[Adnan Khashoggi]] providing bridge loans. [[Oliver North]] brought in Secord and [[Albert Hakim]], an Iranian-born dealer who had sold defense goods to the Shah's government, to run [[The Enterprise (Iran-Contra)|the Enterprise]], which marked up the weapons and took about 48 million dollars from the sales; about 2,000 TOW missiles reached Iran in all. In October 1986 Hakim negotiated in Geneva with a relative of [[Ali Akbar Hashemi Rafsanjani]], speaker of the parliament, a nine-point plan that went beyond anything the [[White House]] had authorized.[^17][^22] On November 3, 1986, the Lebanese magazine *Al-Shiraa* published the arms sales, and the next day Rafsanjani described to parliament the visit of [[Robert McFarlane]] and North to Tehran that May with a Bible signed by Reagan.[^17] The [[Hashemi Sting]] of 1985 and 1986, a [[U.S. Customs]] and [[Federal Bureau of Investigation|FBI]] operation run with the office of [[Rudolph Giuliani]], used Cyrus Hashemi, himself indicted in 1984 for arms sales to Iran, as its informant against dealers selling to Iran while the government's own sales were under way. He died suddenly after his role became known to those he had helped entrap; no inquiry concluded that there was foul play.[^19][^14] ### Footnotes [^1]: Foreign Relations of the United States, 1952-1954, Volume X, Iran, 1951-1954, Document 449, April 1, 1954. https://history.state.gov/historicaldocuments/frus1952-54v10/d449 [^2]: Foreign Relations of the United States, 1952-1954, Volume X, Document 413, Hoover to the Secretary of State, January 21, 1954 ("The five United States companies now named in the Cartel antitrust case are the only ones from this country who meet such a criteria"). https://history.state.gov/historicaldocuments/frus1952-54v10/d413 [^3]: U.S. Congress, Senate, Committee on Foreign Relations, Subcommittee on Multinational Corporations, The International Petroleum Cartel, the Iranian Consortium, and U.S. National Security (committee print, February 21, 1974), preface by Senator Frank Church, p. V. https://archive.org/details/TheInternationalPetroleumCartelTheIranianConsortiumAndU.S.NationalSecurity [^4]: Foreign Relations of the United States, 1952-1954, Volume X, Document 411, Brownell to the National Security Council, January 20, 1954 (action pending as Civil No. 86-27, Southern District of New York). https://history.state.gov/historicaldocuments/frus1952-54v10/d411 [^5]: Foreign Relations of the United States, 1952-1954, Volume X, Documents 489 and 490, August 5, 1954. https://history.state.gov/historicaldocuments/frus1952-54v10/d490 [^6]: Foreign Relations of the United States, 1952-1954, Volume X, Document 496, September 21, 1954 (text of the single-article bill; signatories Gulf, Socony Vacuum, Standard Oil Company of New Jersey, Standard Oil Company of California, the Texas Oil Company, the Anglo-Iranian Oil Company, N.V. Bataafsche Petroleum Maatschappij and Compagnie Francaise des Petroles). https://history.state.gov/historicaldocuments/frus1952-54v10/d496 [^7]: Foreign Relations of the United States, 1952-1954, Volume X, Document 502, editorial note (agreement in principle signed August 5, 1954; ratified by the Iranian Senate October 28, 1954). https://history.state.gov/historicaldocuments/frus1952-54v10/d502 [^8]: Kinzer, Stephen. *The Brothers: John Foster Dulles, Allen Dulles, and Their Secret World War.* Times Books, 2013; Grose, Peter. *Gentleman Spy: The Life of Allen Dulles.* Houghton Mifflin, 1994. [^9]: Ben-Menashe, Ari. *Profits of War: Inside the Secret U.S.-Israeli Arms Network.* Sheridan Square Press, 1992. [^10]: "SAVAK," *Encyclopaedia Britannica.* https://www.britannica.com/topic/SAVAK ; Risen, James. *State of War: The Secret History of the CIA and the Bush Administration.* Free Press, 2006. [^11]: "Yaakov Nimrodi," obituaries, July 2016, as cited on the linked page. [^12]: Powers, Thomas. *The Man Who Kept the Secrets: Richard Helms and the CIA.* Knopf, 1979. [^13]: Trento, Joseph J. *Prelude to Terror: The Rogue CIA and the Legacy of America's Private Intelligence Network.* Carroll and Graf, 2005. [^14]: Ben-Menashe, *Profits of War*. [^15]: Sick, Gary. *October Surprise: America's Hostages in Iran and the Election of Ronald Reagan.* Times Books, 1991. [^16]: Schnabel, Jim. *Remote Viewers: The Secret History of America's Psychic Spies.* Dell, 1997. [^17]: Walsh, Lawrence E. *Final Report of the Independent Counsel for Iran/Contra Matters.* 1993; Walsh, Lawrence E. *Firewall: The Iran-Contra Conspiracy and Cover-Up.* Norton, 1997; Secord, Richard, with Jay Wurts. *Honored and Betrayed.* Wiley, 1992. [^18]: "Probe by House finds no 'October surprise,'" *The Baltimore Sun,* January 13, 1993. https://www.baltimoresun.com/news/bs-xpm-1993-01-13-1993013111-story.html [^19]: Parry, Robert. *Trick or Treason: The October Surprise Mystery.* Sheridan Square Press, 1993. [^20]: Unger, Craig. *Den of Spies.* 2024; Barnes, Ben, interview, *The New York Times,* March 2023. [^21]: Friedman, Alan. *Spider's Web: The Secret History of How the White House Illegally Armed Iraq.* Bantam, 1993. [^22]: U.S. Congress, Joint Committees on Iran-Contra. *Report of the Congressional Committees Investigating the Iran-Contra Affair.* 100th Congress, 1st Session, 1987.