The 1953 coup d'état, known in Iran as the 28 Mordad Coup, was organized and orchestrated by the United Kingdom and United States, along with the Pahlavi Dynasty, to remove and replace Mohammad Mossaddegh, the democratically elected prime minister of Iran from his position of power, and replace him with the pro-American Shah Mohammed Reza Pahlavi. The British called it Operation Boot, while the Americans named it the TPAJAX Project (The prefix TP indicated that the project was to be carried out in Iran. This was the first time the CIA worked to undermine a democratically elected government, and their success there encouraged them to carry out a similar plan in Guatemala, the following year.
In 1908, an UK based financier William D'Arcy struck oil in Iran, and started the Anglo-Persian Oil Company (APOC), which would later become British Petroleum. Britain eventually succeeded in forcing the government of Iran to accept the Anglo-Persian Agreement, which gave Britain complete control over Iran's treasury, transport, army, and communications network.
However, in 1951, Mohammad Mossaddegh, the newly elected prime minister of Iran, who was firmly against Britain's exploitation of his country, attempted to nationalize the country's oil industry, without any compensation to APOC. This occurred mainly because APOC refused to allow an audit of their accounts to check if the Iranian government had received the royalties that they were supposed to get. The government then demanded that they get an equal share in the revenue of the company. APOC finally ceased their operations, rather than accepting these demands.
Unsurprisingly, this move, and Mossaddegh's socialist stand really riled the men sitting in the British parliament. Despite severe international embargoes, and closure of Iran's export markets, Mossaddegh refused to back down against this international pressure. Looking to keep control of the oil in Iran, and wanting to stop the loss of more power after the recent independence of India, the prime minister of Britain, Winston Churchill, approached the United States for support, and he got it when Dwight Eisenhower was elected into the President's office in 1953. It is widely believed that Eisenhower gave his support because he feared that Russia would invade a vulnerable Iran, and become a communist threat in the ongoing Cold War.
The new Secretary of State John Foster Dulles, the Deputy Director of the CIA Allen Dulles, and CIA field commander Kermit Roosevelt, all came together to plan the coup against Mossaddegh. The CIA first organized a guerrilla group, to combat the communist Tudeh Party, which would attempt to seize power in the aftermath of Operation Ajax. To do this, they mad a deal with the Qashqai tribes in southern Iran to create a base for intelligence agencies and US funded guerrilla fighters.
During the operation, CIA agents harassed and bombed the homes of religious leaders to turn them against Mossaddegh. They also used various Iranian politicians to promote propaganda to influence the public against Mossaddegh. The CIA also worked directly with royalist army officers and sent numerous envoys to persuade the Shah to agree with the plan, who took a lot of persuading to agree with them. They printed articles and cartoons in the newspapers, and started a campaign of bombings done by Iranians in the guise of members of the communist party.
The British played a background role in the operation by providing finances, and using their agents to influence the members of the Iranian parliament. Also, huge amounts were paid in bribes to various civil and army officers, along with bureaucrats and other people of influence.
On the 15th of August, the CIA started the operation, but was almost immediately compromised by a talkative Iranian officer, whose words were sent on to Mossaddegh. This advance warning resulted in the capture and detention of several key players in the coup, and the project was almost abandoned by the Americans, who had lost direction completely. The situation was further worsened after it was found that the Shah had fled from Tehran to Baghdad.
On the 17th of August, lulled by the failure of the coup and the disappearance of the Shah, Mossaddegh let down his guard, and recalled most of the troops from around the city, believing that the danger had passed. However, the operation was still in shambles, as the Shah left Baghdad for Rome.
The break came on 19th of August, when many newspapers of Tehran released royal decrees written by the Shah, which removed Mossaddegh from the post of prime minister. This led to a change in public opinion, and with the covert leadership of the CIA, large crowds swiftly overtook government forces and replaced them with pro-Shah people. Mohammad Mossaddegh and his supporters were rounded up and replaced with people who had supported Ajax.
Immediately after the coup, the CIA sent USD 5 million to support the new government. The success of Operation Ajax restored power to the previous ruler of Iran - Shah Mohammad Reza Pahlavi, who greatly increased the import of arms and aid from the US to increase the development of the oil industry in Iran. Mossaddegh was tried and convicted for treason, and he spent 3 years in prison, followed by house arrest for the rest of his life. Many of his supporters were imprisoned, tortured, and executed.
As a part of the deal with the British, the APOC was to be restored, but in turn they gave up their monopoly on Iran's oil industry. Five major US oil companies were allowed to operate in Iran, along with APOC. The US also gained the added advantage that the Iranian government would not ally itself with the Soviet Union. With the removal of British embargoes, the economy of the country improved, and this led to widespread westernization of the country. Eventually, however, the Shah's abuse of his power made him highly unpopular among the common people, which worsened when he started ruling Iran as a dictator, finally ending with the Iranian Revolution in 1979.
Operation Ajax of Iran and the CIA coup in 1953 is now viewed as a dark chapter in the history of Iran, as it is believed that Operation Ajax was highly responsible for the ill-feeling towards the US in Iran, which led to the Iranian hostage crisis where 52 hostages were kept prisoners in the US embassy in Tehran for close to 2 years, and also for the Iranian Revolution, which led to the exile of Reza Shah, and the installation of the anti-western cleric Ayatollah Khomeini as the leader of Iran.