History has charitably characterized the Mossadegh period as a democratic revolution in the making. But Iranian politics was not then truly moving in the direction of liberal democracy. Mossadegh talked of reducing the power of the Shah but was amassing power in his own hands and was quick to cross the constitution when it suited him—including dismissing the parliament in 1953. Far from liberal democracy, Iran seemed to heading for the familiar story of an elected Third World politician riding the wave of nationalism and transforming himself into an authoritarian ruler, leaving his country broken in the process.
As Mossadegh stepped up tensions with Britain, cutting off diplomatic relations in October 1952, the British government requested U.S. assistance, suggesting that the United States collaborate in overthrowing Mossadegh. The Truman administration refused to take direct military or diplomatic action against Iran, fearing that Mossadegh was naïve about the Soviet threat and too close to the communist Tudeh Party, which had backed Mossadegh’s election. Cold war paranoia fueled fear that Iran would join the Soviet sphere of influence. Shortly after Dwight Eisenhower won the presidency in the 1952 election, he approved a plan for the CIA to sponsor a propaganda campaign to foment protest against Mossadegh, allocating $1 million in funding to the plan (of which not much more than $60,000 was eventually spent), which was dubbed Operation Ajax.
The CIA urged the Shah to execute his constitutional authority to remove Mossadegh from office, but he resisted doing so, and in a preemptive move, Mossadegh, who had learned of the intentions against him, announced that he was dissolving parliament and he organized a national plebiscite to affirm his hold on power.
His extreme moves ignited further agitation against him, and the crisis came to a head when, in August 1953, the Shah finally did formally dismiss Mossadegh from power. When Mossadegh refused to step down, the Shah fled the country to Rome, appointing retired General Fazlullah Zahedi prime minister. With Mossadegh still in charge and the Shah gone, however, the Anglo-American plan failed and the crisis deepened. Massive protests erupted in the streets of Tehran and around the nation, with brutal fighting breaking out between pro-Shah and pro-Mossadegh factions. Four days later General Zahedi, widely popular in the royalist military, led troops to storm the capital in a second coup attempt. Mossadegh surrendered to Zahedi the next day, and the Shah was reinstalled in power. It has been common wisdom that the CIA did all the heavy lifting for the coup, but in reality it was General Zahedi, taking advantage of the growing popular apprehension with the worsening situation, who planned and led the second coup that won the day.