Economic Coercion Ousted Iran's Leader In The 1950S But Won't Now

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While popular with many Iranians, who perceived it as a long overdue measure to reclaim the nation's independence and control its wealth, the move was considered by the British a breach of contract and a theft of its largest overseas asset.

The UK filed complaints with the newly created United Nations Security Council. But in July of that year, negotiations stalled and tensions escalated between Mossadegh – now the prime minister – and the British.

Economic coercion began with the British obstructing Iran's oil sales by informing Iranian tankers that their receipts – issued when cargo is loaded on board – would not be accepted on the international market. In August, the UK stepped up the campaign by imposing a naval blockade against Iran.

In the process, they intercepted oil tankers off the Persian coast and prevented Iran from exporting petroleum to other countries. The British also prohibited the export of key commodities to Iran – such as sugar and steel – and froze Iranian bank accounts and assets in the UK.

That same month, the UK evacuated its British technicians and closed Anglo-Iranian Oil Company refineries and other installations in the city of Abadan.

Mossadegh and his government assumed they could replace the technicians with those from other countries while training Iranians to fill the void. However, through legal threats and agreements, the British convinced other international oil companies in the United States and Europe, except Italy, to refrain from sending personnel.

... to Operation Ajax

Due to the British blockade and embargo, Iran's petroleum production declined by about 96% and its oil income to almost zero between 1950 and 1952.

At the same time, foreign oil companies like British Petroleum and Saudi Aramco doubled their production to offset the economic impact to the UK and the world of reduced or nonexistent production and exports from Iran.

Amid the economic crisis, Mossadegh's inability to alleviate poverty, among other issues, caused his political coalition to fracture and fueled the British and American propaganda campaign against him ahead of his overthrow in Operation Ajax on August 19, 1953.

A year later, the Shah of Iran, Mohammad Reza Pahlavi, consolidated power and signed an oil agreement with the British. In it, Iran's share of the profits increased slightly, while an overwhelming majority of between 75% and 79% continued to be claimed by British and American companies.

In exchange, the British lifted the blockade and enabled Iran to resume exporting oil on the international market.

The difference of deterrence

The UK's campaign to pressure Iran and oust its leader contains parallels with the current conflict. Now, just as then, a Western power is hoping to bring Iranian leadership to its knees – and encourage widespread anti-government protests – through coercive economic actions.

But contrary to the 1950s, Tehran today is better placed to deter its foreign adversary.

While Washington has drastically degraded Iran's conventional military capabilities, including its air force and navy, Tehran has effectively employed drones, missiles and proxies to repeatedly strike US assets in the region.

Back in the 1950s, Iran had no network of sympathetic regional militias like it has today, and it lacked sufficient technology to hit back at a conventionally superior military.

Iran can also counter economic measures. Since the war began in February 2026, Tehran and its partners have continuously targeted the tanker traffic and civilian and energy infrastructure of the Arab Gulf states.

Consequently, it has caused Gulf kingdoms to rethink remaining under the U.S. security umbrella and diversify defense partnerships to include other powers inside and outside the region.