Mossadegh was turning Iran into a constitutional democracy when the CIA arranged a coup against him. After the coup, the Shah, who had fled the country twice, was put back in power, and with the help of the US, solidified his hold on power and became a dictator who is reviled by Iranians, and as brutal and repressive as Saddam Hussein.


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http://en.wikipedia.org/wiki/Mohammad_Reza_Pahlavi

In the early 1950s, there was a political crisis centered in Iran that commanded the focused attention of British and American intelligence agencies. In 1951 Dr. Mossadegh came to office, committed to re-establishing democracy and constitutional monarchy, and to nationalizing the Iranian petroleum industry, which was controlled by the British. From the start he erroneously believed that the Americans, who had no interest in the Anglo-Iranian Oil company, would support his nationalization plan. He was buoyed by the American Ambassador, Henry Grady. However, during these events, the Americans supported the British, and, fearing that the Communists with the help of the Soviets were poised to overthrow the government, they decided to remove Mossadegh. Shortly before the 1952 presidential election in the US, the British government invited Kermit Roosevelt, Jr., of the CIA to London and proposed they cooperate under the code name �Operation Ajax� to bring down Mossadegh from office.[3]

In 1951, under the leadership of the nationalist movement of Dr. Mohammed Mossadegh, the Iranian parliament unanimously voted to nationalize the oil industry. This shut out the immensely profitable Anglo-Iranian Oil Company (AIOC), which was a pillar of Britain's economy and political clout in the region. A month after that vote, Mossadegh was named Prime Minister of Iran.

Under the direction of Kermit Roosevelt, Jr., a senior Central Intelligence Agency (CIA) officer and grandson of former U.S. President Theodore Roosevelt, the American CIA and British Secret Intelligence Service (SIS) funded and led a covert operation to depose Mossadegh with the help of military forces loyal to the Shah. This plan was known as Operation Ajax.[4] The plot hinged on orders signed by the Shah to dismiss Mossadegh as prime minister and replace him with General Fazlollah Zahedi, a choice agreed on by the British and Americans.

Despite the high-level coordination and planning, the coup initially failed, causing the Shah to flee to Baghdad, then Rome. After a brief exile in Italy, the Shah returned to Iran, this time through a successful second attempt at the coup. The deposed Mossadegh was arrested, given a show trial, and sentenced to solitary confinement for three years in a military prison, followed by house arrest for life. Zahedi was installed to succeed Prime Minister Mossadegh.[5]

The American Embassy in Tehran reported that Mossadegh had near total support from the nation and was unlikely to fall. The Prime Minister asked the Majles to give him direct control of the army. Given the situation, alongside the strong personal support of Eden and Churchill for covert action, the American government gave the go ahead to a committee, attended by the Secretary of State John Foster Dulles, Director of Central Intelligence Allen Dulles, Kermit Roosevelt, Ambassador Henderson, and Secretary of Defense Charles Erwin Wilson. Kermit Roosevelt returned to Iran on 13 July and on 1 August in his first meeting with the Shah. A car picked him up at midnight and drove him to the palace. He lay down on the seat and covered himself with a blanket as guards waved his driver through the gates. The Shah got into the car and Roosevelt explained the mission. The CIA provided $1 million in Iranian currency, which Roosevelt had stored in a large safe, a bulky cache given the exchange rate of 1000 rial = 15 dollars at the time.[6]

The Communists staged massive demonstrations to hijack the Prime Minister�s initiatives. The United States had announced its total lack of confidence in him; and his followers were drifting into indifference. On 16 August 1953, the right wing of the Army reacted. Armed with an order by the Shah, it appointed General Fazlollah Zahedi as prime minister. A coalition of mobs and retired officers close to the Palace, attempted what could be described as a coup d�etat. They failed dismally. The Shah fled the country in humiliating haste. Even Ettelaat, the nation�s largest daily newspaper, and its pro-Shah publisher, Abbas Masudi, published negative commentaries on him.[7]

During the following two days, the Communists turned against Mossadeq. They roamed Tehran raising red flags and pulling down statues of Reza Shah. This frightened the conservative clergies like Kashani and National Front leaders like Makki, who sided with the Shah. On August 18, Mossadeq hit back. Tudeh Partisans were clubbed and dispersed.[8]

Tudeh had no choice but to accept defeat. In the meantime, according to the CIA plot, Zahedi appealed to the military, and claimed to be the legitimate prime minister and charged Mossadegh with staging a coup by ignoring the Shah�s decree. Zahedi�s son Ardeshir acted as the contact between the CIA and his father. On 19 August pro-Shah partisans, organized with $100,000 in CIA funds, finally appeared, marched out of south Tehran into the city center, where others joined in. Gangs with clubs, knives, and rocks controlled the streets, overturning Tudeh trucks and beating up anti-Shah activists. As Roosevelt was congratulating Zahedi in the basement of his hiding place, the new Prime Minister�s mobs burst in and carried him upstairs on their shoulders. That evening, Ambassador Henderson suggested to Ardashir that Mossadegh not be harmed. Roosevelt gave Zahedi $900,000 left from Operation Ajax funds.

The Shah returned to power, but never extended the elite status of the court to the technocrats and intellectuals who emerged from Iranian and Western universities. Indeed, his system irritated the new classes, for they were barred from partaking in real power.[9]