The explosion of oil prices in the preceding four years had given the shah a windfall of revenues, and he used this money to fund a massive economic and military buildup. Tens of thousands of U.S. technicians were provided to install and maintain an enormous arsenal and to train Iranians to use it. But when oil prices declined, Iran was hugely over-extended. Disaffection with the shah’s rule, which had been simmering for years, burst into the open.
The revolution
During the first two years of the Carter administration, Iran went through a wrenching societal transformation that steadily gathered momentum. Both Washington and the shah’s own forces were constantly surprised at the speed of events, and the shah could not maintain control. Opposition forces, led from abroad by Ayatollah Ruhollah Khomeini, took over the streets of Tehran in December 1978, and the shah left the country the following month.
Khomeini returned to Tehran on February 1, 1979, and 10 days later the monarchy fell and was replaced by an Islamic revolutionary government. This was the first contact between the United States and radical, political Islam. It set the tone for future dealings with Iran and other radical Islamic states.
The United States attempted to develop a working relationship with the new government. Some modest progress was made in the summer of 1979 with the relatively secular, technocratic provisional government of Prime Minister Mehdi Bazargan and Foreign Minister Ibrahim Yazdi.
U.S. Embassy seizure
But in October 1979, President Carter reluctantly permitted the shah, who was desperately ill with lymphoma, to enter the United States for medical treatment. This triggered a violent reaction in Tehran. Mobs of students invaded the U.S. Embassy on November 4, taking its occupants prisoner and demanding the return of the shah and his financial assets to Iran. Khomeini threw his support behind the students and the Bazargan government was dismissed, thus beginning a 444-day siege usually referred to as the hostage crisis.
