Britain viewed the takeover by Iran as nothing short of a coup d'etat. In fact, even more than that, as a slap in the face and an affront to Britain's honour. Declared Sir Anthony Eden, the British Foreign Secretary:" Our authority throughout the Middle East has been violently shaken by the insolent defiance of decency, legality and reason of a group of wild men in Iran". A sentiment, this, echoed by Dan Acheson - the then US Secretary of State.

The international oil companies quickly swung into action, collectively coming to the defence of one of their own. An attack on Anglo-Iranian Oil was seen as the precursor to an attack on the international oil establishment and on the sanctity of oil companies to the region's oil reserves - especially by the Americans. The major international oil companies, therefore, spearheaded by Exxon cooperated in imposing a worldwide boycott on nationalized Iranian oil. The British and US governments backed the embargo, and Washington pressured the American oil industry to respect the boycott and to refuse to enter into any contract for the exploration and development of Iranian oil resources. The boycott succeeded in cutting off Iranian oil from world markets, devastating that country's economy. So effective was the embargo, that Iranian oil exports dropped from USD 400 million in 1950 to less than USD 2 million in 1952!

Even so, the boycott failed to bring Mossadegh's government down to its knees. In fact, if for nothing else, it served to increase Mossadegh's popularity among the Iranians as well as throughout the Middle East, in that he quickly became a symbol of defiance of British power and Western capitalism. In the face of such popularity Prime Minister Winston Churchill, a strong supporter of British imperial power, became convinced that Mossadegh had to be stopped at all costs, and requested Washington's help to this effect. He found the perfect timing in the transition from the Democratic Administration of Harry Truman to that of Republican Dwight Eisenhower, who was inclined to see Iran as a potential battleground between the United States and the Soviet Union. Eisenhower gave the green light to the CIA, which then dispatched Kermit Roosevelt - the grandson of President Theodore Roosevelt - to Tehran. Roosevelt spent a week meeting secretly with the Shah to win his support for the coup d'etat. Reza Phalavi was initially against a coup for fears that it would fail, but in light of the many concessions made by Roosevelt - including US military support for his regime - the Shah finally agreed.

The coup succeeded. The enormously popular Mossadegh was arrested, tried by a military tribunal, found guilty of treason and incarcerated in a military prison for three years. Upon his release, the Shah ordered Mossadegh to be placed under house arrest until his death, which occurred in 1967.

The US-led coup d'etat became a defining moment in the history of Iran, if not of the entire Middle East. To some extent it served as a lesson and a reminder to those who longed for greater national control over their countries' oil industries. But at the same time, by exposing what many thought of as the imperialistic aims of Western powers, the coup in Iran became a rallying point for anti-Western nationalism in the region for years to come. At the forefront of this anti-Western sentiment were two men - an Egyptian and an Iranian - whose names were to become very well known in the West: Gamal Abdel Nasser (1918 - 1970) and Ruhollah Musavi Khomeini (1900 - 1989).

Nasser's appeal lay in his willingness to defy Western powers, most notably the US, and in his fierce advocacy of Arab sovereignty and unity. In 1956 Nasser claimed Egyptian control of the Suez Canal, the vital conduit for moving oil from Iran to Europe and proceeded to its nationalization, thus precipitating the Suez Canal Crisis. In early October, the United Nations Security Council met on the matter of the Suez Canal and adopted a resolution recognizing Egypt's right to control the canal as long as it continued to allow passage of foreign ships. On October 29, 1956, however, Israeli forces moved into the Sinai Peninsula and on October 31, 1956 a joint force from Britain and France entered the Canal Zone. On November 5, 1956, the Soviet Union issued an ultimatum demanding the withdrawal of all foreign forces from Egypt, and in this the Soviets found an unlikely ally in Washington. Britain, France, and Israel reluctantly complied and gradually removed their forces, thus ending the Suez Canal Crisis.