The Anglo-Iranian Oil Company is unable to continue operations and as a result Britain boycotts the purchase of Iranian oil. A power struggle between the Shah and Mossadeq ensues. 22 August - With the help of western backing, mainly due to oil interests in the country, the Shah overthrows Mossadeq in a coup d'etat staged by General Fazlollah Zahedi. He launches the 'White Revolution', a programme of land reform and social and economic modernization. September - The Shah's policies alienate the clergy and his authoritarian rule leads to riots, strikes and mass demonstrations.
Martial law is imposed.
The Islamic Republic of Iran is proclaimed following a referendum. They demand the extradition of the Shah, in the US at the time for medical treatment, to face trial in Iran. His government begins work on a major nationalization programme. July - The exiled Shah dies of cancer in Egypt. This marks the beginning of a war that will last eight years.