1979 coup d'état
In February 1979, less than a year before the crisis, the Pahlavi dynasty was overthrown during the Iranian Revolution. For several decades before that, the United States had allied with and supported the Shah. During World War II, Allied powers Britain and the Soviet Union occupied Iran to force the abdication of first Pahlavi monarch Reza Shah Pahlavi, in favor of his eldest son, Crown Prince Mohammad. The Allies feared that Reza Shah intended to align his petroleum-rich country with Nazi Germany, but Reza Shah's earlier declaration of neutrality, and his refusal to allow Iranian territory to be used to train or supply Soviet troops against Germany, were the strongest motives for the Allied invasion of Iran. Because of its importance in the Allied victory, Iran was subsequently called "The Bridge of Victory" by Winston Churchill.
By the 1950s Mohammad Reza Pahlavi was engaged in a power struggle with Iran's prime minister, Mohammad Mosaddegh, an immediate descendant of the preceding Qajar dynasty. Mosaddegh led a general strike on behalf of impoverished Iranians, demanding a share of the nation's petroleum revenue from Britain's Anglo-Iranian Oil Company. However, he overstepped in trying to get $50 million in damages and lost revenue from the British. In 1953, the British and American spy agencies helped Iranian royalists depose Mosaddegh in a military coup d'état codenamed Operation Ajax, allowing the Shah to extend his power. The Shah appointed himself an absolute monarch rather than a constitutional monarch, his position before the 1953 crisis, with the aim of assuming complete control of the government and purging the disloyal. The U.S. continued to support and fund the Shah after the coup, with the Central Intelligence Agency training the government's SAVAK secret police. In the subsequent decades of the Cold War, various economic, cultural, and political issues united opposition against the Shah and led to his overthrow.
Months before the revolution, on New Year's Eve 1977, President Carter further angered anti-Shah Iranians with a televised toast to Pahlavi, declaring how beloved the shah was by his people. After the revolution culminated in February 1979 with the return of Ayatollah Ruhollah Khomeini from France, the American Embassy was occupied and its staff held hostage briefly. Rocks and bullets had broken so many of the embassy's front-facing windows that they had been replaced with bulletproof glass. The embassy's staff was reduced to just over 60 from a high of nearly one thousand earlier in the decade.
The Carter administration tried to mitigate anti-American feeling by promoting a new relationship with the de facto Iranian government and continuing military cooperation in hopes that the situation would stabilize. However, on October 22, 1979, the United States permitted the Shah, who had lymphoma, to enter New York Hospital-Cornell Medical Center for medical treatment. The State Department had discouraged the request, understanding the political delicacy. But in response to pressure from influential figures including former Secretary of State Henry Kissinger and Council on Foreign Relations Chairman David Rockefeller, the Carter administration decided to grant it.
The Shah's admission to the United States intensified Iranian revolutionaries' anti-Americanism and spawned rumors of another U.S.–backed coup that would re-install him. Ayatollah Khomeini, who had been exiled by the shah for 15 years, heightened the rhetoric against the "Great Satan", as he called the United States, talking of "evidence of American plotting". In addition to ending what they believed was American sabotage of the revolution, the hostage takers hoped to depose the provisional revolutionary government of Prime Minister Mehdi Bazargan, which they believed was plotting to normalize relations with the United States and extinguish Islamic revolutionary order in Iran. The occupation of the embassy on November 4, 1979, was also intended as leverage to demand the return of the shah to stand trial in Iran in exchange for the hostages.
A later study claimed that there had been no American plots to overthrow the revolutionaries, and that a CIA intelligence-gathering mission at the embassy had been "notably ineffectual, gathering little information and hampered by the fact that none of the three officers spoke the local language, Persian." Its work, the study said, was "routine, prudent espionage conducted at diplomatic missions everywhere."