When the war began in Europe in September 1939, Reza Shah declared Iran's neutrality. However, after the Germans attacked the Soviet Union in June 1941, Iranian involvement in the war became inevitable. The USSR and Great Britain, Iran's perennial enemies, once again formed an alliance. As German troops pushed eastward and threatened the Caucasus, the strategic significance of Iran for the Allies grew. The Allied objectives in Iran were to protect the British-controlled oil fields in Khuzistan; to employ Iran and, in particular, its newly built Trans-Iranian Railroad to channel military supplies to the Soviet Union; and to curb the activities of German agents in Iran.
The British and Soviet representatives in Iran demanded that the government expel German nationals and let the Allies use the railroad to transport war materials. When Reza Shah refused to comply on the grounds of Iran's neutrality, the Allies invaded and occupied the country. On 25 August 1941, Soviet forces entered Iran from the northwest and the British entered from Iraq. The Allied forces suppressed Iranian military and naval resistance in just three days. Left with no choice, Reza Shah abdicated on September 1941, and his 22-year-old son, Muhammad Reza, succeeded him. Reza Shah was sent into exile and died in 1944 in South Africa.
The fate of Iran in World War II resembled that which had prevailed in World War I: once more, Iran was occupied and dominated by foreign powers. The Soviet and British zones of occupation were consistent with the spheres of influence into which Iran had been divided by the humiliating Anglo-Russia Convention of 1907. The Soviets occupied the north, the British took control in the south, and Tehran and other central areas were put under joint Anglo-Soviet protection. In January 1942, Iran, the Soviet Union, and Great Britain signed the Tripartite Treaty of Alliance, whereby the great powers promised to respect the territorial integrity, sovereignty, and political independence of Iran; to safeguard the Iranian economy from the effects of the war; and to withdraw from Iranian territory within six months of the cessation of hostilities.
By the spring of 1942, Iran had severed diplomatic relations with Germany, Italy, and Japan and expelled their nationals. On 9 September 1943, Iran declared war on Germany. Two months later, one of the most important Allied meetings of the war, the Tehran Conference, was held, with the participation of U.S. President Franklin D. Roosevelt, British Prime Minister Winston L. S. Churchill, and Soviet leader Josef Stalin. Recognizing the help provided by Iran to their war effort, the three Allied leaders promised during the meeting to provide economic assistance to Iran and address its problems after the war.
The war had a devastating impact on Iran. It lost effective sovereignty to the domination of the occupying powers, and the central government that had been strengthened by Reza Shah became ineffective. Political instability and social disintegration grew, and economic hardship developed. Further, the use of major roads and the Trans-Iranian Railroad for the transportation of supplies to the Soviet Union disrupted Iranian trade; the demands of Allied troops aggravated inflation; and a poor harvest in 1942 led to widespread famine. Short-lived cabinets were unable to deal with the emergency situation, resulting in social unrest and the rise of separatist movements. All of these factors and the new political freedom resulting from the paralysis of a dysfunctional government led to a surge in political activity by various groups and parties. Political conflict among them was encouraged by the occupying powers.
During the course of their involvement, the Soviet Union and Britain revived and intensified their rivalry in Iran, a contest that was an integral part of what had been known as the "Great Game" in the late nineteenth and early twentieth centuries. Each side tried to expand its own influence and to limit the other's influence. The Soviets closed their zone of occupation to free entry. They supported left-wing trade unions in the north and the Communist Party, which had been banned in 1937 but was revived in 1941 under the new name of Tudeh (Masses). The Soviets also patronized the separatist leftist movements in Iranian Kurdistan and Azerbaijan. One result of these Soviet activities was the establishment of an autonomous state of Azerbaijan in December 1945. Meanwhile, the British in the south supported conservative elements, including the tribes, Muslim clerics, and the proponents of monarchy. They also sponsored the right-wing, pro-Western, and anticommunist National Will Party.
During the war, Washington became aware of the economic importance of Iran, stemming from its oil and its strategic location. After the United States entered the war, American troops arrived in Iran. The Persian Gulf Command, which eventually numbered 30,000 men, helped orchestrate the movement of supplies from the gulf to northern Iran, where they were handed over to the Soviets. American financial and military advisers were also sent to Iran at the request of the Iranian government. Between 1942 and 1943, a financial mission headed by Arthur Millspaugh worked on reorganizing Iran's finances. A mission headed by Colonel H. Norman Schwarzkopf took charge of the reorganization of the Gendarmerie (rural police).
In the first half of 1944, two American oil companies and then the Soviet government attempted to receive oil concessions from the Iranian government in order to undermine the monopoly of the Anglo-Iranian Oil Company. The Majles (Parliament), however, passed a bill, authored mainly by Mohammad Mossadeq, that prohibited oil-concession agreements with any foreign company until after the end of the war.
British and American troops withdrew from Iran in January 1946, whereas the Soviet occupation of the northern provinces of Azerbaijan and Kurdistan lasted until May 1946 when, under pressure from the United Nations, the Soviets withdrew.
Lenczowski, George. Russia and the West in Iran, 1918–1948: A Study in Big-Power Rivalry. Ithaca, NY: Cornell University Press, 1949.; Ramazani, Rouhollah K. Iran's Foreign Policy, 1941–1973: A Study of Foreign Policy in Modernizing Nations. Charlottesville: University Press of Virginia, 1975.; Saikal, Amin. The Rise and Fall of the Shah. Princeton, NJ: Princeton University Press, 1980.; Wilber, Donald N. Iran: Past and Present. Princeton, NJ: Princeton University Press, 1955.