The untold story of the last US mission to Iran under the Shah

Nearly fifty years later, Iran International can reveal the untold story of a critical US mission to Tehran ordered by President Jimmy Carter to determine whether Mohammad Reza Pahlavi Shah could fend off a revolution.

Their conclusion, after facing militants' bullets and a ghostly encounter with the shell-shocked monarch, was that the US could no longer support its longtime ally's rule.

The consequences of Islamic Revolution to follow reverberate to the present day.

Ambassador John Craig, 80, was a young American diplomat when he was tasked with joining an exclusive group to meet the Shah alongside Senate majority leader Senator Robert Byrd.

It was a mission that went undisclosed even to American Ambassador to Iran William Sullivan, Craig told Iran International in an interview in Elizabethtown, Pennsylvania, where he teaches at the local university.

In a storied career, Craig went on to serve as US ambassador to Egypt and Oman.

“President Carter asked Senator Byrd to make a special trip to Tehran to give him a personal assessment of the longevity of the Shah. There was great concern in Washington”, said Craig, “Could the Shah hold on? Could the Shah defeat the revolution?”

Their task was to help Carter transcend the disagreements within the US foreign policy over whether one of Washington's key allies in the turbulent region could be salvaged and provide an unvarnished take on the Shah's mettle.

“Some were saying, yes, the Shah could hold on, others no. One of the issues in that debate was how much force should be used to put down the revolution,” said Craig.

"There were those who felt that the Shah should really be aggressive and shoot people. And there were those who felt that reforms were the way to defeat the revolution.”

Ambassador John Craig has Ambassador-in-Residence in the Center for Global Understanding and Peacemaking at Elizabethtown College in Elizabethtown, Pennsylvania.

American politician who served as a United States House of Representatives from West Virginia for over 57 years, from 1953 until his death in 2010.

Mission: Tehran

To camouflage the trip's true purpose, Craig and the rest of the group made a diplomatic tour across the Middle East and the North Africa before arriving in Tehran.

Craig touched down in December 1978, just a few months before the Shah was ultimately toppled and as rebellion roiled cities nationwide.

Violence was escalating and martial law was in place as armed anti-Shah demonstrators roamed the streets chanting ‘death to the Shah!’

Iranian demonstrator holds poster of Khomeini as uprisings swept Iran in 1978.

Because of the security risk, Craig and the team were not able to drive to the Shah’s Niavaran palace and instead flew by helicopter.

“We were flying. You could see out the windows that people were shooting at us,” Craig said.

When they arrived, Craig said he was astonished to see bare walls - no paintings, no antiques - in what was once among the world's most opulent palaces.

It became clear that the Shah was preparing to flee.

Interior of Niavaran palace which is now a museum open to the public in Northern Tehran.

“I'm saying to myself, this is really weird. I said to myself immediately, these guys have packed up. They are ready to go. No question about that,” Craig said.

Entering the palace’s Hall of Mirrors, Craig caught sight of the Shah and his wife, Empress Farah Diba, standing to greet them.

'Inert' emperor

“He was comatose. Standing, but inert,” said Craig.

“I noticed that the Shah was looking straight ahead. He was not interacting. His eyes weren't moving. He did not raise his hand. But when the person put their hand in his hand, he didn't grasp it and he didn't shake it,” Craig said.

Mohammad Reza Shah Pahlavi, his wife Empress Farah Diba and their son, the crown prince.

They went on to have lunch in the palace. Craig said the Shah did not speak once over the course of the meal, leaving the Empress to do all the talking. She appeared to be in control and running the country in the last days of their rule, Craig concluded.

“He didn't eat. He didn't move. He didn't say a word,” said Craig about the Shah.

Pleasantries and small talk dominated the discussion and the violence in the streets went unmentioned. Senator Byrd and Ambassador Craig left convinced that the Shah was unfit to rule.

Little did anyone at the time realize it, but the lunch was to help determine US policy and Iran's future course for the coming decades.

Screaming match

What followed next was a visit by Senator Byrd and Ambassador Craig to Ambassador Sullivan’s house in Tehran to break the news on the special visit.

While Ambassador Craig did not partake in the conversation, he could hear what Sullivan and Byrd were saying.

“There was a lot of screaming and yelling. They were arguing about what our policy should be going forward,” said Craig on the encounter between the two men.

William H. Sullivan, the last American ambassador to Iran.

The conversation lasted about three hours, with Sullivan coming to the defense of the Shah and pushing to have the Americans keep him in power. Byrd argued the Shah was already done for and unable to rule over a people in revolt.

On the flight back to the United States, Senator Byrd prepared his report to Carter.

“We were such a small group, of course, that we could hear what the senator was dictating in the memo to the president. So we we all knew what the senator was saying in his memo,” said Craig.

Once they arrived back to D.C, the Senator had a car waiting to take him straight to the White House, where he informed the president of his dire conclusion: the scion of Iran's 2,500-year monarchy was doomed.

“He went back and told the president: This is not going to work," Craig said.

"The Shah cannot continue.”

You can watch the full interview with Ambassador John Craig on YouTube.

Khamenei, IRGC boost share of Iran’s oil revenues and state assets

Apr 3, 2025, 11:06 GMT+1

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Dalga Khatinoglu

Iran's newly published budget law reveals the Islamic Revolutionary Guard Corps’ (IRGC) major share of oil revenues and public funds—and opens the door for the IRGC and Supreme Leader–linked institutions to take control of state assets.

In the past Iranian year, which ended on March 20, a portion of the country’s oil exports was allocated to the armed forces—particularly the IRGC—under the pretext of “strengthening national defense.” This year not only has the military’s share of oil export revenues grown significantly, but direct government budget allocations to the armed forces have also sharply increased. Additionally, the law expands the authorization for crude oil transfers to other entities, including those involved in nuclear programs.

Meanwhile, the budget law allows IRGC-affiliated entities—such as Khatam al-Anbiya Construction Headquarters—as well as institutions linked to Supreme Leader Ali Khamenei’s office, like the Execution of Imam Khomeini’s Order (EIKO), to acquire state assets as a means of settling government debt owed to them.

Military's share of oil

President Masoud Pezeshkian’s government has projected daily oil exports of 1.85 million barrels for the current fiscal year, which began on March 21. Of this, one-third—valued at $12.4 billion—will be directly allocated to the armed forces and their specialized military projects, a figure that has tripled compared to the previous year. The remaining oil revenues, along with total gas export earnings, estimated at $33.5 billion, will be divided among the government budget, the National Development Fund, and the National Iranian Oil Company.

Another key point is that the government has set the exchange rate for oil allocated to the armed forces at roughly 600,000 rials per euro—while the euro trades at around 1.14 million rials on the open market. This disparity creates a major financial windfall for the military, enabling them to sell the oil and convert the proceeds at market rates, effectively pocketing the difference.

Moreover, the military has priority in oil sales, meaning any decline in national exports will primarily impact the government’s share. If the armed forces are unable to export their allocated share, the government is obligated to compensate them with equivalent cash payments.

Despite the government’s target of exporting 1.85 million barrels of oil per day this fiscal year, data from commodities intelligence firm Kpler—obtained by Iran International—shows that the average daily delivery of Iranian crude to Chinese ports, Iran’s sole oil customer, stood at approximately 1.34 million barrels in the first quarter of 2025. That’s down from a daily average of 1.5 million barrels in 2024.

Additionally, the Trump administration has launched a campaign to reduce Iran’s oil exports to “zero”, and several tanker tracking and energy consulting firms previously told Iran International that Iranian oil exports could drop by about half a million barrels per day in the coming months.

Kpler also reported this week that Chinese independent refineries, known as "teapots," appear to be pausing new orders of Iranian crude oil following Washington's first imposition of sanctions on a Chinese refinery, Shandong-based Shouguang Luqing Petrochemicals.

In addition to the armed forces, the Iranian government has authorized five other entities—including those involved in “nuclear energy projects”—to sell oil directly.

At least part of these funds will likely be directed toward nuclear activities unrelated to electricity production, like sensitive and controversial uranium enrichment that the US and its allies object to.

Moreover, beyond revenues from direct oil sales under the so-called “strengthening national defense” initiative, the military and security forces are also set to receive 10% of the government’s general budget for personnel salaries.

Transfer of state assets to the military and supreme leader's office

Amid a lack of transparency surrounding the economic activities of the IRGC and institutions under the Supreme Leader’s control, unofficial reports suggest these entities dominate roughly half of Iran’s informal or “shadow” economy. Over the past two decades, much of the government’s privatization program has veered off course—rather than transferring assets to the true private sector, state-owned properties have been handed over at heavily discounted rates to the IRGC and Supreme Leader–affiliated institutions.

These entities also play a major role in Iran’s infrastructure development. Yet the exact amount the government owes them for state-assigned construction projects remains unclear. What is clear, however, is that the 2025 budget law specifically authorizes the IRGC-linked Khatam al-Anbiya Construction Headquarters and the Supreme Leader–controlled Execution of Imam Khomeini’s Order (EIKO) to receive up to two quadrillion rials (approximately $2 billion) worth of state assets as repayment for outstanding government debts.

This year, the government plans to sell 15.8 quadrillion rials in state-owned assets, of which 13% is earmarked for transfer to the military and institutions tied to the Supreme Leader—if budget targets are met. Given the weakness of Iran’s private sector, it is widely expected that, once again, entities under the IRGC and Supreme Leader’s control will acquire the lion’s share of these assets.