Ignoring international law, Britain and the US opted for the high-risk strategy of regime change in order to pre-empt a volatile enemy in the Middle East. It was not Iraq, however, that was in the firing line but Iran, and the aftershocks are still being felt.
Fifty years ago this week, the CIA and the British SIS orchestrated a coup d'etat that toppled the democratically elected government of Mohammad Mossadegh. The prime minister and his nationalist supporters in parliament roused Britain's ire when they nationalised the oil industry in 1951, which had previously been exclusively controlled by the Anglo-Iranian Oil Company. Mossadegh argued that Iran should begin profiting from its vast oil reserves.
Britain accused him of violating the company's legal rights and orchestrated a worldwide boycott of Iran's oil that plunged the country into financial crisis. The British government tried to enlist the Americans in planning a coup, an idea originally rebuffed by President Truman. But when Dwight Eisenhower took over the White House, cold war ideologues - determined to prevent the possibility of a Soviet takeover - ordered the CIA to embark on its first covert operation against a foreign government.
A new book about the coup, All the Shah's Men, which is based on recently released CIA documents, describes how the CIA - with British assistance - undermined Mossadegh's government by bribing influential figures, planting false reports in newspapers and provoking street violence. Led by an agent named Kermit Roosevelt, the grandson of President Theodore Roosevelt, the CIA leaned on a young, insecure Shah to issue a decree dismissing Mossadegh as prime minister. By the end of Operation Ajax, some 300 people had died in firefights in the streets of Tehran.
The crushing of Iran's first democratic government ushered in more than two decades of dictatorship under the Shah, who relied heavily on US aid and arms. The anti-American backlash that toppled the Shah in 1979 shook the whole region and helped spread Islamic militancy, with Iran's new hardline theocracy declaring undying hostility to the US.
The author of All the Shah's Men, New York Times reporter Stephen Kinzer, argues that the coup planted the seeds of resentment against the US in the Middle East, ultimately leading to the events of September 11.
While it may be reaching too far to link Mossadegh's overthrow with al-Qaida's terrorism, it certainly helped unleash a wave of Islamic extremism and assisted to power the anti-American clerical leadership that still rules Iran. It is difficult to imagine a worse outcome to an expedient action.
The coup and the culture of covert interference it created forever changed how the world viewed the US, especially in poor, oppressive countries. For many Iranians, the coup was a tragedy from which their country has never recovered. Perhaps because Mossadegh represents a future denied, his memory has approached myth.
On yesterday's anniversary, there was no official government ceremony honouring Mossadegh's legacy. Deemed too secular for the Islamic Republic, the conservative clergy never mention him. But at a time when the Bush administration expresses impatience with diplomacy and promotes "regime change" as a means of reshaping the Middle East, the anniversary recalls some unwelcome parallels.
The mindset that produced the coup is not so different from the premises that underpin the current doctrine of "pre-emption" or the belief that the war on terror can justify ignoring the Geneva convention, diplomacy and the sentiments of a country's population.
Veterans of the cold war in President Bush's administration are cultivating relations with Iranian monarchists in exile while Congressmen are calling for a campaign to undermine Iran's clerical leadership. Washington's tough rhetoric and flirtation with the Shah's son are a kind of nightmarish deja vu for the embattled reformists and students struggling to push for democratic change in Iran.
"Now it seems that the Americans are pushing towards the same direction again," says Ibrahim Yazdi, who served briefly as foreign minister after the Shah fell. "That shows they have not learned anything from history."
The reformists allied with President Khatami believe their country now faces another choice between despotism and democracy, and they worry that the combination of outside interference and internal squabbling within their own ranks could once again defer their dream. The more neo-conservatives attempt to pile pressure on Iran, the more ammunition they provide for the most hardline elements of the regime.
Beyond Iran, America remains deeply resented for siding with authoritarian rule in the region. It would be comforting to think "reshaping the Middle East" means promoting democratic rule. But if it merely allows for the ends to justify the means, then the spectre of Operation Ajax will continue to haunt the region.
Dan De Luce is the Guardian's correspondent in Tehran