President Obama is being criticized by the discredited neo-conservatives - who took the US into war in Iraq in 2003 - for not doing enough in Iran. But he has the right policy.

Obama knows that the Iranians have a long memory of US intervention in Iran - even if most Americans have long forgotten that history.

The overthrow of the Iranian government just over 50 years ago was the first secret operation by the Central Intelligence Agency outside of the Cold War. It was one of the CIA's most successful operations and became one of the standards against which all other CIA operations have been judged.

But some of the hatred that still exists among some Iranians for the United States is due to this coup.

Mohammed Mossadegh was one of the most important Iranian politicians in the 20th century. He was a European-educated lawyer, whose father was an Iranian bureaucrat and whose mother was descended from Persian kings. In 1951, the Iranian prime minister, Ali Razmara who was sympathetic to the west, was assassinated and Mossadegh became the prime minister.

He quickly sent to the Iranian parliament legislation to take over control of the country's oil assets. Throughout the next couple of years, he moved to limit foreign interests in Iran and to limit the shah's powers.

All this puts him on a collision course with Britain and the United States (and made his Soviet neighbour worried). The British acquired the rights to exploit and sell oil from Iran's southern fields in 1901. They were angry at losing that special deal when Mossadegh nationalized the oil industry.

Iran had long been a pawn in Anglo-Russian politics. The British wanted influence over Iran as part of the route to India and then, after 1901, as a way of fuelling the Royal Navy's demand for oil. Meanwhile, Russia for two centuries had wanted access to "warm-water" ports in the Persian Gulf and so wanted influence over Iran as a the route to those ports. At the beginning of the 20th century, Russia occupied the northern part of the country. In 1907, the British and Russians formalized their relationship with an agreement to divide Iran into two zones of influence and so reduce the risk of their confrontation.

In 1941, Britain and the Soviet Union (now united in their fight against Hitler) deposed Shah Reza Pahlavi because they thought he was too sympathetic to Hitler. His son, Mohammad Reza Pahlavi, was made shah. Allied forces were then able to occupy Iran and transport munitions to the Soviet Union to help halt the Nazi invasion of the Soviet Union.

The young shah remained on the throne after World War II. But Mossadegh was able to catch the mood of resentment against British control of Iran's oil industry. He was the obvious person to become prime minister in 1951. Then he set about trying to centralize political and military power in his own hands. When the shah refused his demand, Mossadegh resigned. But then the shah had to reinstate him to calm popular riots which demanded his reinstatement. By this time, the United States had also begun to take an interest in Iranian affairs. The Cold War was underway and the US was establishing its global reach. It was the natural replacement for Britain's influence in Iran. It wanted access to Iran's oil. Also, Iran could be a good place for US bases because it was next to the Soviet Union.

The US was suspicious of Mossadegh's links with Iranian communists. It feared that Iran could become more sympathetic to Moscow. In fact, Mossadegh was not a communist: he was a nationalist. Iranian communists were not major supporters because he was not anti-American enough.

In late 1952 British intelligence officials surprised their American colleagues by raising the possibility removing the prime minister. The Truman Administration was not keen on it.

In March 1953, the Eisenhower Administration came to power. It had fears about oil shortages and the danger of communist expansion. The new secretary of state, John Foster Dulles, was the brother of the CIA director.

On April 4 1953, the CIA director Allen Dulles approved US$1 million to be used "in any way that would bring about the fall of Mossadegh". The CIA identified a high-ranking officer, General Fazlollah Zahedi, as the person to spearhead the coup, with the shah playing a leading role.

But the CIA planners had doubts about the operation, codenamed "Ajax". They feared that the shah was weak and indecisive. The general appeared to lack drive, energy and concrete plans.

Despite these doubts, the CIA went ahead in mid-April with the first stage of the operation: distributing anti-Mossadegh material in the streets and planting unflattering articles about him in the local newspapers. The intention was for the country to become so destabilized that the shah would seem justified in dismissing Mossadegh. But the shah was hesitant to act against Mossadegh. Despite the CIA- secretly inspired turmoil, he remained popular with the masses.

The CIA coup began on the night of August 15 1953. The shah dismissed the prime minister and sent soldiers out to arrest him. But they were themselves captured and Tehran radio announced that a coup had been put down.

Meanwhile, general Zahedi hid away in the city. CIA station chief Kermit Roosevelt (a grandson of President Theodore Roosevelt) tracked him down and found him still willing to go ahead with the coup. The CIA issued media statements that the shah had signed two decrees: one sacking Mossadegh and the other appointing Zahedi as the new prime minister.

On August 16, the shah fearing that the coup had failed, fled Iran for Rome. CIA headquarters warned Roosevelt to also leave as quickly as possible. He refused. He believed the operation could still be successful.

On August 17, Mossadegh overplayed his hand by dissolving parliament. With the shah out of the country, he thought that the coup was over and so he recalled his troops from active duty.

This gave Zahedi his opportunity to counter-attack. He called on the religious leaders to urge their followers to rise up in a holy war against Mossadegh. Suddenly, the mood swung against Mossadegh.

Much to Washington's surprise, the coup was successful. August 19 1953 was one of the happiest days in the CIA's history. Royalist forces supporting the shah took over the country. Deciding it was safe, the shah returned.

Mossadegh was put on trial and served three years in prison. In March 1967, in his mid-80s, he died from cancer. He remains a legend in Iran. After the 1979 revolution, which saw the end of the shah's rule, the new rulers revived his memory by changing the name of a Tehran thoroughfare from Pahlevi Avenue to Mossadegh Avenue. But the change did not last long. The Islamic rulers thought that the memory was becoming too powerful and was too much nationalistic competition, and so they named the street after an Islamic figure.

The Iranian coup had three consequences for the US and CIA. First, it created unrealistic expectations of what the CIA could achieve. Suddenly, US politicians assumed that it could remove other hostile governments easily. But the US was dragged into all sorts of misadventures (such as the 1961 Bay of Pigs disaster in Cuba).

Second, the CIA's notoriety for removing governments eroded the US's moral superiority in the Cold War. It was seen to be behaving just as badly the Soviet Union.

Finally, the coup planted the seeds for widespread Iranian hatred of the US. This eventually erupted in 1979 when the shah was overthrown. One of the targets for the militants was the US embassy, which they claimed was a "nest of spies" that had been manipulating Iran for decades.

President Obama, in his Cairo speech this month   acknowledged that the US had "...played a role in the overthrow of a democratically-elected Iranian government." He now has to tread carefully. He has to avoid playing into the hands of the current Iranian leadership who would love to have proof of the US's role in the current round of political instability. That would feed the paranoia of Iranians and destroy the credibility of the critics of the current leadership.

Keith Suter