Carter refused to support the Shah of Iran, on human rights issues. The Shah, a strong U.S. ally in the Middle East who recognized Israel as a sovereign state was forced into exile, replaced by a fundamentalist government, hostile to the U.,S.he Fed (Federal Reserve) had failed to act, when economic conditions deteriorated, and inflation, unemployment were at double digit levels OPEC had used, and was using, Middle East oil as a political weapon, including a boycott of the U.S, refusing to sell us oil.