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The United States government has denounced Iran as a continued sponsor of global terrorism. Despite this assertion, the United States and Iran have made tentative overtures toward diplomacy in recent months. Click the choices below to find out how the two countries have arrived at this point.

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U.S. Relations


Iran and Iraq


In 1979, a group of revolutionaries led by the exiled Ayatollah Khomeini overthrew the U.S.-backed Pahlavi monarchy and established the Islamic Republic of Iran.

The new government drafted a constitution that vested primary political power in Iran's clergy under the principle of velayat-e-faqih. The Ayatollah Khomeini died in 1989 and the country's current Islamic spiritual leader, Ali Khamenei, succeeded him. Iran's government also includes a popularly elected president and parliament or Majiles.

Moderate cleric Mohammed Khatemi was elected president in a landslide vote on May 23, 1997. Khatemi was formerly the minister of culture before hard-liners removed him from power in 1992 for having liberal views. Westerners consider Khatemi a welcome change from the hard-line Muslim leaders who preceded him.

U.S. Relations

On November 4, 1979, a group of students loyal to the Iranian government invaded the U.S. Embassy in Tehran, taking the staff members hostage. The siege stemmed from Iran's antagonism toward the United States, which it referred to as the "Great Satan."

The hostages were released in January 1981 amid criticism that the new Reagan administration engineered the release to coincide with his inauguration. Following the hostage crisis, Washington severed diplomatic ties with Tehran and adopted a policy of "dual containment" of Iran and neighboring Iraq.

In December 1997, Khatemi expressed regret for the 1979 invasion and called for a "dialogue" with the American people. The Clinton administration in turn proposed direct talks with Khatemi, but remains concerned about Iran's continued support of terrorist activity and efforts to acquire nuclear weapons.

Oliver North
Oliver North (James W. Atherton)
One of the more notorious events in the context of U.S.-Iran relations was the
Iran-contra scandal in the 1980s. In 1985, staff members from the National Security Council (NSC) of the Reagan administration began selling missiles to Iran for the release of American citizens being held in Lebanon by terrorists loyal to Iran. The sales violated an arms embargo that the U.S. had levied against Iran.

A portion of the profits from these secret arms sales were illegally given to the contras, rebels fighting to overthrow the Sandinista government in Nicaragua. The Boland Amendment banned direct or indirect U.S military aid to the contras.

The scandal came to light on November 25, 1986, and Attorney General Edwin Meese III sought the appointment of an independent counsel to investigate the allegations.

At the conclusion of the probe, former national security adviser Robert McFarlane pleaded guilty to withholding information from Congress. Iran-contra's most notable figure, Marine Lt. Col. Oliver North was convicted of accepting an illegal gift, shredding documents and obstructing Congress. Vice Adm. John Poindexter, who succeeded McFarlane, was also convicted of conspiracy, submitting false statements, destroying and removing records, and obstructing Congress. North's and Poindexter's convictions were overturned on appeal.

Iran's Economy

Iran has a centralized oil-based economy largely. The 1979 revolution ended planned economic development initiated in 1949, when the Islamic republic nationalized all industries. The country faced a large budget deficit and other economic woes as a result of a costly war with Iraq in the 1980s.

Iran and Iraq

Saddam Hussein (File Photo)
In 1980, Saddam Hussein launched a military invasion of neighboring Iran, beginning an eight-year war in which an estimated 1 million people were killed. Hussein wanted to reassert Iraqi sovereignty over both sides of the border and to prevent Iran's Shiite-led government from inciting rebellion among the Shiite majority in Iraq.

By 1988, Iraq expressed a willingness to end the war, but Iran would not agree to a cease-fire until Iraq agreed to pay war reparations and to punish the Iraqi leaders who started the war. Iran finally agreed to a cease-fire, which went into effect on August 20, 1988. The two countries restored diplomatic relations in 1990.

In April of this year, Iran and Iraq conducted a final prisoner of war exchange, in which 5,584 Iraqis and 322 Iranians detained during the Iran-Iraq war were released. Tehran has also sided with its former enemy in opposition of U.S. intervention in the standoff over U.N. weapons inspections in Iraq.

Staff-compiled from the CIA World Factbook and The Washington Post

© Copyright 1998 The Washington Post Company

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