Brief History of Modern Iran - MideastWeb for Coexistence

Introduction - Iran and ancient Persia have a long, creative and  glorious history. Unlike many other Middle East countries, Iran managed to remain independent throughout much of its history. Today,  Iran has a population of about 70 million persons. Principle ethnic groups are Persian 51%, Azeri 24%, Gilaki and Mazandarani 8%, Kurd 7% and Arab 3%. Iran is a Muslim country, with 89% Shi'a and 10% Sunni Muslims. The remaining 1% belong to Jewish, Bahai and Zoroastrian faiths. The Bahai and Zoroastrian faiths originated in Iran. Major Languages of Iran are Persian (Fars) and Persian dialects 58%, Turkic and Turkic dialects 26%, Kurdish 9%, Luri 2%, Baluchi 1%, Arabic 1%, Turkish 1%. Since 1979, Iran is an Islamic Republic. Iran is situated east of Iraq, beyond the Tigris River, Shatt Al-Arab waterway and east of the Persian Gulf, across from Saudi Arabia. To the north, it borders on former Soviet Central Asian countries including Armenia Turkmenistan, Azerbaijan and the Caspian Sea. It also borders on Afghanistan and Pakistan in the east, and Turkey to the west. Click for large map

Iran has a semi-arid climate for the most part, but it is extremely rich in natural resources. In particular, it has nearly 10% of the world's proven oil reserves. With nearly 16% of the world's gas reserves, Iran has the second largest reserves in the world. Additionally, it has considerable quantities of fairly low grade uranium. However, poor economic planning, sanctions by Western countries, low literacy, high birthrates and a long and bloody war with Iraq have kept Iran poor, with a GDP of about $7,000 and unemployment of about 16%. In recent years, government programs that encourage family planning and significant emigration have reduced the rate of population increase to about 1% a year. Birth rate is now about 17 per thousand, comparable to Western industrialized countries, and literacy is up to 79%.  

Early Modern Times -  After the death, in 1779, of Mohammad Karim Khan Zand, who was the Zand dynasty ruler of southern Persia, Agha Mohammad Khan, a leader of the Qajar tribe, reunified the country, defeated  numerous rivals and brought all of Iran under his rule, establishing the Qajar dynasty. By 1794 he had eliminated all his rivals, and had retaken former Iranian territories in Georgia and the Caucasus. Agha Mohammad established his capital at Tehran, a village near the ruins of the ancient city of Ray. In 1796 he was formally crowned as Shah, but he was assassinated in 1797 and was succeeded by his nephew, Fath Ali Shah.

Agha Mohammad Khan

Fath Ali Shah went to war twice against Russia, which was expanding from the north into the Caucasus Mountains. Iran suffered major military defeats in both wars, signing the Treaty of Golestan in 1813, and the Treaty of Turkmanchai in 1828, and ceding to Russia Georgia, the north Caucasus, and the eventually the the entire area north of the Aras River, which includes present day Armenia and Azerbaijan. Fath Ali Shah died in 1834 and was succeed by Mohammad Shah. He died in 1848 and was succeeded by Naser o-Din Shah.

Naser o-Din Shah was the ablest of the Qajar rules. He introduced Western science, technology, and educational methods and began the modernization of Iran. He tried to play off the imperial powers, Great Britain and Russia, to preserve Iran's independence, but he was not able to prevent Britain and Russia from encroaching into regions of traditional Iranian influence. In 1856 Britain prevented Iran from reasserting control over Herat, and helped make Herat part of Afghanistan. By 1881 Russia had conquered present-day Turkmenistan and Uzbekistan, bringing Russia's frontier to Iran's northeastern borders and severing historic Iranian connections to Bukhara and Samarqand. Trade concessions by Iran put the Iranian economy largely under British control. Naser o-Din Shah was assassinated in 1896 by Mirza Reza Kermani in 1896, and  his son Mozaffar o-Din assumed the throne. 

Mozaffar o-Din Shah was a weak and ineffectual ruler. He quickly spent two large loans from Russia, partly on trips to Europe. Public anger was fueled by the shah's willingness to grant concessions to Europeans in return for generous payments to him and his officials. The shah's failed to respond to protests by the religious establishment, the merchants, and other classes and instituted Repressive measures. A large number of merchants and clerical leaders  took sanctuary from probable arrest in mosques in Tehran and outside the capital in January 1906, and an additional 10,000 people, led by the merchants, took sanctuary in June in the compound of the British legation in Tehran, following the Shah's failure to grant a promised national assembly. In August the shah was forced to issue a decree promising a constitution. In October an elected assembly convened and drew up a constitution that provided for strict limitations on royal power, an elected parliament, or Majles, with wide powers to represent the people, and a government with a cabinet subject to confirmation by the Majles. The Shah signed the constitution on December 30, 1906, but died five days later.  Supplementary Fundamental Laws approved in 1907 provided, within limits, for freedom of press, speech, and association, and for security of life and property. The Constitutional Revolution marked the end of the medieval period in Iran Iranians are very proud of this event However, but the constitution remained to a large extent a dead letter. 

Mohammad Ali Shah, son of Mozaffar o-Din took office in 1907. With  Russian backing, he  attempted to rescind the constitution and abolish parliamentary government. In June 1908 he used his Russian-officered Persian Cossacks Brigade to bombard the Majlis building. He arrested many of the deputies, and closed down the assembly. Resistance to the Shah, however, coalesced in several cities, and elsewhere. In July 1909, constitutional forces marched from Rasht and Esfahan to Tehran, deposed the Shah, and re-established the constitution. The ex-Shah went into exile in Russia.

The upheavals of the Constitutional Revolution and civil war had undermined stability and trade. The ex-Shah, with Russian support, landed troops in Iran in July 1910 in an attempt to regain his throne. The hope that the Constitutional Revolution would inaugurate a new era of independence from the great powers ended when, under the Anglo-Russian Agreement of 1907, Britain and Russia agreed to divide Iran into spheres of influence. The Russians were to enjoy exclusive right to pursue their interests in the northern sphere, the British in the south and east; both powers would be free to compete for economic and political advantage in a neutral sphere in the center.

A crisis was precipitated when Morgan Shuster, a United States administrator hired as treasurer general by the Persian government to reform its finances, sought to collect taxes from powerful officials under Russian protection. He attempted  to send members of the treasury gendarmerie into the Russian zone. The Russians issued an ultimatum demanding Shuster's dismissal, Russian troops, already in the country, moved to occupy the capital. To prevent the Russian takeover, on December 20 1911, Bakhtiari chiefs and their troops surrounded the Majles building, forced acceptance of the Russian ultimatum, and shut down the assembly, once again suspending the constitution. A period of government by Bakhtiari chiefs ensued until Ahmad Shah, who was 11 when he acceded to the throne, came of age.

Ahmad  proved to be incompetent and was unable to preserve the integrity of Iran. The occupation of  Persia during World War I (1914-18) by Russian, British, and Ottoman troops was a blow from which his government never effectively recovered.

Reza Shah - A coup d'état in February 1921 established Reza Khan, a soldier who led the coup, as ruler. After suppressing several rebellions, he became Shah in 1925, ruling until 1941 as Reza Shah Pahlavi. Reza Shah's government transformed Iran in many positive ways, but his dictatorial politics caused unrest and hate, and his foreign policy failed to keep Iran independent, and managed at the same time to alienate both the Soviets and the British.

Reza Shah had ambitious plans for modernizing of Iran, including large-scale industries, major infrastructure projects such as railroads, a national public education system, a reformed judiciary, and improving health care. He wanted a strong, centralized government managed by educated personnel to carry out his plans. He sent hundreds of Iranians including his son to Europe for training.  Reza Shah's numerous development projects transformed Iran into an industrial, urbanized country. Public education progressed rapidly, and new social classes-a professional middle class and an industrial working class emerged.   In 1935, the name of the country was changed from Persia to Iran.

Reza Shah tried to avoid involvement with Britain and the Union of Soviet Socialist Republics. Though  many of his development projects required foreign technical expertise, he avoided awarding contracts to British and Soviet companies.  Britain, owned of the Anglo-Iranian Oil Company and through it, controlled all of Iran's oil resources, but Reza Shah shunned Britain and  got technical assistance from Germany, France, Italy and other European countries. In 1939, when WW II broke out, Reza Shah proclaimed Iranian neutrality. However, Britain insisted that German engineers and technicians in Iran were spies and demanded that all German citizens must be expelled. Reza Shah refused, claiming this would adversely impact his development projects. The suspicion was not absent that in fact the Shah had concluded a secret agreement with Nazi Germany.

After Britain and the Soviet Union became allies in WW II,. they turned their attention to Iran. Both countries eyed the newly opened Trans-Iranian Railroad as an attractive route to transport from Persian Gulf to the Soviet region. In August 1941, because of Iranian refusal to expel German nationals, Britain and the USSR invaded Iran. They arrested and exiled Reza  Shah, and took control of Iranian communications and railroad. In 1942 the United States, sent a military force to Iran to help maintain and operate sections of the railroad.

Mohamed Shah - The British and Soviet authorities constrained constitutional government and  permitted Reza Shah's son, Mohammad Reza Shah Pahlavi, to succeed to the throne on September 16, 1941. 

In January 1942 Britain and Russia signed an agreement with Iran to respect Iran's independence and to withdraw their troops within six months after the end of the war. In 1943 Tehran Conference U.S. reaffirmed this commitment. In 1945, the USSR refused to announce a timetable to leave Iran's northwestern provinces of East Azerbaijan and West Azerbaijan, where Soviet supported autonomy movements had developed. The USSR withdrew its troops in May 1946; this episode was one of the harbingers of the emerging Cold War.

Iran's political system began to mature. Political parties were organized, and the 1944 Majlis election were the first genuinely competitive elections in over 20 years. Foreign influence and interference remained very a sensitive issue for all parties. The Anglo-Iranian Oil Company (AIOC), owned by the British government, continued to extract and market Iranian oil. At the end of the war, Iranians began to demand nationalization of the oil industry, a demand that became the centerpiece of Iranian nationalism.

Despite his vow to act as a constitutional monarch who would defer to the power of the parliamentary government, Mohammad Reza Shah increasingly involved himself in governmental affairs and opposed or thwarted strong prime ministers. Prone to indecision, however, Mohammad Reza relied more on manipulation than on leadership. He concentrated on reviving the army and ensuring that it would remain under royal control as the  main power base of the Monarchy. In 1949 the Tudeh communist party was banned after an assassination attempt on the Shah, and the Shah's powers were expanded.

Rise and Fall of Mosaddeq - In 1951, the Iranian Parliament voted to nationalize the oil industry, then controlled by Britain.  Legislators backing the law elected its leading advocate, Dr. Mohammad Mosaddeq, as prime minister following the assassination of his predecessor. Britain responded with threats and sanctions. However,  Britain could not persuade the USA, under the Truman administration. to take any action at the time. Mosaddeq was an aging and eccentric academic, immensely popular because of his stands for the common people. He was a nationalist, and not a communist, though the Tudeh (communist) party supported him for a time. Nonetheless, the British and US governments were eventually able to persuade themselves that Mosaddeg was about to align Iran with the USSR.

Dr Mossaddeq

Dr. Mosaddeg  took very inflexible positions, and was  unable to compromise with Britain, which won the support of the major oil companies in imposing an effective global boycott on Iranian oil.

Dr. Mosaddeq became an anti-imperialist hero to the developing world. His eccentricities, which became his trademark,  included conducting business in bed dressed in pajamas, weeping publicly and frequent complaints about poor health. Raised by a wave of popularity, Mosaddeq showed signs of demagoguery and dictatorial government.  When the Shah refused his demand for control of the army forces in 1952, Dr. Mosaddeq resigned. He was reinstated in the face of popular riots as he very probably knew he would be. Next he conducted a national referendum to dissolve parliament.

By 1953, General Eisenhower had become president of the US. Anti-communist hysteria was reaching its peak. An Iranian general offered to help in the overthrow of Mosaddeq, and the British were able to persuade the American CIA to go ahead with the coup in August. With very scant resources and a shoe-string operational plan, the CIA set out to remove Mosaddeq. The plan almost failed, and the Shah, never very resolute, had fled to Baghdad and had to be enticed to continue playing his part from there. The army was loyal to the Shah and Mosaddeq was overthrown and arrested. This coup earned the USA and Britain the lasting hatred of large sectors of Iranian public opinion, uniting communists, nationalists and Shia clericalists behind enmity to foreign meddling. Mosaddeq became a folk hero of  Iranian nationalism.

In the context of regional turmoil and the Cold War, the Shah established himself as an indispensable ally of the West. In the Middle East, Iran  stood out as one of the few friends of Israel, a friendship that allegedly extended to Israeli help in running the SAVAK, the hated Iranian secret service.  Domestically, he advocated reform policies, culminating in the 1963 program known as the White Revolution, which included land reform, the extension of voting rights to women, and the elimination of illiteracy.

These measures and the increasing arbitrariness of the Shah's rule provoked both religious leaders who feared losing their traditional authority and intellectuals seeking democratic reforms. These opponents criticized the Shah for violation of the constitution, which placed limits on royal power and provided for a representative government, and for subservience to the United States. The Shah saw himself as heir to the kings of ancient Iran. In 1967 he staged an elaborate coronation ceremony, styling himself "Shah en Shah" - King of Kings. In 1971 he held an extravagant celebration of 2,500 years of Persian monarchy. In 1976 he replaced the Islamic calendar with an "imperial" calendar, which began with the foundation of the Persian empire around 500 BC. These actions were clearly aimed at  sidelining the Islamic religion, and excited the opposition of Muslim groups, which rallied around the Ayatollah Khomeini.

Reza Shah Pahlavi

The Shah suppressed and marginalized opponents with the help of Iran's security and intelligence organization, the Savak, using arbitrary arrest, imprisonment, exile and torture, and exciting profound and widespread discontent.  Islamic leaders, particularly the exiled cleric Ayatollah Khomeini, channeled  this discontent into a populist Islamist ideology.  Ayatollah Khomeini had been exiled in 1964 and had been living Najaf Iraq since 1965, and from 1978 in France. In Najaf, Khomeini expounded his ideology of absolutist theocratic rule, Velayat e Faqih, led by a supreme leader, an authority worthy of emulation, the Marj al Taqlid. This ideology was spread through books and cassettes smuggled into Iran. However, beginning about 1978, Khomeini began publicizing more democratic views and pretended that he envisioned democratic rule in Iran and that he would not be a leader of the government. Riots erupted in Iran, ignited by various real or manufactured pretexts.

Suffering ill health, the Shah left Iran on January 16 1979. He announced that he was leaving for an eighteen month leave of absence. He had appointed  Shapour Bakhtiar as Prime Minister. Shapour Bakhtiar was unable to keep order with the help of Supreme Army Councils. Inexplicably, Bakhtiar not only allowed the Ayatollah Khomeini to return to Iran, but publicly invited him to return. Bakhtiar eventually dled to France and was assassinated, probably by Iranian agents, in 1991.

Khomeini - Ayatollah Khomeini  returned to Iran on February 1 by invitation of the interim government. Bakhtiar had invited the means of his own destruction. He soon went into hiding, and was eventually exiled in Paris. Mass purges of supporters of the Shah began, and hundreds were executed. A revolutionary court set to work almost immediately in a school building in Tehran. Revolutionary courts were established in provincial centers soon after. The Tehran court passed death sentences on four of the Shah's  generals on February 16, 1979 and all four were executed by firing squad.  More executions, of military and police officers, SAVAK agents, cabinet ministers, Majlis deputies, and officials of the Shah's regime followed. In March of 1979, a referendum was held regarding the new form of government to be established in Iran. Only one form of government, the Islamic Republic, appeared on the ballot, and was approved by 98% of the voters in non-secret elections.

Ayatollah Khomeini

Mehdi Bazargan was appointed Prime Minister.  A truly revolutionary and anarchic situation gripped Iran. semi-independent revolutionary committees, not answerable to central authority, took over various governmental tasks. Factory workers, civil servants, white-collar employees, and students were often in control, demanding a say in running their organizations and choosing their chiefs. Governors, military commanders, and other officials appointed by the prime minister were frequently rejected by the lower ranks or local inhabitants. At the same time, The Ayatollah Khomeini who headed the Revolutionary Council, ran his own version of the government, pushing Iran in the direction of an Islamist theocracy. They mobilized street mobs to force their program on the government.

Iran was soon plagued by ethnic unrest as Kurds, Arabs, Turkomens and other minorities demanded varying degrees of autonomy. Beginning in August 1979, the revolutionary courts tried and passed death sentences on members of ethnic minorities involved in these disturbances.

In May 1979 Ayatollah Khomeini created the Pasdaran (Pasdaran-e Enghelab-e Islami, Islamic Revolutionary Guard Corps or Revolutionary Guards or IRGC). The Pasdaran was conceived as a force loyal to the Revolution and the clerical leaders, as opposed to the regular army which was thought to be loyal to the civil government. Soon after, Khomeini also ordered the creation of the Basij volunteers. These two groups were to function both as internal police protecting the government, and as a politically reliable army against foreign foes. The IRGC was also used to foment revolution and "resistance" abroad, particularly in Lebanon, where it helped to found and train the Hezbollah.

The revolutionary government began veering to the right as power was concentrated around the clerics. Leftist newspapers were banned, and rallies of the National Democratic Front were broken up. Opposition leaders were arrested. As the powers of the clerics increased, the state began a program of nationalization and also of religious repression in particular against women. Students and others who thought they were eliminating the Shah to bring democracy to Iran would eventually be bitterly disappointed.

The Ayatollah Khomeini and other clerics delivered extremist and threatening speeches against the United States and against its Persian Gulf allies. On the other hand, the government still headed by Bazargan tried to maintain good relations with the United States, especially as US supply of spare parts for the army and the oil industry was desperately needed.

The Hostage Crisis - As though following the scripts of the French and Russian revolutions, domestic chaos and repression were followed by foreign entanglements and intervention. On November 1, 1979, Bazargan met with President Carter's national security adviser, Zbigniew  Brzezinski, in Algiers. Meanwhile, the Shah, who was seriously ill with cancer, was admitted to the United States for medical treatment. Iranians feared that the Shah would use this visit to the United States to secure United States support for an attempt to overthrow the Islamic Republic. On November 1, 1979, hundreds of thousands demonstrated in Teheran, demanding extradition of the Shah. The press denounced Bazargan for meeting with a key United States official. On November 4, Iranian Islamic students stormed the US embassy, taking 66 hostages, mostly Americans. 14 were released before the end of November.  Prime Minister Mehdi Bazargan resigned,  and no prime minister was named to replace him.

Hostage (center) & captors

The Revolutionary Council took over the prime minister's functions until Abolhassan Bani Sadr, an independent associated with Ayatollah Khomeini  was elected. Initially he had the support of Khomeini, but as he tried increasingly to reassert the rule of law and civil rights, he clashed with Mohammad Ali Rajai, a protege of the revolutionary council who was appointed Prime Minister. Fresh waves of purges gutted the civil service and the army.

Meanwhile, the hostage crisis was exacerbating relations with the United States and West European countries. President Carter froze several billion dollars of Iranian assets held by American banks in the United States and abroad. Bani Sadr's various attempts to resolve the crisis failed.  The Shah  made his home in Panama. Bani Sadr and Foreign Minister Qotbzadeh attempted to arrange for the Shah to be arrested by the Panamanian authorities and extradited to Iran. But the Shah left Panama for Egypt on March 23, 1980, before anything could be done.

In April, 1980 the United States tried to rescue the hostages by secretly landing aircraft and troops near Tabas, along the Dasht-e Kavir desert in eastern Iran at a base known as "Desert 1." The attempt was bungled however. Two helicopters failed,  and when the mission commander decided to abort the mission, a helicopter and a C-130 transport aircraft collided, killing eight United States servicemen. Fresh plots against the Iranian government, real or imagined, were discovered in the army and wide purges followed.

Negotiations  for release of of the hostages began on September 14 1980 in West Germany and were successfully concluded in January. Possibly to personally humiliate outgoing President Carter, the hostages were released only after Ronald Reagan took office as president on January 20 1981.

The Iran-Iraq War - Tension between Iran and Iraq led to border incidents in April 1980. Apparently Saddam Hussein of Iraq saw a chance to make territorial gains at the expense of Iran, and perhaps to overthrow the regime of the Ayatollahs, which was seen as a threat both by conservative Sunni regimes such as Saudi Arabia and pan-Arab regimes like that of Saddam. Iranian propagandists were spreading the message of the Islamic Revolution throughout the Persian Gulf, and the Iraqis feared this propaganda would infect the Shi'a population of Iraq, whose religious life had been suppressed by Saddam.   Iraqi relations with Iran are dominated by geography. Iraq and Iran disputed navigation rights which were regulated by the Algiers Agreement of 1975, and Iraq coveted territories in Iran.

On September 17, Saddam Hussein abrogated the Algiers Agreement. On September 22 Iraq began a massive invasion of Iran, citing an alleged Iranian assassination attempt on Iraqi foreign minister Tariq Aziz at one of the excuses. Iran had isolated itself. Iran's foreign policy had alienated it from virtually every country in the world, in particular the USA, which the Ayatollah Khomeini called "the great Satan."  Iran continued to export Islamic revolution throughout the war, instigating riots among Shi'a communities in Saudi Arabia, and inspiring and arming terrorists in Lebanon who kidnapped US and British citizens. Iran could not get spare parts for its US made military hardware, other supplies from Western countries or loans to carry on the war.

Conversely, Iraq received substantial military, diplomatic and diplomatic support from virtually every Western country as well as the USSR, and all Arab countries with the exception of Syria. For much of the war, the Khomeini dominated government hesitated to give the army a leading role in combat because it doubted the army's political reliability. The ill trained Pasdaran Revolutionary Guards were used extensively in the war instead. Iraq used gas warfare on several occasions in the war.

Cypriot tanker sunk by Iranians

During this period, Iran was also fighting a Kurdish uprising and insurrections led by the Mojahedin and others. The war exacted as many as a million casualties in total on both sides according to some estimates. Despite their internal and foreign relations problems, the Iranians were quite surprisingly able to hold their own, using human wave attacks and other desperate tactics for lack of better alternatives. Total war by both sides included attacks on shipping as well as civilian population centers, but unlike Iraq, Iran apparently did not use gas or chemical weapons during the war. The Ayatollah Khomeini refused all efforts at mediation and insisted that Iran would fight until Saddam Hussein was removed from power in Iraq. Both countries finally agreed to a compromise peace in 1988, after Iraq had made some serious gains.

The war and army-Pasdaran rivalry accentuated differences between President Bani Sadr, who sided with the army, and PM Rajai, who was backed by the clerical government and sided with the Pasdaran. By June 1981, Bani Sadr had lost the struggle and was impeached. Prime minister Mohammad Ali Rajai was elected president, but in August  Rajai and prime minister Bahonar were killed by a bomb, apparently planted by the Mojahedin opposition. In October, 1981 Ali Khamenei,   was elected president and has remained in that office since.

With the dismissal of relatively moderate elements from power, the government veered to the right again, imposing an Islamic legal system and an Islamic code of social and moral behavior. Opposition elements including the Mojahedin, and the Union of Communists attempted to reorganize and to overthrow the government by force. The government responded with fresh waves of repression and terror. Batches of 50 to 100 people were executed on a daily basis following trials by revolutionary courts.  Amnesty International documented 2,946 executions in the 12 months following Bani Sadr's impeachment, a conservative figure because the authorities did not report all executions. Widespread revulsion caused the government to wind down the program of repression.

In February 1983, the government arrested over a thousand leaders and members of the Tudeh  party. The party was banned,  leaders were imprisoned and members were put to death. Other than the religious factions, only Mehdi Bazargan's IFM  was permitted any freedom of activity by 1983, and even this was very limited.

Iran-Contra- Though the US would not officially sell arms to Iran, beginning in 1985, the Reagan administration violated its own laws. In a complicated swap deal, Israel and other intermediaries sold TOW and Hawk missiles and other military hardware in return for cash and for release of one or more American hostages. The cash was used by the USA to finance an equally illegal war against the Sandinista government of Nicaragua. The arms sales were exposed at the end of 1986 and presumable were terminated.

In 1988, the USS Vincennes shot down an Iranian civilian airliner with 290 passengers on board, killing everyone, supposedly in error. On 20 August 1988, a cease fire was signed between Iran and Iraq. Both parties accepted UN Resolution 598. (see Ayatollah Khomeini for further details of the Khomeini period and his philosophy of government and religion).

Rafsanjani and Khamenei - Ayatollah Khomeini died on June 3, 1989 of a heart attack. President Ali Khamenei assumed the role of supreme spiritual leader. The Assembly of Experts (Ulama) met in emergency session on June 4 and elected President Khamenei the new Valy-e-Faqih (supreme spiritual leader), simultaneously promoting him to the status of ayatollah. And  Ali Akbar Hashemi Rafsanjani, speaker of the Majles (parliament) was elected president.

The Iranian economy was devastated by the war, by western trade boycotts, and by inept and erratic economic policies. A huge birthrate resulted in an unmanageable demographic disaster initially. Subsequently, Iran changed its policy regarding population growth, and now it has one of the lowest rates of population increases in the Middle East, coupled with an investment in education, especially education of women and literacy programs. However, unemployment remains high, and drug addiction is rumored to be a very serious problem. Food shortages have led to periodic riots such as those that broke out in 1991.

Khatami - In 1997, Hojatoleslam Mohammad Khatami was elected president. He  pursued political reform and liberalization, and was supported by broad sectors of society. He also tried   to normalize relations with the west and reduce tensions in the region. His efforts for democracy were frustrated by the veto power of the supreme council, which can bar any measure it pleases. Outstanding issues with the west included support of terror and Iran's arbitrary human rights practices, which until recently included stoning women to death for adultery as well as periodic purges of political opponents, censorship of the press etc. The position of women in Iran is relatively good compared to some Muslim countries, but there is much room for improvement.

President Mohammad Khatami

Shia Iran does not support the Sunnii Al-Qaeda terrorist network, and has cooperated in arresting al-Qaeda members. However, Iran supports terror groups including the Lebanese Hezbollah, the Islamic Jihad in Gaza and the West Bank and other groups in Egypt, Algeria and elsewhere. Iranian intelligence and the Hezbollah were behind the bombing of a Jewish center in Argentina.  In the 1980s, Iran and the Hezbollah apparently were responsible for bombing of the US embassy and marine barracks in Lebanon, and Iranian funded groups kidnapped numerous American and other Europeans and held them as hostages.  The mastermind behind Hezbollah/Iranian terror operations was Imad Moughnieh, who was killed in Damascus on February 12, 2008, possibly by Israeli agents or by the intelligence service of a different country that may have cooperated with Israel.  In January 2002, Israeli security forces confiscated a boatload of arms, the Karine A, which they claimed originated in Iran, but it is not known if the shipment was authorized by the Iranian government. 

Mohammad Khatami was re-elected as president in 2001 by a huge majority in relatively free elections. Iranians were convinced that he had a mandate for reform, but reform has proceeded slowly. Iran is wracked repeatedly by student demonstrations and riots, in which students seeking democracy and supporting reform bills backed by Khatami clash with "Hebollahi" paramilitary groups and with police.

Iran's Nuclear Program - Toward the end of 2003 Iran's nuclear program came under the scrutiny of the International Atomic Energy Agency (IAEA). Work on a nuclear reactor to be built by Siemens at Bushehr had begun in the time of the Shah, and was nearing completion in 1979, when the revolution occurred. The Ayatolah Khomeini pronounced the project "unislamic." The Iraqis bombed damaged the Bushehr site during the Iran-Iraq war. However, Iran decided subsequently to renew the program. Nuclear power has fallen out of favor in most countries since the reactor mishap at 3 Mile Island in 1979, and more especially after the Chernobyl disaster in the former Soviet Union.  However, Iranians claim that they want to develop nuclear power as an alternative to fossil fuels, citing pollution concerns as well as eventual depletion. Indeed, Teheran is very polluted primarily because of vehicle and refinery emissions. This is partly due to subsidies of oil prices by the Iranian government. Though it has over 9% of the world's oil reserves and over 16% of the world's gas, Iran has neglected its fossil fuel substrate because foreign companies would not provide spare parts and know-how following the revolution. Wells may have become unusable due to neglect. Iran still has more than enough gas and oil to meet its increasing energy needs though for many years to come.

Iran contracted with Russia to install a reactor to replace the Siemens reactor destroyed by the Iraqis. This project was under IAEA supervision in accord with the nuclear non-proliferation treaty of which Iran is a signatory. However, through reports of informants, it was discovered that Iran had additional nuclear projects that were concealed from the IAEA and the world. Iran was manufacturing and installing a large number of gas centrifuges. These can be used to purify low grade uranium ore, such as that which Iran possesses in relative abundance, into reactor fuel grade uranium They can also be used to produce weapons grade U-235 isotope. . To date, Iran has about 1000 KG of low enriched uranium (LEU) enough to make a bomb with further refinement.

Iran may want nuclear weapons to balance Israeli nuclear capabilities, or as a counter-weight to Pakistani nuclear capabilities. Additionally Iran is building a heavy water plant and other facilities at Natanz, Arak and elsewhere. Heavy water is not required for the Russian built reactor at Bushehr. The Arak heavy water "research" reactor is of a type that can be used to create fissionable plutonium. US intelligence believes that Iran had a program to construct nuclear weapons, but this may have been terminated in 2003. It is not known if it has been resumed. IAEA reports insist that there is no evidence of Iranian nuclear weapons development, but also note that Iran has failed to comply with all inspection requests. The head of the Mossad, the Israeli intelligence organization, Meir Dagan, has estimated that Iran will have developed or could develop nuclear weapons by 2014, an estimate that agrees with U.S. intelligence. However, others set a closer date. 

Many are suspicious of  the large investment in nuclear energy by a poor country with tremendous fossil fuel reserves. They believe it could only be an indication that that country is developing nuclear weapons. Both Israel and the United States have been watching the Iranian nuclear program with concern. Though there has been speculation that Israel would strike the Bushehr reactor as it struck the Osirak reactor in Iraq in 1981, the situation is not comparable. Bushehr is not a breeder reactor used to make nuclear fuel and Bushehr is not the only nuclear facility in Iran, so that striking Bushehr would not destroy the nuclear program.

IAEA inspectors became uneasy after finding several discrepancies in Iranian disclosures about their program, and after finding traces of highly enriched uranium in Iranian nuclear sites. Iran claims that these traces were present in machinery that was shipped to them from abroad. The IAEA gave Iran until October 31 to submit a full account of its nuclear program, and also asked for the right to snap inspections and other measures. After initial resistance, Iran complied, submitting the report ahead of time, and agreeing also to suspend the upgrading of uranium. However, it resumed enrichment of Uranium subsequently, and is believed to have in excess of 1,000 kilograms of 5% (LEU) enriched uranium.

Mahmoud Ahmadinejad - Mahmoud Ahmadinejad was elected president of Iran in 2005 in place of the reformist Khatami, and began pursuing a hard line both at home and abroad. Dress codes and persecution of minorities became stricter, and some homosexuals were hanged. Abroad, Ahmadinejad refused to stop enrichment of uranium as demanded by the United Nations, and conducted a blatantly racist campaign of Holocaust denial and anti-Semitism, vowing to pursue the goal of a "World Without Zionism and America." U.S. officials have studiously ignored the threats against the United States and have tended to view the Iranian threat as solely a threat against Israel. The administration of George Bush pursued a confrontational policy against Iran, asking the UN for increasingly stringent sanctions against Iran. Iran did not respond in any positive way. Though speculation has been rife about imminent US or Israeli military strikes against Iran, every single one of those predictions has proven false so far. The administration of President Barack Obama has pursued a policy of "engagement" with Iran, but that policy has thus far yielded no results either.

In June of 2009 presidential elections were held in Iran. The results returned a suspiciously large victory for Mahmoud Ahmadinejad and opponents claimed obvious fraud. Supporters of opponent Mir Hossein Moussavi in particular took to the streets to protest the fraud. The government refused to back down, and killed at least 20 demonstrators and possibly as many as 150. Many more were arrested. Telephone and other communications were suppressed, and opponents of the regime took to Internet and in particular Twitter to help organize their protest. The real struggle appears to be between Ayatollah Ali Khameinei and Ayatollah Hashemi Rafsanjani.