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Iran: The United States and Iran
Country Study > Chapter 4 > Government and Politics > Foreign Policy > The United States and Iran


The United States broke diplomatic relations with Iran in April 1980, during the hostage crisis, and relations had not been restored as of late 2007. Secret talks occurred between the United States and Iran in the mid-1980s, but their premature revelation was an embarrassment for both countries. Consequently, even though the talks had been approved at the highest levels in Tehran and Washington, some Americans and some Iranians involved in them were punished by their respective governments. New, tentative overtures toward normalizing relations were undertaken during the presidential administrations of George H.W. Bush and Ali Akbar Hashemi Rafsanjani, but these did not bear fruit by the end of Bush’s term in 1993. The administration of William J. Clinton, which followed, had a more suspicious view of Iran. In early 1993, it announced a policy of dual containment to isolate both Iran and Iraq. Two years later, an executive order forbade U.S. firms and individuals from trading or having any financial transactions with Iran, and in 1996 the Iran–Libya Sanctions Act (ILSA) expanded economic sanctions against Iran. Consequently, when Khatami took office as president of Iran in 1997, the United States was not positioned to respond quickly to the opportunities his administration presented.

In a series of statements during his first few months in office, Khatami called for better relations with the West and, specifically, closer ties with the United States. In an extraordinary interview broadcast in January 1998, he expressed “great respect” for the American people, condemned the use of terrorism, and again called for closer U.S. ties. American officials reacted cautiously to these overtures, making a few minor gestures such as listing the Mojahedin-e Khalq as a terrorist organization. However, the United States continued to insist that any bilateral discussions with Iran focus on its nuclear program, its alleged support for terrorist groups, and its opposition to the Israeli-Palestinian peace process—preconditions that Iran had rejected repeatedly in the past. A few weeks after Khatami’s interview, Khamenei further undermined the prospects for rapprochement in a major speech, stating that the United States was Iran’s “enemy” and making it clear that he opposed better relations as long as Washington continued to act “arrogantly” toward Iran. Other conservatives quickly joined Khamenei in denouncing the United States, thereby politicizing the issue of U.S relations and making it difficult for Khatami to move forward. However, while relations between the two governments remained problematic during this period, many U.S. NGOs became much more active in Iran.

In June 1998—more than a year after Khatami was elected—U.S. Secretary of State Madeleine Albright laid out a “road map” to achieve better bilateral relations. U.S. officials made several minor gestures toward Iran during 1998 as well, declining to apply sanctions to third-country firms investing in Iran (as provided for in the ILSA), working with Iranian officials in a UN committee on Afghanistan, and removing Iran from the U.S. list of countries involved in illicit drug transit or production. In April 1999, the United States authorized sales of food and medicine to Iran. Iranian officials generally found these gestures positive but considered them small steps that did not address the crippling economic sanctions that remained in force. Moreover, faced with increasing criticism from the conservatives beginning in 1998, Khatami and his allies concluded that whatever benefits might result from responding positively to these limited U.S. actions were outweighed by the high domestic political costs of doing so.

Despite Iran’s tepid response, U.S. officials continued efforts to promote rapprochement until the Clinton administration left office in January 2001. The high point of this initiative came in March 2000, when Albright officially acknowledged the U.S. role in overthrowing Iranian prime minister Mohammad Mossadeq in 1953, lifted restrictions on U.S. imports of Iranian food products and carpets, and identified areas where the United States and Iran could cooperate. However, Albright also pointedly criticized Iran’s “unelected officials”—an obvious reference to Khamenei and other key conservatives. Predictably, Khamenei’s negative reaction to Albright’s speech nullified the important concessions she had made.

When George W. Bush was elected U.S. president in November 2000, the prospects of continued rapprochement with Iran seemed good. However, the Bush administration did not continue its predecessor’s efforts. The administration’s review of Iran policy was interrupted by the terrorist attacks of September 11, 2001; Iranian officials expressed deep sympathy over the loss of life and then gave assistance to the United States as it attacked the forces of the Taliban and the terrorist group al Qaeda in Afghanistan. Iran facilitated U.S. contacts with the Northern Alliance, allowed U.S. forces to use Iranian territory and airspace for various purposes, and worked closely with U.S. officials to set up a post-Taliban government. Although Iran clearly had an interest in helping to overthrow the Taliban, the Iranian assistance seemed to be a deliberate, positive gesture toward the United States.

Before the Bush administration decided on whether to reciprocate Iran’s gesture in Afghanistan, the Karine A incident of January 2002 had the effect of putting Iran into the camp of supporters of terrorism, as seen from the U.S. perspective. Several weeks later, in his State of the Union address, Bush linked Iran with Iraq and North Korea in an “axis of evil.” Iranian officials were angered that the United States had ignored the assistance they had provided in Afghanistan and had put Iran in the same category as Iraq, whose government, in their view, had committed acts of incomparable brutality.

The “axis of evil” characterization initiated a new period of mutual recriminations between Iran and the United States. Although Iran did not end its cooperation with the United States in Afghanistan, contacts were scaled back considerably, and misunderstandings were more common than consensus during 2002 and 2003. Iranian forces arrested some al Qaeda members who fled into Iran.

Iraq became another arena for cooperation and conflict with the United States. On the one hand, Iran did not welcome the prospect of a large American military force occupying Iraq. On the other hand, it did welcome Saddam Hussein’s removal from power and the opportunity for Iraq’s Shias finally to gain representation in national government. Iran’s main ally in Iraq was the Supreme Council for the Islamic Revolution in Iraq (SCIRI), which had been based in exile in Iran since 1980, and whose militia returned to Iraq soon after the U.S. invasion of March 2003. Iran’s relations with the SCIRI have provided it with influence in Iraq, but Iraq’s large Shia community (estimated at 55 percent of the country’s population) did not unite around a single political party.

The initial U.S. victory in Iraq prompted some official talk in Washington of the need for “regime change” in Iran. This language put Khatami and the reformists on the defensive, forcing them to demonstrate their loyalty to Iran by denouncing the United States as strongly as did the conservatives. By 2004, however, the rhetoric had abated, and both Iran and the United States seemed to have reverted to ambivalent attitudes toward each other. Washington continued to cite the need for “freedom” in Iran while simultaneously stressing the value of negotiations with Tehran on its nuclear program. In March 2005, Bush agreed with his EU allies that they should offer Iran a carrot if it would abandon efforts to enrich uranium for fuel: The United States would drop its opposition to Iran’s application for membership in the World Trade Organization. In 2006 and 2007, there was persistent media speculation about a possible U.S. attack on or invasion of Iran, as tensions continued and negotiations failed to resolve issues.

Tensions around the nuclear issue diminished in the fall of 2007 when an official U.S. government intelligence report declared that Iran likely ceased work on its nuclear weapons program in 2003. However, the Bush administration maintained that the nuclear program represented an ongoing danger because of Iran’s continued enrichment of uranium and that Iran’s support of terrorist organizations in the Middle East remained unacceptable.

Data as of 2008

Last Updated: January 2008

Editor's Note: Country Studies included here were published between 1988 and 1998. The Country study for Iran was first published in 1987. Where available, the data has been updated through 2008. The date at the bottom of each section will indicate the time period of the data. Information on some countries may no longer be up to date. See the "Research Completed" date at the beginning of each study on the Title Page or the "Data as of" date at the end of each section of text. This information is included due to its comprehensiveness and for historical purposes.

Note that current information from the CIA World Factbook, U.S. Department of State Background Notes, Australia's Department of Foreign Affairs and Trade Country Briefs, the UK's Foreign and Commonwealth Office's Country Profiles, and the World Bank can be found on

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