The Future of US–Iran Relations

Gary Sick is adjunct professor of international affairs at Columbia University. He served on the US National Security Council staff under presidents Ford, Carter and Reagan, where he was the principal White House aide for Persian Gulf affairs during the Iranian Revolution and the hostage crisis.

The slow mating dance between Iran and the United States over more than two decades has lent additional weight to the maxim that all politics is local. Each of these two states has tracked and reacted to the actions of the other, while cautiously looking over its shoulder at its domestic constituencies. International behaviour was never ignored or forgotten, but ultimately it was the pressure of domestic imperatives that drove the policies of these two wary protagonists, often in directions that seemed to many observers heedless of their fundamental national interests. The major events that have shaped this relationship, while often painful and controversial, cannot be ignored.

 

In 1953, the United States conspired to overthrow an Iranian nationalist leader, Mohammad Mossadeq, and restore the shah to the throne. For Iranians, this became the touchstone of the US role in Iran. The shah was viewed as a US puppet, and the United States was held responsible in the popular Iranian mind for all of his domestic policies.

 

That impression was strengthened in the early 1970s as the United States linked its security strategy in the Persian Gulf directly to the shah. However, the very close ties between Washington and Tehran tended to conceal the degree of dependence that the United States experienced as it relied on the shah to defend US interests while US forces were fully engaged in South-East Asia. At most, it was a very mixed relationship where influence flowed both ways.

 

Partly as a result of US strategic dependence on Iran, there was a reluctance in Washington to acknowledge the power of growing revolutionary sentiment in Iran. In the absence of an alternative strategy, the United States was unwilling to recognise Iranian grievances or to consider any political outcome that did not include the shah. However, US support for the shah was largely verbal and ultimately did little to halt the swelling revolutionary movement.

 

When the shah was overthrown in February 1979, the United States was left strategically naked in the Persian Gulf, with no safety net. It began to rebuild its security presence from scratch and to counter the vigorous efforts of Iran to export its revolution beyond its own borders.

 

The Iranian attack on the US embassy in Tehran and the subsequent hostage crisis that went on for well over a year was a major factor in the electoral defeat of President Carter, thus turning the tables. If the United States stood accused of interference in Iran’s domestic affairs after 1953, Iran was now perceived in the minds of most Americans as a radically hostile state bent on the destruction of US interests and values.

The Revolution at War

In the exuberant atmosphere following the overthrow of the shah, Iran’s revolutionary leaders almost casually let it be known that they did not consider themselves bound by any of the shah’s agreements. Instead, spokesmen for the Islamic Republic pointedly noted that in traditional Islam there were no borders dividing the faithful. Those remarks, when coupled with fiery rhetoric calling for export of the revolution to the entire Islamic world, gave Iraq and other neighbours of Iran justifiable grounds for concern. The basic principle was written into Iran’s constitution.¹

 

Even the crucial 1975 border agreement with Iraq, which favoured Iran, was allowed to languish in a kind of diplomatic limbo until a full month after Iraq launched its invasion in 1980. The war, however, had a sobering effect. By mid-1983, Iran’s repeated failures to breach Iraqi defences, combined with the growing effectiveness of the Iraqi air strikes, compelled Tehran to undertake a thorough reappraisal of its diplomatic and military policies. In October 1984, Ayatollah Ruhollah Khomeini summoned Iran’s diplomatic representatives from abroad and instructed them to take a new approach:

 

We should act as it was done in early Islam when the Prophet ... sent ambassadors to all parts of the world to establish proper relations. We cannot sit idly by saying we have nothing to do with governments. This is contrary to intellect and religious law. We should have relations with all governments with the exception of a few with which we have no relations at present.²

 

After Iraq’s invasion of Iran, and in the long bloody conflict that followed, the United States for the most part sided tacitly with Baghdad by providing intelligence information and quiet political support. This anti-Iranian policy was initially prompted by the hostage taking in Tehran and was later given further impetus by the capture of a number of innocent Americans in Lebanon, who were held hostage for years by groups closely aligned with Iran, as well as suspicions of Iranian involvement in terrorist bombings of US embassies in Beirut and Kuwait.

 

However, in the mid-1980s the Reagan administration attempted a “strategic opening” to Iran that became known as the Iran–contra affair. This initiative was poorly planned and badly executed. When it collapsed in a blaze of publicity, it severely damaged US–Arab relations and very nearly brought down a second US president.

 

In the last two years of the war, the United States increasingly took the side of Iraq, retaliating for indiscriminate Iranian maritime mines and shipping attacks by striking at Iranian oil platforms and other targets. In a terrible and inexcusable error by a US naval commander, a civilian Iranian aircraft was shot down with immense loss of life.

After the War

After the end of the Iran–Iraq War in 1988 and the death of Ayatollah Khomeini in 1989, the new government of Ali Akbar Hashemi Rafsanjani initiated a major effort to repair relations with Europe, Iran’s neighbours in the Persian Gulf and surrounding area, and even with the United States. Rafsanjani, who was a businessman as well as a cleric, made reconstruction of Iran’s shattered economy his top priority, and he understood that this would require foreign investment and co-operation.

 

His plans, however, were repeatedly disrupted. The fatwa against Salman Rushdie that was issued by Ayatollah Khomeini before his death caused a major crisis with the British government and other members of the European Union, greatly complicating Rafsanjani’s efforts to repair relations. In August 1991, just before Rafsanjani was scheduled to make the first Iranian state visit to France since the revolution, former prime minister Shahpour Bakhtiar was stabbed to death at his home in Paris while under the protection of the French security services, and the visit was cancelled. In Germany, the leader of a Kurdish opposition group was assassinated in 1992, eventually leading to the formal indictment of the Iranian minister of information (intelligence), Ali Fallahian. This was compounded in October 1993 when the Norwegian publisher of Rushdie’s novel, The Satanic Verses, was shot and seriously wounded outside his home in Oslo, eventually leading Norway to withdraw its ambassador from Iran.

 

These and other incidents gave the impression that there were several centres of power in Iran that were working at cross-purposes. Specifically, it appeared that the hardliners in the Iranian intelligence services were pursuing an independent vendetta against enemies of the revolution and that they were not entirely displeased to embarrass the more moderate president and the foreign ministry. The killings in Europe stopped in about 1993, suggesting that Rafsanjani was finally able to exert some control. But the aftermath of those events continued to poison relations with Europe and other countries for years.

 

During the decade of the 1990s, starting with Rafsanjani’s presidency and accelerating since the election of Mohammad Khatami in 1997, Iran began to restore its relations with the international community, to assert a new and more positive role in Islamic politics, and to promote more cordial relations with its neighbours in the Persian Gulf. The United States welcomed these developments but refused to remove most of the unilateral economic sanctions that had been imposed on Iran by President Clinton in the mid-1990s.

Containing Iran

On 18 May 1993, two months after President Clinton took office, Martin Indyk of the US National Security Council staff spelled out the broad outlines of what he called America’s “dual containment” policy in the Persian Gulf. Traditionally, the United States had pursued a policy of balancing Iran or Iraq against one another as a means of maintaining a degree of regional stability and to protect the smaller, oil-rich Arab states on the southern side of the Gulf. Indyk, however, proclaimed the policy bankrupt and rejected it “because we don’t need to rely on one to balance the other”. Iraq was boxed in by United Nations sanctions, Iran was nearly prostrate after the eight-year war with Iraq, and the United States was the predominant power in the Persian Gulf, with the “means to counter both the Iraqi and Iranian regimes”.³

 

The dual containment policy called for Iran (1) to cease its support of international terrorism and subversion; (2) to end its violent opposition to the Arab–Israel peace talks; and (3) to halt efforts to acquire weapons of mass destruction. President Bush had referred to Iran in his inaugural address in January 1989, saying: “Good will begets good will. Good faith can be a spiral that endlessly moves on.” There was, however, no talk of good will by the Clinton administration. Instead, US officials developed a special vocabulary in which Iran was routinely branded as a “rogue”, “terrorist”, “outlaw” or “backlash” state. This relentless drumfire of attacks—the mirror image of Iranian depictions of the United States as the “Great Satan”—had its effects in the media, in Congress, on the public and in the attitudes of lower-level bureaucrats. With a Democrat in the White House and the Republicans in control of Congress, a domestic political contest developed over which party could be most vigorous in promoting US policies to oppose Iran.

 

The debate was galvanised in 1995 when the US oil company Conoco announced that it had signed a $1 billion contract with Iran to develop the Sirri oil field in the Persian Gulf. President Clinton quickly pre-empted this by issuing two executive orders that made it illegal for American oil companies to operate in Iran and established penalties for any US person or corporation doing business with Iran. Both decisions were announced by senior administration officials before major Jewish organisations. The US business community, apparently intimidated by the public outcry, remained totally silent.

 

The terrorist bombing of the US military barracks at Dhahran, Saudi Arabia, in 1996 killed nineteen American servicemen and raised concerns that Iran was behind the attack. Although the charges were never proved, US suspicions of Iran’s intentions received new life, and that affected domestic attitudes.⁴

 

Those views were clearly visible in the US presidential election year of 1996. Congress prepared a bill that would impose sanctions on any foreign corporation that invested $40 million or more in the Iranian oil and gas sector (reduced after one year to $20 million). Libya was later added on the floor of the Senate, and the bill became known as the Iran–Libya Sanctions Act (ILSA). Although the bill was certain to create serious problems with America’s allies, Congress saw ILSA as an opportunity to take a public stand against terrorism. The bill passed the House of Representatives by a vote of 415–0 and was signed into law by President Clinton.⁵

The Khatami Phenomenon

The entire situation was changed, however, the following year by the election of Mohammad Khatami as president of Iran in an overwhelming upset victory over the establishment candidate. In January 1998, Khatami made an unprecedented “Address to the American People” in the form of an interview on CNN. He praised the achievements of American civilisation, went as far as an Iranian politician could go in expressing regret for the hostage crisis, and spelled out very clearly Iran’s position on all of the major issues of concern to the United States:

 

• On terrorism: “Any form of killing of innocent men and women who are not involved in confrontations is terrorism. It must be condemned, and we, in our turn, condemn every form of it in the world.”

 

• On the peace process: “We have declared our opposition to the Middle East peace process, because we believe it will not succeed. At the same time, we have clearly said that we don’t intend to impose our views on others or to stand in their way.”

 

• On weapons of mass destruction: “We are not a nuclear power and do not intend to become one.”

 

Following the Khatami CNN address, the United States took a number of steps. In May 1998, citing national security concerns, Washington announced that it would waive the provisions of ILSA against a consortium of French, Russian and Malaysian companies which replaced Conoco. That decision was due almost entirely to pressure from America’s European allies, but its significance for US sanctions policy was unmistakable.

 

On 17 June 1998, Secretary of State Madeleine Albright delivered a major speech that responded almost point-by-point to the issues Khatami had addressed in his interview five months earlier. The speech was notable for its conciliatory tone and for the absence of the rhetoric that had characterised US statements about Iran over the previous five years. The speech offered no specific new policies or initiatives, but it held out the prospect of a new beginning:

 

We are ready to explore further ways to build mutual confidence and avoid misunderstandings. The Islamic Republic should consider parallel steps. If such a process can be initiated and sustained in a way that addresses the concerns of both sides, then we in the United States can see the prospect of a very different relationship. As the wall of mistrust comes down, we can develop with the Islamic Republic, when it is ready, a road map leading to normal relations. Obviously, two decades of mistrust cannot be erased overnight. The gap between us remains wide. But it is time to test the possibilities for bridging this gap.⁶

 

The United States removed Iran from the list of states subject to sanctions for dealing in narcotics. It no longer identified Iran as the leading sponsor of international terrorism (though Iran remained on the list of states sponsoring terrorism). And it formally designated the Iranian exile opposition group mojahedin-e khalq as a terrorist organisation.

 

A number of small but significant regulatory changes were adopted to make US visas more readily available to Iranians, and sanctions were removed from the sale of food and medicine to Iran.

 

Perhaps even more significantly, President Clinton—apparently speaking personally and unscripted—made a series of statements in which he recognised positive changes in Iran’s policies. He acknowledged that Iran had legitimate grievances because of the involvement of external powers in its domestic affairs. President Khatami characterised those remarks as “courageous”.

 

Although the United States claimed that none of these steps was intended as a “signal” to Iran, they nevertheless represented quite a significant shift in US public policy during the two years after Khatami became president.

Clinton’s Last Year

Following the February 2000 elections for the sixth Majlis (parliament) in Iran, which again resulted in an overwhelming popular vote for candidates supporting Khatami’s reform movement, Secretary Albright once more addressed the issue of Iran. She acknowledged the US role in the countercoup that overthrew Prime Minister Mohammad Mosaddeq in 1953 and commented that “the United States must bear its fair share of responsibility for the problems that have arisen in US–Iranian relations”. She further acknowledged that “aspects of US policy towards Iraq during its conflict with Iran appear now to have been regrettably shortsighted”. While reiterating US grievances toward Iran, she welcomed the prospect of “regional discussions aimed at reducing tensions and building trust”. She announced the lifting of US sanctions on the purchase of Iranian carpets and food products, such as caviar and pistachios; promised to remove travel impediments and other obstacles to the operation of exchange programmes and non-governmental organisations; and vowed to increase efforts to conclude a global settlement of all outstanding legal claims (often incorrectly referred to as Iran’s “frozen assets”). Reiterating US willingness to engage in direct official discussions without preconditions, she added, “surely the time has come for America and Iran to enter a new season in which mutual trust may grow and a quality of warmth supplant the long cold winter of our mutual discontent.”⁷

 

This was the most far-reaching expression of US interest in a rapprochement with Iran in the twenty-one years since the revolution. It came, however, at a moment of intense political conflict in Iran. Conservative forces were striking back at the reformers, closing many newspapers, throwing key journalists into jail and attempting to assassinate Said Hajjarian, a member of the Tehran municipal council and one of the architects of the reform movement. It was also followed by the arrest of a group of Iranians suspected of spying for Israel, which had a powerful impact on US public opinion and effectively halted any further unilateral movement towards reconciliation with Iran. Albright’s promises to pursue a global settlement of legal claims and to modify US limitations on academic exchange activities never materialised.

 

Iran’s Supreme Leader, Ayatollah Ali Khamenei, was reportedly offended by a phrase in Albright’s speech referring to the fact that many of Iran’s institutions remained in the hands of “unelected” officials. He made a scathing attack on the US position in a speech in Mashhad on 25 March, and Iran’s official response to the Albright speech was muted and tended to fall back on the formulas of the past.

 

Remarkably, however, less than two weeks later an important reformist organisation published an alternative analysis of the Albright speech. Without reference to the Khamenei address, the Organisation of the Mujahideen of the Islamic Revolution of Iran (Omir), which was closely associated with Behzad Nabavi, a key supporter of President Khatami in the sixth Majlis, praised the candour of Albright’s speech and concluded that it was “a kind of victory and an achievement for … Khatami’s government”. In a clear reference to the US call for direct talks, the Omir declaration asked Iranian policy makers “to carry out a logical, calculated and wise analysis of the changes that have come about in American stances and policies. Instead of relying upon a wave of blind emotions, they must act on the basis of national interests”.⁸

 

Thus, although the Albright speech and the Iranian response could not be seen as a breakthrough, they were evidence of substantially changed attitudes in Washington and in some important circles in Tehran. Unlike the “dual containment” policy of the previous six years, after 1998 the United States deliberately began to make an explicit distinction between Iran, where it sought dialogue and eventual normalisation of relations, as opposed to Iraq, where regime change was the objective.

Looking Ahead

With the arrival in Washington of the new administration of George W. Bush, there appeared to be prospects for an improvement in US–Iran relations. The top levels of the new administration were occupied by individuals with long experience of the Persian Gulf, and a number of them as private citizens had expressed an interest in eliminating the sanctions on Iran and developing a more businesslike relationship. This attitude seemed to be reflected in the confirmation hearings of General Colin Powell as the new secretary of state, when he went out of his way to call for increased interaction between the United States and Iran. The new administration made it clear that it intended to undertake a full review of US policies on the Persian Gulf, including Iran.

 

Two major events seemed likely to shape the outcome of that review in the first half of 2001. June’s presidential election in Iran saw Mohammad Khatami win a second term by a huge majority. The Bush administration went out of its way to avoid taking sides in the election, if only because any US statements favouring one side or the other were more likely to be harmful than helpful. Washington was well aware of the intense political competition under way in Iran and realised that it was entirely a domestic debate that must be dealt with by Iranians. Although most Americans instinctively favoured the reformist camp, with its objectives of the rule of law, greater civil liberties and enhanced freedom of expression, some administration officials unofficially indicated that Iran was a strategic nation and that they were prepared to deal with whatever leadership was chosen by the Iranian people.

 

The other major event was the vote on the extension or termination of the ILSA legislation, which was to expire in early August 2001. The debate on ILSA began in earnest in March 2001 and showed signs of becoming more intense, at least partly depending on what happened in Iran. Several key Republican members of Congress, including some of those who had been most involved in promoting an opening to Iran, indicated that they might vote in favour of renewing the legislation unless Iran provided some positive response to the various US gestures that had been extended over the previous three years. Specifically, they noted that Iran had not made any reciprocal gestures to the lifting of some sanctions and had failed to take up the invitation to meet with a delegation of US legislators.⁹ The congressmen’s positions appeared to be influenced also by the fact that the legislation covers Libya as well as Iran, thereby complicating the signals that might be sent by lifting the sanctions. Although not directly related, the outbreak of the intifada in Palestine and Iran’s scorching anti-Israel rhetoric seemed certain to influence political positions on Capitol Hill.

 

On the other side of the equation was the recognised fact that ILSA had not been invoked by the United States owing to pressure from US allies, that it had not prevented a string of international companies from signing major contracts with Iran, and that it had had little apparent effect on Iranian policies. The National Foreign Trade Council, a private US umbrella organisation of major international companies, in April 2001 strongly recommended ending the sanctions on Iran.

 

The ideological bent of the new Bush administration appeared to be in favour of ending sanctions and re-engaging Iran at some level. However, it is apparent that the administration is unwilling to undertake any major new initiatives in the absence of some indication of receptivity on the part of Iran. Iran, for its part, continued to flail away at “enemies” of the Islamic Republic who were trying to subvert the principles of the revolution through the reform movement, suggesting that reformers—many of whom were in jail—were somehow in league with foreign devils. It is curious that, just as the United States deleted “rogue” from its vocabulary when referring to Iran, Iranian conservatives rediscovered the value of a foreign enemy to bolster their rather unconvincing case against political reform.

 

So the slow-motion dance between Iran and the United States in early 2001 continued as it had in the past, constrained by the domestic politics of the two countries. At one level, each country recognised the strategic value of co-operation, while at another level each feared losing the benefits of a well-established enemy that could be used to promote a domestic agenda.

 

Iran and the United States need each other and cannot avoid each other. Iran is the largest country in the Persian Gulf, with a long history, a long coastline, a population comparable in size to Egypt’s and Turkey’s, and a presence that simply cannot be ignored. The United States, in turn, is the dominant military, economic and political force in the region. The United States has friends and important interests there, and it will not simply go away. Its co-operation could greatly hasten the influx of investment capital that Iran desperately needs.

 

Although these two countries will inevitably find a way to become reconciled and conduct civil relations with each other, this will not necessarily happen quickly. The era of mutual hostility with Iran has already outlasted US estrangement from Vietnam, where a war was fought, where America was humiliated and defeated and where fifty thousand Americans died. But the era of US–Iran antagonism is still very short compared to the US embargo on Cuba, which is forty years old and shows no sign of abating.

 

The experience of the past twenty-two years has demonstrated that progress is possible only when both sides are prepared to act constructively. For many years, the United States was unwilling to budge from its position of unrelenting hostility to Iran. In the past few years, as the United States slowly changed its attitudes and called for direct talks, Iran chose to renew its rhetorical attacks on the United States as part of the conservatives’ efforts to counter President Khatami’s programme of reform.

 

It is often said of antagonists in the Middle East that they never miss an opportunity to miss an opportunity. As a new administration in Washington considers its options in the Persian Gulf region, and as Iran emerges from yet another key election, there are new and important opportunities for these two states to begin the process of healing their historic wounds. There are also growing numbers of people of good will on both sides who understand the benefits that would be achieved by removing the political and economic barriers that divide them. This is clearly an issue that is ripe for resolution. But whether or not the leadership on either side will demonstrate the will and courage to follow through on their convictions, only time will tell.

Endnotes

1. The Preamble of the Constitution of the Islamic Republic declares: “[I]n the development of international relations, the Constitution will strive with other Islamic and popular movements to prepare the way for the formation of a single world community … and to assure the continuation of the struggle for the liberation of all deprived and oppressed peoples in the world.”

 

2. US Foreign Broadcast Information Service, 30 October 1984.

 

3. Martin Indyk, “The Clinton Administration’s Approach to the Middle East”, keynote address to the Soref Symposium on “Challenges to US Interests in the Middle East: Obstacles and Opportunities”, Proceedings of the Washington Institute for Near East Policy (18–19 May 1993), pp. 1–8. Martin Indyk at the time of this speech had just joined the National Security Council staff. He subsequently became the US ambassador to Israel, the assistant secretary of state for Near East affairs, and again ambassador to Israel.

 

4. On 21 June 2001, US Attorney-General John Ashcroft said that (unnamed) members of the Iranian government had “inspired, supported and supervised” members of the Saudi Hizbollah indicted with carrying out the Dhahran bombing. Iran rejected the accusation.

 

5. For a detailed analysis of the ILSA debate and other US sanctions against Iran, see Hossein Alikhani, Sanctioning Iran: Anatomy of a Failed Policy (London: I. B. Tauris, 2000).

 

6. Madeleine K. Albright, “Remarks at 1998 Asia Society Dinner”, 17 June 1998, as released by the Office of the Spokesman, US Department of State, 18 June 1998.

 

7. Madeleine K. Albright, remarks before the American–Iranian Council, Omni Shoreham Hotel, Washington, D.C., 17 March 2025 [http://secretary.state.gov/www/statements/2000/000317.html].

 

8. Declaration of the Organisation of the Mujahideen of the Islamic Revolution of Iran, 4 April 2000, published in Asr-e Ma, no. 156 (6 April 2024), pp. 1, 6, 8. Translated by the US Foreign Broadcast Information Service.

 

9. Tom Doggett, “US Law against Iran Oil Investments Gets Support”, Reuters News Service, 22 March 2001.