Iran: U.S. Concerns and Policy Responses
Kenneth Katzman
Specialist in Middle Eastern Affairs
January 6, 2010
Congressional Research Service
7-5700
www.crs.gov
RL32048
CRS Report for Congress
P
repared for Members and Committees of Congress

Iran: U.S. Concerns and Policy Responses

Summary
President Obama has said his Administration shares the goals of previous Administrations to
contain Iran’s strategic capabilities and regional influence. The Administration has not changed
the previous Administration’s characterization of Iran as a “profound threat to U.S. national
security interests,” a perception generated not only by Iran’s nuclear program but also by its
military assistance to armed groups in Iraq and Afghanistan, to the Palestinian group Hamas, and
to Lebanese Hezbollah. The Obama Administration formulated approaches to achieve those goals
that differ from those of its predecessor by expanding direct diplomatic engagement with Iran’s
government and by downplaying discussion of potential U.S. military action against Iranian
nuclear facilities. However, the domestic unrest in Iran that has burgeoned since alleged fraud in
Iran’s June 12, 2009, presidential election has presented the Administration with a choice of
whether to continue to engage Iran’s government or to back the growing ranks of the Iranian
opposition.
Although Administration statements in December 2009 were more supportive of the student-led
protests than previously, the Administration remained open to negotiating a nuclear deal with Iran
along the lines of an October 1, 2009, multilateral agreement with Iran. Under that framework,
Russia and France would reprocess some of Iran’s low-enriched uranium for medical use.
However, Iran has not, to date, agreed to the stipulated technical details of such a reprocessing
program, casting doubts on Iran’s commitment to the tentative deal and sparking renewed
discussions of new U.N. sanctions, particularly those that would target members and companies
of Iran’s Revolutionary Guard Corps. The Guard is the main element used by the regime to crack
down against the protesters.
Any additional U.N. Security Council sanctions would build on those put in place since 2006.
These sanctions generally are targeted against WMD-related trade with Iran, but also ban Iran
from transferring arms outside Iran and restrict dealings with some Iranian banks. Separate U.S.
efforts to persuade European governments to curb trade with, investment in, and credits for Iran,
and to convince foreign banks not to do business with Iran, are intended to compound the U.N.
pressure. Some in Congress believe that additional unilateral U.S. sanctions that try to curb sales
to Iran of gasoline could help pressure Iran into a nuclear settlement. Others believe that
sanctioning Iran’s ability to monitor the Internet—or clearer statements of U.S. support for the
demonstrators—would help the domestic opposition materially change or even topple the regime.
Others believe that new U.S. unilateral or U.N. measures would cause Iran to resist compromise,
fracture the U.S.-led coalition that is trying to curb Iran’s program, or hurt the cause of the
opposition. For further information, see CRS Report RS20871, Iran Sanctions, by Kenneth
Katzman; CRS Report R40849, Iran: Regional Perspectives and U.S. Policy, coordinated by
Casey L. Addis; and CRS Report RL34544, Iran’s Nuclear Program: Status, by Paul K. Kerr.

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Iran: U.S. Concerns and Policy Responses

Contents
Political History .......................................................................................................................... 1
Regime Structure, Stability, and Opposition ................................................................................ 2
The Supreme Leader, His Powers, and Other Ruling Councils ............................................... 2
The Presidency/Mahmoud Ahmadinejad ............................................................................... 6
Ahmadinejad’s Policies and Popularity............................................................................ 7
June 12, 2009, Presidential Elections............................................................................... 8
Election Dispute and Aftermath....................................................................................... 9
How Shaken and Divided Is the Regime? ...................................................................... 10
Exiled Opposition Groups ................................................................................................... 11
People’s Mojahedin Organization of Iran (PMOI)/Camp Ashraf .................................... 12
Other Armed Groups ..................................................................................................... 13
The Son of the Former Shah.......................................................................................... 13
Other Outside Activists ................................................................................................. 14
Human Rights Practices ............................................................................................................ 14
Iran’s Strategic Capabilities and Weapons of Mass Destruction Programs .................................. 16
Conventional Military/Revolutionary Guard/Qods Force ..................................................... 17
Nuclear Program and Related International Diplomacy ....................................................... 19
Iran’s Arguments and the International Response........................................................... 20
Establishment of “P5+1” Contact Group/June 2006 Incentive Package.......................... 22
Resolution 1696 ............................................................................................................ 23
Resolution 1737 ............................................................................................................ 23
Resolution 1747 and Results ......................................................................................... 23
Resolution 1803 and Additional Incentives .................................................................... 24
Resolution 1835 ............................................................................................................ 24
The P5+1 Process Under President Obama .................................................................... 25
Chemical Weapons, Biological Weapons, and Missiles ........................................................ 27
Ballistic Missiles/Warheads........................................................................................... 27
Foreign Policy and Support for Terrorist Groups ....................................................................... 28
Relations with the Persian Gulf States ................................................................................. 29
Iranian Policy in Iraq........................................................................................................... 31
Supporting Palestinian Militant Groups ............................................................................... 32
Iran and Hamas ............................................................................................................. 33
Lebanese Hezbollah and Syria............................................................................................. 33
Syria ............................................................................................................................. 35
Central Asia and the Caspian............................................................................................... 35
Afghanistan and Pakistan .................................................................................................... 36
Pakistan ........................................................................................................................ 37
Al Qaeda............................................................................................................................. 37
Latin America ..................................................................................................................... 38
India ................................................................................................................................... 39
Africa ................................................................................................................................. 39
U.S. Policy Responses, Options, and Legislation ....................................................................... 39
Policy During the Clinton and George W. Bush Administrations.......................................... 40
George W. Bush Administration Policy ......................................................................... 40
Overview of Obama Administration Policy ......................................................................... 41
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Implementation of the Engagement Policy .................................................................... 41
Enhanced U.S. Interests Section .................................................................................... 42
Engagement Efforts During the George W. Bush Administration ................................... 42
“Grand Bargain Concept”.............................................................................................. 43
Containment and Possible Military Action........................................................................... 43
An Israeli Strike? .......................................................................................................... 44
Iranian Retaliatory Scenarios......................................................................................... 45
Containment and the Gulf Security Dialogue................................................................. 46
Presidential Authorities and Legislation......................................................................... 46
Regime Change................................................................................................................... 47
Democracy Promotion Efforts ....................................................................................... 47
Funding ........................................................................................................................ 49
Further International and Multilateral Sanctions .................................................................. 50
European/Japanese/Other Foreign Country Policy on Sanctions and Trade
Agreements................................................................................................................ 51
World Bank Loans ........................................................................................................ 52
U.S. Sanctions..................................................................................................................... 54
Terrorism/Foreign Aid Sanctions ................................................................................... 54
Proliferation Sanctions .................................................................................................. 54
Targeted Financial Measures by Treasury Department ................................................... 55
U.S. Ban on Trade and Investment with Iran.................................................................. 55
The Iran Sanctions Act (ISA) ........................................................................................ 55
Divestment.................................................................................................................... 55
Counter-Narcotics ......................................................................................................... 56
Travel-Related Guidance............................................................................................... 56
Status of Some U.S.-Iran Assets Disputes ...................................................................... 56
Conclusion................................................................................................................................ 56

Figures
Figure 1. Structure of the Iranian Government ........................................................................... 57
Figure 2. Map of Iran ................................................................................................................ 58

Tables
Table 1. Major Factions and Personalities.................................................................................... 3
Table 2. Factions in the Eighth Majles ......................................................................................... 7
Table 3. Human Rights Practices ............................................................................................... 15
Table 4. The Revolutionary Guard............................................................................................. 18
Table 5. Iran’s Conventional Military Arsenal............................................................................ 19
Table 6. Summary of Provisions of U.N. Resolutions on Iran Nuclear Program (1737,
1747, and 1803) ..................................................................................................................... 27
Table 7. Iran’s Ballistic Missile Arsenal..................................................................................... 28
Table 8. Iran Democracy Promotion Funding ............................................................................ 49
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Table 9. Selected Economic Indicators ...................................................................................... 53

Contacts
Author Contact Information ...................................................................................................... 58
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uch of the debate over U.S. policy toward Iran has centered on the nature of the current
regime; some believe that Iran, a country of about 70 million people, is a threat to U.S.
M interests because hardliners in Iran’s regime dominate and set a policy direction
intended to challenge U.S. influence and allies in the region. President George W. Bush, in his
January 29, 2002, State of the Union message, labeled Iran part of an “axis of evil” along with
Iraq and North Korea.
Political History
The United States was an ally of the late Shah of Iran, Mohammad Reza Pahlavi (“the Shah”),
who ruled from 1941 until his ouster in February 1979. The Shah assumed the throne when
Britain and Russia forced his father, Reza Shah Pahlavi (Reza Shah), from power because of his
perceived alignment with Germany in World War II. Reza Shah had assumed power in 1921
when, as an officer in Iran’s only military force, the Cossack Brigade (reflecting Russian
influence in Iran in the early 20th century), he launched a coup against the government of the
Qajar Dynasty. Reza Shah was proclaimed Shah in 1925, founding the Pahlavi dynasty. The
Qajars had been in decline for many years before Reza Shah’s takeover. That dynasty’s perceived
manipulation by Britain and Russia had been one of the causes of the 1906 constitutionalist
movement, which forced the Qajars to form Iran’s first Majles (parliament) in August 1906 and
promulgate a constitution in December 1906. Prior to the Qajars, what is now Iran was the center
of several Persian empires and dynasties, but whose reach shrunk steadily over time. Since the
16th century, Iranian empires lost control of Bahrain (1521), Baghdad (1638), the Caucasus
(1828), western Afghanistan (1857), Baluchistan (1872), and what is now Turkmenistan (1894).
Iran adopted Shiite Islam under the Safavid Dynasty (1500-1722), which brought Iran out from a
series of Turkic and Mongol conquests.
The Shah was anti-Communist, and the United States viewed his government as a bulwark
against the expansion of Soviet influence in the Persian Gulf and a counterweight to pro-Soviet
Arab regimes and movements. Israel maintained a representative office in Iran during the Shah’s
time and the Shah supported a peaceful resolution of the Arab-Israeli dispute. In 1951, under
pressure from nationalists in the Majles (parliament) who gained strength in the 1949 Majles
elections, he appointed a popular nationalist parliamentarian, Dr. Mohammad Mossadeq, as Prime
Minister. Mossadeq was widely considered left-leaning, and the United States was wary of his
policies, which included his drive for nationalization of the oil industry. Mossadeq’s followers
began an uprising in August 1953 when the Shah tried to dismiss Mossadeq, and the Shah fled.
The Shah was restored in a successful CIA-supported uprising against Mossadeq.
The Shah tried to modernize Iran and orient it toward the West, but in so doing he also sought to
marginalize Iran’s Shiite clergy. He exiled Ayatollah Ruhollah Khomeini in 1964 because of
Khomeini’s active opposition, which was based on the Shah’s anti-clerical policies and what
Khomeini alleged was the Shah’s forfeiture of Iran’s sovereignty to the United States. Khomeini
fled to and taught in Najaf, Iraq, a major Shiite theological center that contains the Shrine of
Imam Ali, Shiism’s foremost figure. There, he was a peer of senior Iraqi Shiite clerics and, with
them, advocated direct clerical rule or velayat-e-faqih (rule by a supreme Islamic jurisprudent). In
1978, three years after the March 6, 1975, Algiers Accords between the Shah and Iraq’s Baathist
leaders, which settled territorial disputes and required each party to stop assisting each other’s
oppositionists, Iraq expelled Khomeini to France, from which he stoked the Islamic revolution.
Mass demonstrations and guerrilla activity by pro-Khomeini forces, allied with a broad array of
anti-Shah activists, caused the Shah’s government to collapse in February 1979. Khomeini
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returned from France and, on February 11, 1979, declared an Islamic Republic of Iran, as
enshrined in the constitution that was adopted in a public referendum in December 1979 (and
amended in 1989). Khomeini was strongly anti-West and particularly anti-U.S., and relations
between the United States and the Islamic Republic turned hostile even before the November 4,
1979, seizure of the U.S. Embassy by pro-Khomeini radicals.
Regime Structure, Stability, and Opposition
About a decade after founding the Islamic republic, Ayatollah Ruhollah Khomeini died on June 3,
1989. Iran’s regime has always been considered authoritarian, but with a degree of popular input
and checks and balances among power centers. The regime Khomeini established—enshrined in
an Islamic republican constitution adopted in October 1979 and amended in a national
referendum of April 1989—consists of some elected and some appointed positions. National
elections under the Islamic republic have always been held, and on time, even during the eight-
year Iran-Iraq war, although there are limitations on who is allowed to run.
Until the serious popular and intra-regime unrest that followed the June 12, 2009, presidential
election, the regime had appeared relatively stable and faced only low-level and episodic unrest
from minorities, intellectuals, students, labor groups, and women. Since the elections, the regime
has struggled to contain the unrest, which some believe is evolving into a revolutionary
movement that will be satisfied only with the outright replacement of the regime with a secular
democracy. An increasing number of Iran experts believe this opposition movement—calling
itself “The Green Path of Hope”—will eventually lead to a toppling or major alteration of the
current regime.
The Supreme Leader, His Powers, and Other Ruling Councils
Upon Khomeini’s death, one of his disciples, Ayatollah Ali Khamene’i, was selected Supreme
Leader by an elected 86-seat “Assembly of Experts.”1 Although he has never had Khomeini’s
undisputed authority, Khamene’i has vast formal powers as Supreme Leader that have helped him
maintain his grip on power. Amid reports Khamene’I believes that major concessions to the
opposition will lead to regime demise, the protest movement is nonetheless increasingly bold in
denouncing him and in defying his authority. Some of his peers have criticized his handling of the
protest movement, while experts say he is now almost completely dependent on regime security
forces, most notably the Islamic Revolutionary Guard Corps (IRGC).
Formally, the Supreme Leader is Commander in Chief of the armed forces, giving him the power
to appoint commanders and to be represented on the highest national security body, the Supreme
National Security Council, composed of top military and civilian security officials. He appoints
half of the 12-member Council of Guardians;2 and the head of Iran’s judiciary (currently
Ayatollah Sadeq Larijani). Headed by Ayatollah Ahmad Jannati, the conservative-controlled
Council of Guardians reviews legislation to ensure it conforms to Islamic law, and it screens
election candidates and certifies elections results. The Supreme Leader also has the power, under

1 The Assembly also has the power to amend Iran’s constitution.
2 The Council of Guardians consists of six Islamic jurists and six secular lawyers. The six Islamic jurists are appointed
by the Supreme Leader. The six lawyers on the Council are selected by the judiciary but confirmed by the Majles.
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the constitution, to remove the elected President if either the judiciary or the elected Majles
(parliament) say the President should be removed, with cause. The Supreme Leader appoints
members of the 42-member Expediency Council, set up in 1988 to resolve legislative
disagreements between the Majles and the Council of Guardians but its powers were expanded in
2006 to include oversight of the executive branch (cabinet) performance. Expediency Council
members serve five-year terms. The Council, appointed most recently in February 2007, is still
headed by Rafsanjani; its executive officer is former Revolutionary Guard commander-in-chief
Mohsen Reza’i.
The Assembly of Experts is empowered to oversee the work of the Supreme Leader and replace
him if necessary, as well as to amend the constitution. The Assembly serves a six-year term; the
fourth election for that Assembly was held on December 15, 2006. After that election, Akbar
Hashemi-Rafsanjani, still a major figure having served two terms as president himself (1989-
1997), was named deputy leader of the Assembly. After the death of the leader of the Assembly,
Rafsanjani was selected its head in September 2007, outpointing a harder line competitor,
Ayatollah Ahmad Jannati. (See Figure 1 for a chart of the Iranian regime.)
Table 1. Major Factions and Personalities
Conservatives
Supreme Leader Ali Khamene’i
Born in July 1939 to an Azeri (Turkic) family from Mashhad. Lost the use of
his right arm in an assassination attempt in June 1981. Helped organize the
Revolutionary Guard and other post-revolution security organs. Served as
elected president during 1981-1989 and was selected Khomeini’s successor
in June 1989 upon the Ayatollah’s death. Upon that selection, his religious
ranking was advanced in the state-run press and official organs to
“Ayatollah” from the lower ranking “Hojjat ol-Islam.” Has all the formal
powers but not the undisputed authority of his predecessor, founder of
the revolutionary regime Ayatollah Ruhollah Khomeini. Like Khomeini,
Khamene’i generally stays out of day-to-day governmental business but
saves his prestige to resolve factional disputes or to quiet popular criticism
of regime performance. Has taken more interventionist role to calm
internal infighting in wake of June 2009 election dispute. Considered
moderate-conservative on domestic policy but hardline on foreign policy
and particularly toward Israel. Seeks to challenge U.S. hegemony and wants
Israel defeated but respects U.S. military power and fears military
confrontation with United States. Generally supports the business
community (bazaaris), and opposes state control of the economy. Senior
aides in his office include second son, Mojtaba, who is said to be acquiring
increasing influence. Has made public reference to purported letters to him
from President Obama that he asserts have asked for renewed U.S.-Iran
relations.
Expediency Council and Assembly
Long a key strategist of the regime, and longtime advocate of “grand
of Experts Chair Ali Akbar
bargain” to resolve all outstanding issues with United States, although on
Hashemi-Rafsanjani
Iran’s terms. A mid-ranking cleric, now leads both Expediency Council and
Assembly of Experts, although general y perceived as waning in influence
generally. Heads moderate-conservative faction known as Executives of
Construction. Was Majles speaker during 1981-89 and President 1989-
1997. One of Iran’s richest men, family owns large share of Iran’s total
pistachio nut production. Supported Musavi in June 2009 election,
purportedly financed much of his campaign, and played behind-the-scenes
role trying to persuade Supreme Leader to nullify the June 2009 election.
Now considered essential y an opponent of the Supreme Leader, the
arrest of five Rafsanjani family members in June 2009, may have reflected
Khamene’I pressure on him. Daughter Faizah has participated in several
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opposition protests.
President Mahmoud Ahmadinejad
Declared re-elected on June 12, 2009, and inaugurated August 5, but
results still not accepted by his election challengers and protesters. See
box on page 8.
Majles Speaker Ali Larijani
Overwhelming winner for Majles seat from Qom on March 14, 2008, and
selected Majles Speaker on May 25 (237 out of 290 votes). Former state
broadcasting head (1994-2004) and Minister of Culture and Islamic
Guidance (1993), was head of Supreme National Security Council and chief
nuclear negotiator from August 2005 until October 2007 resignation.
Sought to avoid U.N. Security Council isolation. Politically close to
Khamene’i but highly critical of Ahmadinejad and criticized election officials
for the flawed June 12, 2009, election and subsequent crackdown.
However, has grown increasingly threatening against protesters as the
opposition has gained strength. Brother of judiciary head.
Tehran Mayor Mohammad Baqer
Former Revolutionary Guard Air Force commander and police chief, but a
Qalibaf
moderate-conservative and ally of Larijani. Encourages comparisons of
himself to Reza Shah, invoking an era of stability and strong leadership,
while also making use of modern media tools. Lost in the 2005 presidential
elections, but supporters won nine out of 15 seats on Tehran city council
in December 2006 elections, propelling him to current post as mayor of
Tehran. Recruited moderate conservatives for March 2008 Majles election.
Senior Clerics in Qom
The most senior clerics in Qom, including several Grand Ayatollahs, are
general y “quietist”—they believe that the senior clergy should refrain from
direct involvement in politics. These include Grand Ayatollah Nasser
Makarem Shirazi, Grand Ayatollah (former judiciary chief) Abdol Karim
Musavi-Ardabili, and Grand Ayatollah Yusuf Sanei, all of whom have
criticized regime crackdown against opposition protests. Others believe in
political involvement, including Ayatollah Mohammad Taqi Mesbah Yazdi.
He is founder of the hardline Haqqani school, and spiritual mentor of
Ahmadinejad. Fared poorly in December 2006 elections for Assembly of
Experts. An assertive defender of the powers of the Supreme Leader and a
proponent of an “Islamic state” rather than the current “Islamic republic,”
and advocates isolation from the West. May seek to replace Khamene’i.
Another politically active senior cleric is Ayatollah Kazem Haeri, mentor of
radical Iraqi cleric Moqtada Al Sadr.
Judiciary Chief/Ayatollah Sadeq
Larijani named in late August 2009 as Judiciary head, replacing Ayatollah
Larijani
Mahmoud Shahrudi, who had headed the Judiciary since 1999. Larijani is
brother of Majles Speaker Ali Larijani; both are close to the Supreme
Leader. Was appointed primarily to curb Ahmadinejad’s aggressive
prosecutions of reformist leaders fol owing June 2009 election dispute.
Another Larijani brother, Mohammad Javad, was deputy Foreign Minister
during the 1980s.
Militant Clerics Association
Longtime organization of hardline clerics headed by Ayatollah Mohammad
Mahdavi-Kani. Not to be confused with an organization with almost the
same name, below. Did not back Ahmadinejad in June 12 presidential
elections.
Opposition/”Green Path Hope”
Al of the blocs and personalities below can be considered part of the Green Path of Hope opposition/revolutionary
movement. However, overall leadership of the opposition is unclear, with several components competing for pre-
eminence and the ability to determine the direction of the protest movement.
Mohammad Khatemi/Mir Hossein
Khatemi—reformist president during 1997-2005 and declared he would
Musavi
run again for President in June 2009 elections, but withdrew when allied

reformist Mir Hossein Musavi entered the race in late March 2009.
Khatemi elected May 1997, with 69% of the vote; re-elected June 2001with
77%. Rode wave of sentiment for easing social and political restrictions
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among students, intellectuals, youths, and women that seeks reform but
not outright replacement of the regime, but became disillusioned with
Khatemi failure to stand up to hardliners on reform issues. Now heads
International Center for Dialogue Among Civilizations. Visited U.S. in
September 2006 to speak at Harvard and the Washington National
Cathedral on “dialogue of civilizations.” Has hewed to staunch anti-Israel
line of most Iranian officials, but perceived as open to accepting a
Palestinian-Israeli compromise.
Musavi has views similar to Khatemi on political and social freedoms and
on reducing Iran’s international isolation, but supports strong state
intervention in the economy to benefit workers, lower classes. Khatemi
supported Musavi chal enge to 2009 election legitimacy. Continues to
appear at some protests, sometimes intercepted or constrained by regime
security agents, but may be losing ground to harder line student opposition
leaders who criticize his January 2010 statements indicating regime
reconciliation is possible and who want to completely replace the current
system. Some Green supporters have left Iran for Europe, Asia, or the
United States. Some IRGC and parliamentary hardliners continue to urge
his arrest.
Society of Militant Clerics/Mehdi
Reformist grouping once led by Mehdi Karrubi. Karrubi formed a separate
Karrubi
“National Trust” faction after losing 2005 election. Ran again in 2009, but
received few votes and subsequently has emerged, along with Musavi, as a
symbol of the opposition.
Student Opposition
Staunch oppositionists and revolutionaries, many now favor replacement of
Leaders/Confederation of Iranian
the regime with secular democracy. One key bloc in this group is the
Students/Office of Consolidation of
Confederation of Iranian Students (CIS), led by Amir Abbas Fakhravar, who
Unity (Daftar Tahkim-e- Vahdat)
was jailed for five years for participating in July 1999 student riots. CIS,
committed to non-violent resistance, is successor of Office of
Consolidation Unity, which led those riots. CIS supports international
efforts to sanction the regime. At the time of those riots, the students had
been strong Khatemi supporters, but turned against him for failing to
chal enge hardliners, particularly after July 1999 violent crackdown on
student riots, in which four students were killed. Student leaders
attempting—and increasingly succeeding—in gaining support of older
generation, labor, clerics, and other segments to topple regime.
Islamic Iran Participation Front
The most prominent and best organized pro-reform grouping, but has lost
(IIPF).
political ground to more active and forceful student core of Green Path
opposition movement. Its leaders include Khatemi’s brother, Mohammad
Reza Khatemi (a deputy speaker in the 2000-2004 Majles) and Mohsen
Mirdamadi. Backed Musavi in June 12 election; several IIPF leaders,
including Mirdamadi,detained and prosecuted in postelection dispute.
Mojahedin of the Islamic Revolution
Composed mainly of left-leaning Iranian figures who support state control
Organization (MIR)
of the economy, but want greater political pluralism and relaxation of rules
on social behavior. A major constituency of the reformist camp. Its leader
is former Heavy Industries Minister Behzad Nabavi, who supported Musavi
in 2009 election and was remains jailed for post-election unrest.
Shirin Abadi
A number of dissidents have struggled against regime repression for many
years, long before the election dispute. One major longtime dissident and
human rights activist is Nobel Peace Prize laureate (2003) and Iran human
rights activist lawyer Shirin Abadi. Subsequent to the passage of the U.N.
General Assembly resolution above, Iranian authorities raided the Tehran
office of the Center for Defenders of Human Rights, which she runs. She
has often represented clients persecuted or prosecuted by the regime. She
left Iran for Europe, fearing arrest in connection with the postelection
dispute. In December 2009, the regime confiscated her Nobel Prize award.
Grand Ayatollah Hosein Ali
Died December 20, 2009 of natural causes and has become a symbol of
some oppositionists. Montazeri was Khomeini’s designated successor until
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Montazeri
1989, when Khomeini dismissed him for al egedly protecting intel ectuals
and opponents of clerical rule He was released in January 2003 from
several years of house arrest, and, despite being under close watch, issued
statements highly critical of the postelection crackdown.
Other Long Term Dissidents
Other leading dissidents have chal enged the regime long before the
presidential election. For example, joournalist Akbar Ganji conducted
hunger strikes to protest regime oppression; he was released on schedule
on March 18, 2006, after sentencing in 2001 to six years in prison for
alleging high-level involvement in 1999 murders of Iranian dissident
intellectuals that the regime had blamed on “rogue” security agents.
Another prominent dissident is Abdol Karim Soroush, who challenged the
doctrine of clerical rule. Others in this category include former
Revolutionary Guard organizer Mohsen Sazegara, former Culture Minister
Ataollah Mohajerani, and Mohsen Kadivar.

The Presidency/Mahmoud Ahmadinejad
The President, a position held since 2005 by Mahmoud Ahmadinejad, appoints and supervises the
work of the cabinet. Cabinet appointments are subject to confirmation by the Majles (parliament),
and the Supreme Leader is believed to have significant input into key security cabinet
appointments, including ministers of defense, interior, and intelligence. Although subordinate to
the Supreme Leader, the presidency is a coveted and intensely fought-over position which
provides vast opportunities for the President to empower his political base and to affect policy.
After suffering several election defeats at the hands of President Mohammad Khatemi and the
reformists in the 1997 and 2001 presidential elections, hardliners successfully moved to regain
the sway they held when Khomeini was alive. Conservatives won the February 20, 2004, Majles
elections (which are always held one year prior to each presidential election), although the
conservative win was the result of the Council of Guardians’ disqualification of 3,600 reformist
candidates, including 87 Majles incumbents. That helped conservatives win 155 out of the 290
seats. The George W. Bush Administration and the Senate (S.Res. 304, adopted by unanimous
consent on February 12, 2004) criticized the elections as unfair.
As the reformist faction suffered setbacks, the Council of Guardians narrowed the field of
candidates for the June 2005 presidential elections to 8 out of the 1,014 persons who filed.
Rafsanjani 3 was considered the favorite against several opponents more hardline than he is—
three had ties to the Revolutionary Guard: Ali Larijani (see Table 1); Mohammad Baqer Qalibaf
(see Table 1); and Tehran mayor Mahmoud Ahmadinejad. In the June 17, 2005, first round,
turnout was about 63% (29.4 million votes out of 46.7 million eligible voters). With 21% and
19.5%, respectively, Rafsanjani and Ahmadinejad, who did unexpectedly well because of tacit
backing from Khamene’i, moved to a runoff. Reformist candidates (Mehdi Karrubi and Mostafa
Moin) fared worse than expected. Ahmadinejad won in the June 24 runoff, receiving 61.8% to
Rafsanjani’s 35.7%. He first took office on August 6, 2005.

3 Rafsanjani was constitutionally permitted to run because a third term would not have been consecutive with his
previous two terms. In the 2001 presidential election, the Council permitted 10 out of the 814 registered candidates.
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Ahmadinejad’s Policies and Popularity
Well before the June 2009 election unrest, Ahmadinejad had been a controversial figure for his
inflammatory statements. He attracted significant world criticism for an October 26, 2005, Tehran
conference entitled “A World Without Zionism” by stating that “Israel should be wiped off the
map.” He insisted on holding a December 2006 conference in Tehran questioning the Holocaust,
a theme he has returned to several times since, including at a September 2007 speech at Columbia
University. A U.N. Security Council statement and Senate and House resolutions (H.Res. 523 and
S.Res. 292), passed by their respective chambers, condemned the statement. On June 21, 2007,
the House passed H.Con.Res. 21, calling on the U.N. Security Council to charge Ahmadinejad
with violating the 1948 Convention on the Prevention and Punishment of the Crime of Genocide;
the Convention includes “direct and public incitement” to commit genocide as a punishable
offense.
Even before the 2009 presidential election campaign, several Iranian leaders, and portions of the
population, were expressing concern that Ahmadinejad’s defiance of the international community
on the nuclear issue—as well as his frequent visits and meetings with such anti-U.S. figures as
Venezuela’s Hugo Chavez—was isolating Iran. These perceptions contributed to a split within his
conservative “Principalist” faction in the March 2008 Majles elections. Supreme Leader
Khamene’i has publicly supported Ahmadinejad for refusing to bow to international demands on
the nuclear issue. At other times, such as April 2009, Khamene’i has upbraided Ahmadinejad—in
this case for incorporating the position of coordinator of the Hajj (major pilgrimage to Mecca)
into the Tourism Ministry; the move was reversed. Khamene’i was perceived as favoring
Ahmadinejad’s reelection but, perhaps sensing that this outcome was not assured, he was publicly
neutral in the campaign.
Table 2. Factions in the Eighth Majles
(Elected March 14-April 25, 2008)
Pro-Ahmadinejad Conservatives (United Front of Principalists) 117
Anti-Ahmadinejad Conservatives (Coalition of Principalists)
53
Reformists (39 seats in seventh Majles)
46
Independents 71
Seats annulled or voided
3

On economic matters, many Iranians criticized Ahmadinejad for raising some wages and
lowering interest rates for poorer borrowers, cancelling some debts of farmers, and increasing
some social welfare payments. These moves fed inflation, but poorer Iranians saw Ahmadinejad
as attentive to their economic plight and this support appears to have been key to his reelection.
Iranian economists say that these programs began to deplete Iran’s reserve fund (“Oil
Stabilization Fund,” which had been as high as about $10 billion) even when oil prices were high
in mid-2008, leaving Iran now unable to cope with the fall in oil prices. Others say he has not
moved to curb the dependence on oil revenues, which account for about 20% of Iran’s gross
domestic product (GDP). On the other hand, he has attempted to persuade the Majles to pass
legislation to greatly reduce state subsidies.
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Major economic sectors or markets are controlled by the quasi-statal “foundations” (bonyads),
run by powerful former officials, and there are special trading privileges for them and the bazaar
merchants, a key constituency for some conservatives. The same privileges—and more—
reportedly apply to businesses run by the Revolutionary Guard, as discussed below, leading to
criticism that the Guard is using its political influence to win business contracts.
Ahmadinejad has generally been opposed by affluent and educated urbanites. Even before the
post June 2009 election unrest, educated, urban sentiment against him was evident in several
student protests against him. The most recent of these, prior to the June 12 election, was in late
February 2009, when authorities tried to rebury on Amir Kabir University of Technology grounds
the bodies of some killed in the Iran-Iraq war.

Mahmoud Ahmadinejad
First non-cleric to be president of the Islamic republic since the assassination of then president Mohammad Ali Rajai in
August 1981. About 56, he asserts he is a “man of the people,” the son of a blacksmith who lives in modest
circumstances, who would promote the interests of the poor and return government to the original principles of the
Islamic revolution. Has burnished that image as president through regular visits to poor areas and through subsidies
directed at the lower classes. His official biography says he served with the “special forces” of the Revolutionary
Guard, and he served subsequently (late 1980s) as a deputy provincial governor. Has been part of the “Isargaran”
faction composed of former Guard and Basij (volunteer popular forces) leaders and other hardliners. U.S. intelligence
reportedly determined he was not one of the holders of the 52 American hostages during November 1979-January
1981. Other accounts say Ahmadinejad believes his mission is to prepare for the return of the 12th Imam—Imam
Mahdi—whose return from occultation would, according to Twelver Shiite doctrine, be accompanied by the
establishment of Islam as the global religion. Earned clerical criticism in May 2008 for again invoking intervention by
Imam Mahdi in present day state affairs. Regularly attends U.N. General Assembly sessions in New York each
September. In an October 2006 address, Ahmadinejad said, “I have a connection with God.” Sent letter of
congratulation to President-elect Barack Obama for his election victory, but has only tepidly responded to subsequent
Obama Administration outreach initiatives. Following limited recount, declared winner of June 12, 2009, election.
Many diplomats walked out on or did not attend Ahmadinejad’s speech before the U.N. General Assembly on
September 23, 2009.

June 12, 2009, Presidential Elections
The opposition movement grew out of severe disappointment and suspicion of fraud in the June
12, 2009, presidential election. Prospects for reformists to unseat Ahmadinejad seemed to
brighten in February 2009, when Khatemi—who is still highly popular among reform-minded
Iranians—said that he would run. However, on March 18, 2009, Khatemi withdrew from the race
in favor of another reformist, former Prime Minister Mir Hossein Musavi. Musavi was viewed as
somewhat less divisive—and therefore more acceptable to the Supreme Leader—because Musavi
had served as Prime Minister during the 1980-88 Iran-Iraq war. Khatemi backed Musavi
enthusiastically.
A total of about 500 candidates for the June 12, 2009, presidential elections registered their names
during May 5-10, 2009. The Council of Guardians decide on the final candidates on May 20—
permitting only four to run: Ahmadinejad, Musavi, Mehdi Karrubi, and Mohsen Reza’i. The
Interior Ministry, which runs the election, also instituted during this campaign season a series of
one-on-one debates among the candidates, which were acrimonious, including Ahmadinejad’s
accusations of corruption against Rafsanjani and against Musavi’s wife. If no candidate received
more than 50% of the vote on June 12, there would have been a runoff one week later.
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The challengers and their backgrounds and platforms were:
• Mir Hosein Musavi. The main reformist candidate. Non-cleric. About 67.
Architect and disciple of Ayatollah Khomeini, he served as Foreign Minister
(1980), then Prime Minister (1981-89), at which time he successfully managed
the state rationing program during the privations of the Iran-Iraq war but often
feuded with Khamene’i, who was then President. At that time, he was an
advocate of state control of the economy. His post was abolished in the 1989
revision of the constitution. Later moderated his views, including the need to
avoid confrontation with the international community, but publicly opposed—
and continues to oppose—U.N.-demanded curbs on Iran’s nuclear program.
Musavi’s campaign made extensive use of his high profile wife, Zahra
Rahnevard, a well-known women’s activist and professor.
• Mehdi Karrubi. Some feared he might split the reformist vote because of his
attentiveness to economic policies that favor the lower classes, but official results
showed him a minor factor in the voting.
• Mohsen Reza’i. As noted above, he was Commander in Chief of the
Revolutionary Guard for almost all of the Iran-Iraq war period. About 58 years
old, he is considered an anti-Ahmadinejad conservative. Reza’i dropped out just
prior to the 2005 presidential election due to perceived insufficient support, and
he apparently did not build substantial support since then. He attended
Khamene’i’s June 19, 2009, speech and later dropped his formal challenge of the
election results, but he criticized elements of the government crackdown.
Election Dispute and Aftermath
The outcome of the election was always difficult to foresee. Polling results were inconsistent.
Musavi supporters held large rallies in Tehran, but pro-Ahmadinejad rallies were large as well.
During the campaign, Khamene’i met with Musavi and, in mid-May 2009, visited Musavi’s father
at his home, suggesting neutrality, although the two were often at odds during the Iran-Iraq war,
when Khamene’i was President and Musavi was Prime Minister. Turnout was high at about 85%;
39.1 million valid (and invalid) votes were cast. The Interior Ministry announced two hours after
the polls closed that Ahmadinejad had won, although in the past results have been announced the
day after. The totals were announced on Saturday, June 13, 2009, as follows:
Ahmadinejad: 24.5 million votes—62.6%
Musavi: 13.2 million votes—33.75%
Reza’i: 678,000 votes—1.73%
Invalid: 409,000 votes—1%
Karrubi: 333,600 votes—0.85%
Almost immediately after the results were announced, Musavi supporters began protesting the
results on June 13, as he, Karrubi, and Reza’i, asserted outright fraud and called for a new
election, citing the infeasibility of counting 40 million votes so quickly; the barring of candidate
observers at many polling stations; regime shut-down of Internet and text services; and repression
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of postelection protests. Khamene’i declared the results a “divine assessment,” appearing to
certify the results even though formal procedures require a three day complaint period. While
several outside analysts say the results appeared to represent widespread fraud.4, others said the
announced results tracked preelection polls and reflected Ahmadinejad’s perceived strong support
in rural areas and among the urban poor.
Protests built throughout June 13-19, large in Tehran but also held in other cities, exposing regime
divisions and posing the most significant threat to the regime’s grip on power to date. Security
forces used varying amounts of force to control them, causing 27 protester deaths for the period
of active protests, according to official Iranian statements (with figures from opposition groups
running over 100). The protesters’ hopes of having Khamene’i annul the election were dashed by
his major Friday prayer sermon on June 19 in which he refuted allegations of vast fraud and
threatened a crackdown on further protests. Such a crackdown was evident on Saturday, June 20,
with state media reporting at least 10 protesters killed that day.
Protests lessened by June 22, but continued sporadically thereafter, including on the July 9
anniversary of the suppression of the 1999 student riots; the August 5, 2009, official inauguration
of Ahmadinejad; and September 18 “Jerusalem Day.” The sporadic nature of the protests created
the impression that the regime would gain the upper hand. However, the opposition has proved
resilient, making use of Internet-based sites (Facebook, Twitter) and timing their demonstrations
to official holidays when people can gather easily. The most recent demonstrations have been
large and marked by resistance to the security forces as well as the spreading to smaller cities and
the involvement of older generation and even religious persons. These were the hallmarks of
protests on November 4, 2009, the 30th anniversary of the takeover of the U.S. embassy in Tehran,
and particularly on the occasion of the Ashura Shiite holy day (December 27, 2009, which also
marked the seventh day since the death of Ayatollah Montazeri, a major critic of Khamene’i). On
December 27, some anti-riot police are said to have refused to beat protesters.
The regime, particularly the Supreme Leaders, at first tried to at least appear to address
complaints about the election and the crackdown. On June 29, 2009, the Council of Guardians
performed a televised recount of 10% of the votes of Tehran’s districts and some provincial
ballots and, finding no irregularities, certified the results. Musavi and Karrubi, joined by Khatemi,
have continued to call the election fraudulent. In response to complaints even by hardline clerics
about the amount of force used against the protests, in late July Khamene’i ordered 140 more
released and a prison closed (Khazirak) where some protesters purportedly died or were beaten in
custody. In December 2009, however, regime leaders and parliamentarians have increasingly
threatened arrests of senior opposition leaders and even executions of protesters. Some regime
officials are said to believe that the hardening of anti-opposition tactics has caused the opposition
to radicalize into a revolutionary movement that will not reconcile with the regime.
How Shaken and Divided Is the Regime?
Some say that the most serious effects have been the exposure and widening of cracks within the
regime, the most serious internal rift in Iran since the early 1980s. The composition of the regime

4 A paper published by Chatham House and the University of St. Andrews strongly questions how Ahmadinejad’s vote
could have been as large as reported by official results, in light of past voting patterns throughout Iran. “Preliminary
Analysis of the Voting Figures in Iran’s 2009 Presidential Election.” http://www.chathamhouse.org.uk.

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has narrowed significantly—reformists and even some senior clerics have left the regime fold and
are now supporting the opposition. Senior longtime regime stalwart Rafsanjani, discussed
extensively above, is backing the Green movement, and he and others did not attend
Ahmadinejad’s inauguration. In a speech on December 6, 2009, he criticized the use of the Basij
and IRGC against unarmed civilians. Larijani, Qalibaf, and several senior Ayatollahs in Qom,
such as Grand Ayatollah Yusuf Sanei, Grand Ayatollah Abdol Karim Musavi Ardabili, and the
Association of Researchers and Teachers of Qom Seminary, have also criticized the use of
violence against the protesters. Others of the most senior clerics appeared to lean toward that
position as well.
U.S. and Allied Reaction
The burgeoning unrest has complicated policy for President Obama, who has tried to balance
non-interference in Iranian affairs (a sensitive issue in Iran)—and preserve the possibility of a
nuclear deal with Iran—with calls for him to focus entirely on pressuring the regime. Some
believe that President Obama might have missed, or is missing, an opportunity to bring the
regime down by siding more decisively with the opposition movement. As the crackdown has
progressed, the statements of President Obama and other U.S. officials have become
progressively more critical of the regime. Some presidential statements appear to have been
influenced, to some extent by House and Senate passage of resolutions on June 19 (H.Res. 560
and S.Res. 193, respectively), condemning violence against demonstrators and the government’s
suppression of electronic communication. Another resolution passed by the Senate that day,
S.Res. 196, calling on the Iranian regime to permit free expression, free speech, and a free press.
On December 23, 2009, the Senate passed S.Res. 386, condemning Iran’s use of violence against
the demonstrators and its use of Internet censorship and monitoring to counter the opposition.
Other legislation, such as the “Voice Act” (Subtitle D of the FY2010 Defense Authorization, P.L.
111-84), contain provisions to potentially penalize companies that are selling Iran technology
equipment that it can use to suppress or monitor the Internet usage of Iranians.5 On December 28,
2009, President Obama continued to shift toward public support for the opposition outright by
saying, in regard to the unrest in Iran, “Along with all free nations, the United States stands with
those who seek their universal rights.”6
Several European governments, such as France, Britain, and Germany, were even more critical of
Iran’s crackdown than was the United States. A joint statement of the July 8-9, 2009, G-8 summit
meeting, held in Italy, deplored Iran’s treatment of protesters but also renewed the call for
diplomacy with Iran on the nuclear issue.
Exiled Opposition Groups
Some groups have been committed to the replacement of the regime virtually since its inception,
and remain mostly in exile. Their linkages to the Green Path movement are unclear, and some
indications are these movements want to dominate any coalition that might topple the current
regime.

5 For more discussion of such legislation, see CRS Report RS20871, Iran Sanctions .
6 White House, Office of the Press Secretary. “Statement by the President on the Attempted Attack on Christmas Day
and Recent Violence in Iran.” December 28, 2009.
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People’s Mojahedin Organization of Iran (PMOI)/Camp Ashraf
One of the best known exiled opposition groups is the People’s Mojahedin Organization of Iran
(PMOI).7 Secular and left-leaning, it was formed in the 1960s to try to overthrow the Shah of Iran
and advocated Marxism blended with Islamic tenets. It allied with pro-Khomeini forces during
the Islamic revolution and supported the November 1979 takeover of the U.S. Embassy in Tehran
but was later driven into exile. Even though it is an opponent of Tehran, since the late 1980s the
State Department has refused contact with the PMOI and its umbrella organization, the National
Council of Resistance (NCR). The State Department designated the PMOI as a foreign terrorist
organization (FTO) in October 19978 and the NCR was named as an alias of the PMOI in the
October 1999 re-designation. The FTO designation was prompted by PMOI attacks in Iran that
sometimes kill or injure civilians—although the group does not appear to purposely target
civilians. In August 14, 2003, the State Department designated the NCR offices in the United
States an alias of the PMOI, and NCR and Justice Department authorities closed down those
offices. The regime accuses the group of involvement in the post June 2009 presidential election
violence.
The State Department report on international terrorism for 2007 asserts that the organization—
and not just a radical element of the organization as the group asserts—was responsible for the
alleged killing of seven American defense advisers to the former Shah in 1975-1976. The report
again notes the group’s promotion of women in its ranks and again emphasizes the group’s “cult-
like” character, including indoctrination of its members and separation of family members,
including children, from its activists. The group’s alliance with Saddam Hussein’s regime in the
1980s and 1990s has contributed to the U.S. shunning of the organization.
Some advocate that the United States not only remove the group from the FTO list but also enter
an alliance with the group against Iran. The FTO designation was up for formal review in October
2008, and, in July 2008, the PMOI formally petitioned to the State Department that its
designation be revoked, on the grounds that it renounced any use of terrorism in 2001. However,
the State Department announced in mid-January 2009 that the group would remain listed; the next
review of the FTO list is in October 2009.
The group is trying to build on recent legal successes in Europe; on January 27, 2009, the
European Union (EU) removed the group from its terrorist group list; the group had been so
designated by the EU in 2002. In May 2008, a British appeals court determined that the group
should no longer be considered a terrorist organization on the grounds that the British government
did not provide “any reliable evidence that supported a conclusion that PMOI retained an
intention to resort to terrorist activities in the future.” Currently, the governments that still list the
group as a “terrorist organization,” include the United States, Canada, Australia. In June 2003,
France arrested about 170 PMOI members, including its co-leader Maryam Rajavi (wife of PMOI
founder Masoud Rajavi, whose whereabouts are unknown). She was released and remains based
in France, and is occasionally received by European parliamentarians and other politicians.

7 Other names by which this group is known is the Mojahedin-e-Khalq Organization (MEK or MKO) and the National
Council of Resistance (NCR).
8 The designation was made under the authority of the Anti-Terrorism and Effective Death Penalty Act of 1996 (P.L.
104-132).
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The issue of group members in Iraq is increasingly pressing. U.S. forces attacked PMOI military
installations in Iraq during Operation Iraqi Freedom and negotiated a ceasefire with PMOI
military elements in Iraq, requiring the approximately 3,400 PMOI fighters to remain confined to
their Ashraf camp near the border with Iran. Its weaponry is in storage, guarded by U.S.
personnel. In July 2004, the United States granted the Ashraf detainees “protected persons” status
under the 4th Geneva Convention, meaning they will not be extradited to Tehran or forcibly
expelled as long as U.S. forces have a mandate to help secure Iraq. Another 200 PMOI fighters
have taken advantage of an arrangement between Iran and the ICRC for them to return to Iran if
they disavow further PMOI activities; none are known to have been persecuted since returning.
The U.S.-led security mandate in Iraq was replaced on January 1, 2009, by a bilateral U.S.-Iraq
agreement that limits U.S. flexibility in Iraq. The group fears that, now that Iraqi forces have
taken control of the camp, Iraq will expel the group to Iran. The Iraqi government tried to calm
those fears in January 2009 by saying that it would adhere to all international obligations not do
so, but that trust was lost on July 27, 2009, when it set up a police post in the Camp, which was
resisted by PMOI residents. The PMOI says about a dozen were killed in the clashes. Some
observers say Iraq might move the camp to Iraq’s interior, away from the Iran border. The EU
“de-listing” might help resolve the issue by causing EU governments to take in those at Ashraf. In
December 2009, Iraq announced the group would be relocated to a detention center near
Samawah, in southern Iraq; substantial resistance by the Ashraf residents is expected if and when
Iraq attempts to implement that decision.
Other Armed Groups
Some armed groups are operating in Iran’s border areas, and are generally composed of ethnic or
religious minorities. One such group is Jundullah, composed of Sunni Muslims primarily from
the Baluchistan region bordering Pakistan. Since mid-2008, it has conducted several successful
attacks on Iranian security personnel, apparently including in May 2009, claiming revenge for the
poor treatment of Sunnis in Iran. On October 18, 2009, it claimed responsibility for killing five
Revolutionary Guard commanders during a meeting they were holding with local groups in Sistan
va Baluchistan Province.
An armed Kurdish group operating out of Iraq is the Free Life Party, known by its acronym
PJAK. PJAK was designated in early February 2009 as a terrorism supporting entity under
Executive order 13224, although the designation statement indicated the decision was based
mainly on PJAK’s association with the Turkish Kurdish opposition group Kongra Gel, also
known as the PKK. Another militant group, the “Ahwazi Arabs,” operates in the largely Arab
inhabited areas of southwest Iran, bordering Iraq.
The Son of the Former Shah
Some Iranian exiles, as well as some elites still in Iran, want to replace the regime with a
constitutional monarchy led by Reza Pahlavi, the U.S.-based son of the late former Shah and a
U.S.-trained combat pilot. In January 2001, the Shah’s son, who is about 54 years old, ended a
long period of inactivity by giving a speech in Washington, DC, calling for unity in the opposition
and the institution of a constitutional monarchy and democracy in Iran. He has since broadcast
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messages into Iran from Iranian exile-run stations in California,9 and delivered a statement
condemning the regime for the post-2009 election crackdown. He does not appear to have large-
scale support inside Iran, but he may be trying to capitalize on the opposition’s growing
popularity. In January 2010, he called for international governments to withdraw their
representation from Tehran.
Other Outside Activists
Numerous Iranians-Americans in the United States want to see a change of regime in Tehran.
Many of them are based in California, where there is a large Iranian-American community, and
there are about 25 small-scale radio or television stations that broadcast into Iran. While many
Iranian-Americans protested Ahmadinejad’s visit to the United Nations in September 2009, and
many others sport green bracelets indicating sympathy with the Green movement, it is not clear
the degree to which Iranian-American or other Iranians outside Iran are in touch with
oppositionists inside Iran or are influencing events in Iran.
Some organizations, such as The National Iranian American Council (NIAC) and the Public
Affairs Alliance of Iranian-Americans (PAAIA), are not necessarily seeking change within Iran.
The mission of NIAC, composed largely of Iranian-Americans, is to promote discussion of U.S.
policy and the group has advocated engagement with Iran. PAAIA’s mission is to discuss issues
affecting Iranian-Americans, such as discrimination caused by public perceptions of association
with terrorism or radical Islam.
Human Rights Practices
The sections below discuss various aspects of Iran’s human rights record. Table 3 discusses the
regime’s record on a number of human rights issues and its repression of certain groups. The table
is based largely on the latest State Department human rights report (released February 25, 2009)
and the 2009 State Department “International Religious Freedom” report (released October 26,
2009). These reports cite Iran for widespread serious abuses, including unjust executions,
politically motivated abductions by security forces, torture, arbitrary arrest and detention, and
arrests of women’s rights activists. The State Department human rights reports said the
government’s “poor human rights record worsened” during 2008. An October 1, 2008, report on
Iran by the U.N. Secretary General became the basis of a U.N. General Assembly resolution,
finalized on December 18, 2008, by a vote of 69-54, calling on Iran to allow visits by U.N.
personnel investigating the status of human rights practices in Iran.



9 Kampeas, Ron. “Iran’s Crown Prince Plots Nonviolent Insurrection from Suburban Washington.” Associated Press,
August 26, 2002.
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Table 3. Human Rights Practices
Group/Issue
Regime Practice/Recent Developments
Ethnic and
Persians are about 51% of the population, and Azeris (a Turkic people) are about 24%. Kurds are
Religious
about 7% of the population, and about 3% are Arab. Of religions, Shiite Muslims are about 90% of
Breakdown
the Muslim population and Sunnis are about 10%. About 2% of the population is non-Muslim,
including Christians, Zoroastrians (an ancient religion in what is now Iran), Jewish, and Baha’i.
Media
Since 2000, judicial hardliners have closed hundreds of reformist newspapers, although many have
tended to reopen under new names. Even before the election-related unrest, Iran blocked pro-
reform websites and blogs supportive of the reformist candidates. In August 2007, the government
closed a major reformist daily, Shargh, which had previously been suspended repeatedly. In
February 2008, the regime closed the main women’s magazine, Zanan (women in Farsi) for
al egedly highlighting gender inequality in Islamic law. In November 2008, the regime arrested
famed Iranian blogger Hossein Derakshan. Canadian journalist (of Iranian origin) Zahra Kazemi was
detained in 2003 for filming outside Tehran’s Evin prison and allegedly beaten to death in custody.
The intelligence agent who conducted the interrogation/beating was acquitted July 25, 2004.
Labor
Independent unions are technical y legal but not al owed in practice. The sole authorized national
Unions/Students/
labor organization is a state-controlled “Workers’ House” umbrella. However, some activists
Other Activists
show independence and, in 2007, the regime arrested labor activists for teachers’ associations, bus
drivers’ unions, and a bakery workers’ union. A bus drivers union leader, Mansur Osanloo, has
been in jail since July 2007. The regime reportedly also dissolved student unions and replaced
them with regime loyalists following student criticism of Ahmadinejad. In September 2008, Iran
arrested several HIV/AIDs researchers for alleged anti-government activities.
Women
Regime strictly enforcing requirement that women fully cover themselves in public, generally with
a garment called a chador, including through detentions. In March 2007, the regime arrested 31
women activists who were protesting the arrest in 2006 of several other women’s rights activists;
all but 3 of the 31 were released by March 9. In May 2006, the Majles passed a bill calling for
increased public awareness of Islamic dress, an apparent attempt to persuade women not to wear
Western fashion. The bill did not contain a requirement that members of Iran’s minority groups
wear badges or distinctive clothing. In April 2006, Ahmadinejad directed that women be allowed
to attend soccer matches, but the Supreme Leader reversed that move. Women can vote and run
in parliamentary and municipal elections. Iranian women can drive, and many work outside the
home, including owning their own businesses. There are 9 women in the 290-seat Majles.
Religious Freedom Each year since 1999, the State Department religious freedom report has named Iran as a
“Country of Particular Concern” under the International Religious Freedom Act. No sanctions
added, on the grounds that Iran is already subject to extensive U.S. sanctions. Continued
deterioration in religious freedom noted in the International Religious Freedom report for 2000
(October 26, 2009).
Baha’is
Iran repeatedly cited for repression of the Baha’i community, which Iran’s Shiite Muslim clergy
views as a heretical sect. It numbers about 300,000 – 350,000. The State Department cited Iran on
February 13, 2009, for charging seven Bahai’s with espionage; thirty other Bahai’s remain
imprisoned. In the 1990s, several Baha’is were executed for apostasy (Bahman Samandari in 1992;
Musa Talibi in 1996; and Ruhollah Ruhani in 1998). Another, Dhabihullah Mahrami, was in custody
since 1995 and died of unknown causes in prison in December 2005. A wave of Baha’i arrests
occurred in May 2006 and two-thirds of university students of the Baha’i faith were expelled from
university in 2007. Several congressional resolutions have condemned Iran’s treatment of the
Baha’is, including in 1982, 1984, 1988, 1990, 1992, 1994, 1996, 2000, and 2006. In the 110th
Congress, H.Res. 1008 condemned Iran’s treatment of the Baha’is (passed House August 1, 2008).
Jews
Along with Christians, a “recognized minority,” with one seat in the Majles, the 30,000-member
Jewish community (the largest in the Middle East aside from Israel) enjoys somewhat more
freedoms than Jewish communities in several other Muslim states. However, in practice the
freedom of Iranian Jews to practice their religion is limited, and Iranian Jews remain reluctant to
speak out for fear of reprisals. During 1993-1998, Iran executed five Jews al egedly spying for
Israel. In June 1999, Iran arrested 13 Jews (mostly teachers, shopkeepers, and butchers) from the
Shiraz area that it said were part of an “espionage ring” for Israel. After an April-June 2000 trial,
ten of the Jews and two Muslims accomplices were convicted (July 1, 2000), receiving sentences
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Group/Issue
Regime Practice/Recent Developments
ranging from 4 to 13 years. An appeals panel reduced the sentences, and all were released by April
2003. On November 17, 2008, Iran hanged businessman Ali Ashtari (a Muslim), who was arrested
in 2006, for allegedly providing information on Iran’s nuclear program to Israel.
Sunnis
The cited reports note other discrimination against Sufis and Sunni Muslims, although abuses
against Sunnis could reflect that minority ethnicities, including Kurds, are mostly Sunnis. No
reserved seats for Sunnis in the Majles but several are usual y elected in their own right.
Human Trafficking The June 16, 2009, (latest annual), State Department “Trafficking in Persons” report continues to
place Iran in Tier 3 (worst level) for failing to take action to prevent trafficking in persons. Girls
are trafficked for sexual exploitation within Iran and from Iran to neighboring countries.
Executions/
Human rights groups say executions have increased sharply since the dispute over the June 2009
election. A Kurdish activist was executed in November 2009 for opposition activities. Iran
Juvenile
executed six persons under the age of 18 in 2008, the only country to do so. As a party to the
Executions
International Covenant on Civil and Political Rights and the Convention on the Rights of the Child,
Iran is obligated to abolish such executions.
Stonings
In 2002, the head of Iran’s judiciary issued a ban on stoning. However, Iranian officials later cal ed
that directive “advisory” and could be ignored by individual judges. On December 2, 2008, Iran
confirmed the stoning deaths of two men in Mashhad who were convicted of adultery.
Azeris
Azeris are one quarter of the population, but they complain of ethnic and linguistic discrimination.
In 2008, there were several arrests of Azeri students and cultural activists who were pressing for
their right to celebrate their culture and history.
Arrests of Dual
An Iranian-American journalist, Roxanna Saberi, was arrested in January 2009 al egedly because
Nationals and
her press credentials had expired; she was charged on April 9, 2009, with espionage, apparently
Foreign Nationals
for possessing an Iranian military document. Sentenced to eight years in jail, she was released on
appeal on May 12, 2009, but barred from practicing journalism, and has left Iran. Another dual
national, Esha Momeni, arrested in October 2008, is unable to leave Iran. U.S. national, former FBI
agent Robert Levinson, remains missing after a visit in 2005 to Kish Island. Iran was given a U.S.
letter on these cases at a March 31, 2009, meeting in the Netherlands on Afghanistan. Three
American hikers remain under detention in Iran; they were arrested in August 2009 after crossing
into Iran, possibly mistakenly, from a hike in northern Iraq.
Sources: Most recent State Department reports on human rights (February 25, 2009), trafficking in persons
(June 16, 2009), and on religious freedom (October 26, 2009). http://www.state.gov.
Iran’s Strategic Capabilities and Weapons of Mass
Destruction Programs

Many in the Obama Administration view Iran, as the Bush Administration did, as one of the key
national security challenges facing the United States. 10 This assessment is based largely on Iran’s
weapons of mass destruction (WMD) programs—and particularly in light of revelations in
September 2009 that Iran is building at least one more nuclear site than it had previously
declared—and its ability to exert influence in the region counter to U.S. objectives.11 Many
experts agree that Iran’s core national security goals are to protect itself from foreign, primarily
U.S., interference or attack, and to exert regional influence that Iran believes is commensurate
with its size and concept of nationhood. On the other hand, some see the internal unrest as

10 A March 16, 2006 “National Security Strategy” document stated that the United States “may face no greater
challenge from a single country than from Iran.”
11 See http://www.whitehouse.gov/nsc/nss/2006/.
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distracting Iranian leaders from exerting influence outside Iran and from making key decisions
that might be needed to further accelerate WMD programs.
Conventional Military/Revolutionary Guard/Qods Force
Iran’s armed forces are extensive but they are widely considered relatively combat ineffective
against a well-trained, sophisticated military such as that of the United States or a regional power
such as Turkey, and Iran lacks the logistical ability to project power much beyond its borders.
Still, Iranian forces could still cause damage to U.S. forces and allies in the Gulf region, and they
are sufficiently effective to deter or fend off conventional threats from Iran’s weaker neighbors
such as post-war Iraq, Turkmenistan, Azerbaijan, and Afghanistan. Iran’s armed forces have few
formal relationships with foreign militaries, but Iran and India have a “strategic dialogue” and
some Iranian naval officers reportedly have undergone some training in India. Iran and Turkey
agreed in principle in April 2008 to jointly fight terrorism along their border. Most of Iran’s other
military-to-military relationships, such as with Russia, Ukraine, Belarus, North Korea, and a few
others, generally center on Iranian arms purchases or upgrades.
Iran’s armed forces are divided organizationally. The Islamic Revolutionary Guard Corps (IRGC,
known in Persian as the Pasdaran)12 controls the Basij (Mobilization of the Oppressed) volunteer
militia that enforces adherence to Islamic customs and has been the main instrument to repress
the postelection protests in Iran. The IRGC and the regular military report to a Joint
Headquarters, headed by Hassan Firuzabadi. In line with some congressional and Administration
ideas to try to weaken the IRGC by addressing its vulnerabilities, a provision of the National
Defense Authorization Act for FY2010 (Section 1224, P.L. 111-84) calls for a report on Iran’s
conventional military strategy and power, in particular the capabilities of the IRGC.

12 For a more extensive discussion of the IRGC, see Katzman, Kenneth. “The Warriors of Islam: Iran’s Revolutionary
Guard,” Westview Press, 1993.
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Table 4. The Revolutionary Guard
The IRGC is generally loyal to Iran’s hardliners politically and is clearly more politically influential than is Iran’s regular
military, which is numerically larger but was held over from the Shah’s era. Its influence has, by all accounts, grown
sharply over the past few years as the regime has relied on it to suppress dissent. As described in a 2009 Rand
Corporation study, “ Founded by a decree from Ayatollah Khomeini shortly after the victory of the 1978-1979
Islamic Revolution, Iran’s Islamic Revolutionary Guards Corps (IRGC) has evolved well beyond its original foundations
as an ideological guard for the nascent revolutionary regime. Today the IRGC functions as an expansive socio-
political-economic conglomerate whose influence extends into virtually every corner of Iranian political life and
society. Bound together by the shared experience of war and the socialization of military service, the Pasdaran have
articulated a populist, authoritarian, and assertive vision for the Islamic Republic of Iran that they maintain is a more
faithful reflection of the revolution’s early ideals. The IRGC’s presence is particularly powerful in Iran’s highly
factionalized political system, in which [many senior figures] hail from the ranks of the IRGC. Outside the political
realm, the IRGC oversees a robust apparatus of media resources, training activities, education programs designed to
bolster loyalty to the regime, prepare the citizenry for homeland defense, and burnish its own institutional credibility
vis-a-vis other factional actors. It is in the economic sphere, however, that the IRGC has seen the greatest growth
and diversification—strategic industries and commercial services ranging from dam and pipeline construction to
automobile manufacturing and laser eye surgery have fallen under its sway, along with a number of illicit smuggling and
black market enterprises.”
Through its Qods (Jerusalem) Force, the IRGC has a foreign policy role in exerting influence throughout the region
by supporting pro-Iranian movements, as discussed further below. The Qods Force numbers approximately 10,000-
15,000 personnel who provide advice, support, and arrange weapons deliveries to pro-Iranian factions in Lebanon,
Iraq, Persian Gulf states, Gaza/West Bank, Afghanistan, and Central Asia. It also operates a worldwide intelligence
network to give Iran possible terrorist option and to assist in procurement of WMD-related technology. The Qods
Force commander, Brig. Gen. Qassem Soleimani, is said to have his own independent channel to Supreme Leader
Khamene’i, bypassing the IRGC and Joint Staff command structure. The Qods Force commander during 1988-1995
was Brig. Gen. Ahmad Vahidi, confirmed as Defense Minister on September 3, 2009. He led the unit during several
major initiatives such as its alleged assistance to two bombings of Israeli and Jewish targets in Buenos Aires (the 1994
bombing he is wanted by Interpol for a role in it; the buildup of Lebanese Hezbollah’s rocket capabilities; the
recruitment of Saudi Hezbollah activists later accused of the June 1996 Khobar Towers bombing; and the
assassination of Iranian dissident leaders in Europe in the early 1990s.
IRGC leadership developments are significant because of the political influence of the IRGC. On September 2, 2007,
Khamene’i replaced Rahim Safavi with Mohammad Ali Jafari as Commander In Chief of the Guard; Jafari is considered
a hardliner against political dissent and is reputedly close to the Supreme Leader and less so to Ahmadinejad. The
Basij reports to the IRGC Commander in Chief; its leadership was changed in October 2009, to Brig. Gen.
Mohammad Reza Naqdi (replacing Hossein Taeb). It operates from thousands of positions in Iran’s institutions.
Command reshuffles in July 2008 that integrated the Basij more closely with provincially-based IRGC units furthered
the view that the Basij is playing a more active role in uncovering suspected plotting by Iran’s minorities and others. In
November 2009, the regime gave the IRGC’s intelligence units greater authority, perhaps surpassing those of the
Ministry of Intelligence, in monitoring dissent. More information on how the Iranian military might perform against
the United States is discussed later. The IRGC Navy now has responsibility to patrol the entire Persian Gulf, and that
the regular Navy is patrolling the Strait of Hormuz and Gulf of Oman.
As noted, the IRGC is also increasingly involved in Iran’s economy, acting through a network of contracting
businesses it has set up, most notably Ghorb (also called Khatem ol-Anbiya, Persian for “Seal of the Prophet”). Active
duty IRGC senior commanders reportedly serve on Ghorb’s board of directors. In late September 2009, the Guard
boutht a 50% stake in Iran Telecommunication Company at a cost of $7.8 billion. In the past five years, Guard
affiliated firms have won 750 oil and gas and construction contracts, and the Guard has its own civilian port facilities
(New York Times, September 29, 2009). On October 21, 2007, the Treasury Department designated several IRGC
companies as proliferation entities under Executive Order 13382. Also that day, the IRGC as a whole, the Ministry of
Defense, several IRGC commanders, and several Iranian banks were sanctioned under that same executive order.
Simultaneously, the Qods Force was named as a terrorism supporting entity under Executive Order 13224. Both
orders freeze the U.S.-based assets and prevent U.S. transactions with the named entities, but these entities are
believed to have virtual y no U.S.-based assets that could be frozen. The designations stopped short of concurring
with provisions of bills in the 110th Congress—H.R. 1400 (passed by the House on September 25), S. 970, and the
FY2008 defense authorization bill (P.L. 110-181, Senate amendment adopted September 6, 2007, by vote of 76-22)—
for the Revolutionary Guard to be designated a foreign terrorist organization, or FTO. Sources: Frederic Wehrey et
al. “The Rise of the Pasdaran.” Rand Corporation. 2009. Katzman, Kenneth. “The Warriors of Islam: Iran’s
Revolutionary Guard.” Westview Press, 1993.
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Table 5. Iran’s Conventional Military Arsenal
Defense
Surface-
Budget
Military
Air
Combat
(billions
Personnel
Tanks
Missiles
Aircraft
Ships
U.S. $)
545,000 (regular military and
1,693
150
280
200
6.6
Revolutionary Guard Corps
(incl.
I-Hawk plus
(incl. 25 MiG-
(incl. 10 Chinese-made
(IRGC). IRGC is about one-
480 T-
some Stinger 29 and 30 Su-
Hudong, 40 Boghammer,
third of total force.
72)
24)
3 frigates) Also has 3 Kilo
subs
Ship-launched cruise missiles. Iran is able to arm its patrol boats with Chinese-made C-802 cruise missiles. Iran
also has Chinese-supplied HY-2 Seerseekers emplaced along Iran’s coast.
Midget Subs. Iran is said to possess several, possibly purchased assembled or in kit form from North Korea. Iran
claimed on November 29, 2007, to have produced a new smal sub equipped with sonar-evading technology.
Anti-aircraft missile systems. Russia has sold and now delivered to Iran (January 2007) 30 anti-aircraft missile
systems (Tor M1), worth over $1 billion. In September 2006, Ukraine agreed to sell Iran the Kolchuga radar system
that can improve Iran’s detection of combat aircraft. In December 2007, Russia agreed to sel the even more capable
S-300 (also known as SA-20 “Gargoyle”) air defense system, purportedly modeled after the U.S. Patriot system, which
U.S. officials say would greatly enhance Iran’s air defense capability. The value of the deal is estimated at $800 million.
Amid unclear or weak denials by Iranian and Russian officials, U.S. officials told journalists on December 11, 2008, that
Iran has indeed contracted for the missile. It is reportedly was due for delivery by March 2009 and to be operational
by June 2009, but Russian press reports in February 2009 about the visit of Iran’s Defense Minister to Moscow
indicate that Russia has placed delivery on hold due to “political considerations”—expectations of possible adverse
reaction by the Obama Administration. Delivery has not taken place to date, by al accounts, and Israel said in August
2009 that Russia had agreed not to deliver any equipment to Iran that would upset the regional balance of power.

Nuclear Program and Related International Diplomacy
Since 2005, Iran and the international community have been seeking to limit Iran’s nuclear
program. U.S. officials say they are operating under the assumption that Iran intends to develop a
nuclear weapon from that program. Then International Atomic Energy Agency (IAEA) Director
Mohammad El Baradei13 said in a press interview on June 17, 2009, that “My gut feeling is that
Iran definitely would like to have the technology ... that would enable it to have nuclear weapons
if they decided to do so.” In February 2009, the Director of National Intelligence (DNI) Dennis
Blair reiterated previous assessments that it is likely that Iran will eventually try to develop a
nuclear weapon. These assessments were given additional weight on September 25, 2009, when
President Obama and French and British leaders revealed purported longstanding intelligence that
Iran is developing a uranium enrichment site on a Revolutionary Guard base near Qom that
appears unsuitable for purely civilian use. Iran had formally notified the IAEA of the site in prior
days and asserted that, because the site was not operational, the site was not a violation of its
Safeguards Agreement with the IAEA, although IAEA and U.S. officials maintain this violates
agreed reporting requirements of Iran.
The Obama Administration faces policy choices in light of IAEA reports (February 19, 2009) that
Iran has now enriched enough uranium for a nuclear weapon, although only if enriched to 90%.
An IAEA report of June 5, 2009, reiterated that Iran’s enrichment thus far has been 5%, which is

13 A new IAEA Director, Japanese official Yukiya Amano, took office December 2009.
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a level that would permit only civilian uses, but added that Iran has now installed over 7,000
centrifuges, of which over 5,000 are being fed with uranium feedstock. There continues to be no
evidence that Iran has diverted any nuclear material for a nuclear weapons program, but the IAEA
asserts that it cannot verify that Iran’s current program is purely peaceful. Several of its reports
(January 31, 2006, February 27, 2006, May 26, 2008, and September 15, 2008) describe Iranian
documents that show a possible involvement of Iran’s military in the program.
Some U.S. officials, including Secretary of Defense Gates, have signaled less urgency, saying on
March 1, 2009, that Iran is “not close” to a nuclear weapon. The George W. Bush
Administration’s December 2007 NIE assessed that Iran will likely be technically capable of
producing enough highly enriched uranium for a nuclear weapon some time during 2010-2015.
This time frame was reiterated in February 12, 2009, testimony by Director of National
Intelligence Dennis Blair and by him again since then.14 Because of the Qom site revelation, it is
no longer clear that Iran’s weaponization efforts are on hold, as the 2007 NIE had said they have
been (since 2003). On the other hand, some experts say that there has been some slowdown in
Iran’s program in recent months, possibly due to the turmoil resulting from the domestic unrest,
and/or technical difficulties.
Iran’s Arguments and the International Response
International scrutiny of Iran’s nuclear program intensified in 2002, when Iran confirmed PMOI
allegations that Iran was building two facilities that could potentially be used to produce fissile
material useful for a nuclear weapon: a uranium enrichment facility at Natanz and a heavy water
production plant at Arak,15considered ideal for the production of plutonium. It was revealed in
2003 that the founder of Pakistan’s nuclear weapons program, A.Q. Khan, sold Iran nuclear
technology and designs.16
Iranian leaders have addressed the scrutiny by saying that Iran’s nuclear program is for electricity
generation and that enrichment is its “right” as a party to the NPT. Iran professes that WMD is
inconsistent with its ideology and says that its leaders, including the late Ayatollah Khomeini,
have issued formal pronouncements (fatwas) that nuclear weapons are un-Islamic. Iran says its oil
resources are finite and that enriching uranium to make nuclear fuel is allowed under the 1968
Nuclear Non-Proliferation Treaty,17 to which Iran is a party. An analysis was published by the
National Academy of Sciences challenging the U.S. view that Iran is petroleum rich and therefore
has no need for a nuclear power program. According to the analysis, the relative lack of
investment could cause Iran to have negligible exports of oil by 2015.18 The United States and its
partners now accept Iran’s right to purely peaceful uses of nuclear energy. In the past, U.S.
officials have said that Iran’s gas resources make nuclear energy unnecessary.

14 Text at http://www.dni.gov/press_releases/20071203_release.pdf.
15 In November 2006, the IAEA, at U.S. urging, declined to provide technical assistance to the Arak facility on the
grounds that it was likely for proliferation purposes.
16 Lancaster, John and Kamran Khan. “Pakistanis Say Nuclear Scientists Aided Iran.” Washington Post, January 24,
2004.
17 For Iran’s arguments about its program, see Iranian paid advertisement “An Unnecessary Crisis—Setting the Record
Straight About Iran’s Nuclear Program,” in the New York Times, November 18, 2005. P. A11.
18 Stern, Roger. “The Iranian Petroleum Crisis and United States National Security,” Proceedings of the National
Academy of Sciences of the United States of America
. December 26, 2006.
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There is widespread belief among experts that Iran’s governing factions perceive a nuclear
weapons capability as a means of ending Iran’s perceived historic vulnerability to invasion and
domination by great powers, and as a symbol of Iran as a major nation. Others believe a nuclear
weapon represents the instrument with which Iran intends to intimidate its neighbors and
dominate the Persian Gulf region. There are also fears Iran might transfer WMD to extremist
groups or countries. On the other hand, some Iranian strategists maintain that a nuclear weapons
will bring Iran only further sanctions, military containment, U.S. attempted interference in Iran,
and efforts by neighbors to develop countervailing capabilities. Some members of the domestic
opposition, such as Musavi, have positions on the nuclear issue similar to those of regime leaders,
but some opposition factions see the nuclear program as an impediment to eventual re-integration
with the West and might be willing to significantly limit the program.
U.S. officials have generally been less concerned with Russia’s work, under a January 1995
contract, on an $800 million nuclear power plant at Bushehr. Russia insisted that Iran sign an
agreement under which Russia would provide reprocess the plant’s spent nuclear material; that
agreement was signed on February 28, 2005. The plant was expected to become operational in
2007, but Russia had insisted (including during President Putin’s visit to Iran in October 2007)
that Iran first comply with the U.N. resolutions discussed below. In December 2007, Russia began
fueling the reactor, and Iran says it expects the plant to become operational in 2009. Some
preliminary tests of the plant began in February 2009, but, possibly as a sign of Russian
cooperation with international pressure on Iran, Russia has not brought the plant to operational
status to date. As part of this work, Russia has trained 1,500 Iranian nuclear engineers.
Diplomatic Efforts in 2003 and 2004/Paris Agreement
In 2003, France, Britain, and Germany (the “EU-3”) opened a separate diplomatic track to curb
Iran’s program. On October 21, 2003, Iran pledged, in return for peaceful nuclear technology, to
(1) fully disclose its past nuclear activities, (2) to sign and ratify the “Additional Protocol” to the
NPT (allowing for enhanced inspections), and (3) to suspend uranium enrichment activities. Iran
signed the Additional Protocol on December 18, 2003, although the Majles has not ratified it. Iran
discontinued abiding by the Protocol after the IAEA reports of November 10, 2003, and February
24, 2004, stated that Iran had violated its NPT reporting obligations over an 18-year period.
In the face of the U.S. threat to push for Security Council action, the EU-3 and Iran reached a
more specific November 14, 2004, “Paris Agreement,” committing Iran to suspend uranium
enrichment (which it did as of November 22, 2004) in exchange for renewed trade talks and other
aid.19 The Bush Administration did not openly support the track until March 11, 2005, when it
announced it would drop U.S. objections to Iran applying to join the World Trade Organization (it
applied in May 2005) and to selling civilian aircraft parts to Iran. The Bush Administration did
not participate directly in the talks.

19 For text of the agreement, see http://www.iaea.org/NewsCenter/Focus/IaeaIran/eu_iran14112004.shtml. EU-3—Iran
negotiations on a permanent nuclear pact began on December 13, 2004, and related talks on a trade and cooperation
accord (TCA) began in January 2005.
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Reference to the Security Council
The Paris Agreement broke down just after Ahmadinejad’s election; Iran rejected as insufficient
an EU-3 offer to assist Iran with peaceful uses of nuclear energy and provide limited security
guarantees in exchange for Iran’s (1) permanently ending uranium enrichment; (2) dismantling
the Arak heavy-water reactor;20 (3) no-notice nuclear inspections; and (4) a pledge not to leave
the NPT (it has a legal exit clause). On August 8, 2005, Iran broke the IAEA seals and began
uranium “conversion” (one step before enrichment) at its Esfahan facility. On September 24,
2005, the IAEA Board declared Iran in non-compliance with the NPT and decided to refer the
issue to the Security Council,21 but no time frame was set for the referral. After Iran resumed
enrichment activities, on February 4, 2006, the IAEA board voted 27-322 to refer the case to the
Security Council. On March 29, 2006, the Council agreed on a presidency “statement” setting a
30-day time limit (April 28, 2006) for ceasing enrichment.23
Establishment of “P5+1” Contact Group/June 2006 Incentive Package
Taking a multilateral approach, the George W. Bush Administration offered on May 31, 2006, to
join the nuclear talks with Iran if Iran first suspends its uranium enrichment. Such talks would
center on a package of incentives and possible sanctions—formally agreed on June 1, 2006—by a
newly formed group of nations, the so-called “Permanent Five Plus 1” (P5+1: United States,
Russia, China, France, Britain, and Germany). EU representative Javier Solana formally
presented the P5+1 offer to Iran on June 6, 2006. (The package is Annex I to Resolution 1747.)
Incentives:
• Negotiations on an EU-Iran trade agreements and acceptance of Iran into the
World Trade Organization.
• Easing of U.S. sanctions to permit sales to Iran of commercial aircraft/parts.
• Sale to Iran of a light-water nuclear reactor and guarantees of nuclear fuel
(including a five year buffer stock of fuel), and possible sales of light-water
research reactors for medicine and agriculture applications.
• An “energy partnership” between Iran and the EU, including help for Iran to
modernize its oil and gas sector and to build export pipelines.
• Support for a regional security forum for the Persian Gulf, and support for the
objective of a WMD free zone for the Middle East.
• The possibility of eventually allowing Iran to resume uranium enrichment if it
complies with all outstanding IAEA requirements.

20 In November 2006, the IAEA, at U.S. urging, declined to provide technical assistance to the Arak facility.
21Voting in favor: United States, Australia, Britain, France, Germany, Canada, Argentina, Belgium, Ghana, Ecuador,
Hungary, Italy, Netherlands, Poland, Portugal, Sweden, Slovakia, Japan, Peru, Singapore, South Korea, India. Against:
Venezuela. Abstaining: Pakistan, Algeria, Yemen, Brazil, China, Mexico, Nigeria, Russia, South Africa, Sri Lanka,
Tunisia, and Vietnam.
22 Voting no: Cuba, Syria, Venezuela. Abstaining: Algeria, Belarus, Indonesia, Libya, South Africa.
23 See http://daccessdds.un.org/doc/UNDOC/GEN/N06/290/88/PDF/N0629088.pdf?OpenElement.
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Sanctions:24
• Denial of visas for Iranians involved in Iran’s nuclear program and for high-
ranking Iranian officials.
• A freeze of assets of Iranian officials and institutions; a freeze of Iran’s assets
abroad; and a ban on some financial transactions.
• A ban on sales of advanced technology and of arms to Iran; and a ban on sales to
Iran of gasoline and other refined oil products.
• An end to support for Iran’s application to the WTO.
Resolution 1696
Iran did not immediately respond to the offer. On July 31, 2006, the Security Council voted 14-1
(Qatar voting no) for U.N. Security Council Resolution 1696, giving Iran until August 31, 2006,
to fulfill the longstanding IAEA nuclear demands (enrichment suspension, etc). Purportedly in
deference to Russia and China, it was passed under Article 40 of the U.N. Charter, which makes
compliance mandatory, but not under Article 41, which refers to economic sanctions, or Article
42, which would authorize military action. It called on U.N. member states not to sell Iran WMD-
useful technology. On August 22, 2006, Iran responded, but Iran did not offer enrichment
suspension, instead offering vague proposals of engagement with the West.
Resolution 1737
With the backing of the P5+1, chief EU negotiator Javier Solana negotiated with Iran to try
arrange a temporary enrichment suspension, but talks ended on September 28, 2006, without
agreement. The Security Council adopted U.N. Security Council Resolution 1737 unanimously
on December 23, 2006, under Chapter 7, Article 41 of the U.N. Charter. It prohibits sale to Iran—
or financing of such sale—of technology that could contribute to Iran’s uranium enrichment or
heavy-water reprocessing activities. It also required U.N. member states to freeze the financial
assets of 10 named Iranian nuclear and missile firms and 12 persons related to those programs. It
called on—but did not mandate—member states not to permit travel by these persons. In
deference to Russia, the Resolution did not apply to the Bushehr reactor.
Resolution 1747 and Results
Resolution 1737 demanded enrichment suspension by February 21, 2007. With no Iranian
compliance, on March 24, 2007, after only three weeks of P5+1 negotiations, Resolution 1747
was adopted unanimously, which
• added 10 military/WMD-related entities; 3 Revolutionary Guard entities; 8
persons, and 7 Revolutionary Guard commanders. Bank Sepah is among the
entities sanctioned.

24 One source purports to have obtained the contents of the package from ABC News: http://www.basicint.org/pubs/
Notes/BN060609.htm.
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• banned arms transfers by Iran, a provision targeted at Iran’s alleged arms supplies
to Lebanese Hezbollah and to Shiite militias in Iraq.
• required all countries to report to the United Nations when sanctioned Iranian
persons travel to their territories.
• called for (but did not require) countries to avoid selling arms or dual use items
to Iran and to avoid any new lending or grants to Iran.
Resolution 1747 demanded Iran suspend enrichment by May 24, 2007. Iran did not comply, but,
suggesting it wanted to avoid further isolation, in August 2007, Iran agreed to sign with the IAEA
an agreement to clear up outstanding questions on Iran’s past nuclear activities by the end of
2007. On September 28, 2007, the P5+1 grouping—along with the EU itself—agreed to a joint
statement pledging to negotiate another sanctions resolution if there is no progress reported by the
IAEA in implementing the August 2007 agreement or in negotiations with EU representative
Javier Solana. The IAEA and Solana indicated that Iran’s responses fell short; Solana described a
November 30, 2007, meeting with Iranian negotiator Sayid Jallili as “disappointing.”
Resolution 1803 and Additional Incentives
After several months of negotiations, Resolution 1803 was adopted by a vote of 14-0 (Indonesia
abstaining) on March 3, 2008. It (1) bans sales of dual use items to Iran; (2) authorizes, but does
not require, inspections of cargo, carried by Iran Air Cargo and Islamic Republic of Iran Shipping
Line, suspected of shipping WMD-related goods; (3) imposes a firm travel ban on five Iranians
named in Annex II to the Resolution and requires reports on international travel by 13 individuals
named in Annex I; (4) calls for, but does not impose, a prohibition on financial transactions with
Iran’s Bank Melli and Bank Saderat; and (5) adds 12 entities to those sanctioned under Resolution
1737. (On June 23, 2008, the EU, acting under Resolution 1803, froze the assets of Bank Melli
and several IRGC entities and commanders.)
Resolution 1803 also stated the willingness of the P5+1 to consider additional incentives to
resolve the Iranian nuclear issue through negotiation “on the basis of their June 2006 proposals.”
The Bush Administration agreed to expand the June 2006 incentive package at a meeting in
London on May 2, 2008, resulting in an offer to Iran to add political cooperation and enhanced
energy cooperation to prior incentive packages. EU envoy Solana presented the package (which
included a signature by Secretary of State Rice) on June 14, 2008, but Iran was non-committal.
Sensing increasing pressure, in July 2008, Iran indicated it might be ready to first accept a six
week “freeze for freeze,” i.e., the P5+1 would freeze further sanctions efforts and Iran would
freeze any expansion of uranium enrichment (though not suspend outright). To try to take
advantage of what appeared to be an Iranian willingness to compromise, the Bush Administration
sent Undersecretary of State for Political Affairs William Burns to join Solana and the other P5+1
representatives at a meeting in Geneva on July 19, 2008. Iran did not accept the “freeze for
freeze” idea by an extended deadline of August 2, 2008.
Resolution 1835
As a result of the lack of progress, the P5+1 began discussing another sanctions resolution. Ideas
reportedly considered included adding more Iranian banks to those sanctioned, or banning
insurance for Iran’s tanker fleet. On August 7, 2008, the EU implemented the sanctions specified
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in Resolution 1803, including asserting the authority to inspect suspect shipments, and called on
its members to refrain from providing new credit guarantees on exports to Iran. However, the
August 2008 crisis between Russia and Georgia set back U.S.-Russia relations, and Russia
opposed new U.N. sanctions on Iran. In an effort to demonstrate to Iran continued unity, the
Council did adopt (September 27, 2008) Resolution 1835, calling on Iran to comply with previous
resolutions, but restating a willingness to negotiate and imposing no new sanctions.
With Iran still not complying, the P5+1 met again in October and in November of 2008.
However, with U.S. partner officials uncertain about what U.S. policy toward Iran might be under
a new U.S. Administration, there was no consensus on new sanctions.
The P5+1 Process Under President Obama
After President Obama was inaugurated, the P5+1 met in Germany (February 4, 2009), reportedly
focusing on the new U.S. Administration’s approach on Iran. It recommitted to the “two track”
strategy of incentives and sanctions.25 Another P5+1 meeting was held in London on April 8,
2009, during which Undersecretary Burns told the other members of the group that, henceforth, a
U.S. diplomat would attend all of the group’s meetings with Iran. Iran put off new meetings until
after the Iranian June 12, 2009, election.26 In order to try to show good faith to Iran, the Obama
Administration did not press for new sanctions.
As far as a time frame for an Iranian response, on May 18, 2009, in the context of a meeting with
visiting Israeli Prime Minister Benjamin Netanyahu, President Obama said he expect a positive
response by Iran to the U.S. outreach “by the end of [2009],” but that the United States would not
entertain the idea of endless talks that yield no result. The July 9, 2009, G-8 summit statement,
which included Russian concurrence, mentioned late September 2009 (G-20 summit on
September 24) as a time by which the P5+1 would expect Iran to come to new talks and offer
constructive proposals for a settlement, lest the P5+1 consider “crippling sanctions” on Iran’s
economy.
October 1 Tentative Agreement and Subsequent Developments
Perhaps sensing the pressure, on September 1, 2009, Iran’s senior negotiator, Sayed Jallili, said
Iran would come to new talks. On September 9, 2009, Iran distributed its long anticipated
proposals to settle the nuclear issue. To P5+1 representatives in Iran (Swiss Ambassador
represented the United States).27 The Iranian proposals were criticized by many as vague but the
United States and its partners considered it a sufficient basis to schedule a meeting with Iran for
October 1, 2009, in Geneva.
In light of September 25 revelations about the previously unreported Iranian nuclear site—and
despite Iran’s insistence that it would allow the facility to be inspected—little progress was
expected at the meeting. However, the seven hour session, in which U.S. Under Secretary of State
William Burns, representing the United States, also met privately with Iranian negotiator Sayed

25 Dempsey, Judy. “U.S. Urged to Talk With Iran.” International Herald Tribune, February 5, 2009.
26 CRS conversations with European diplomats in July 2009.
27 “Cooperation for Peace, Justice, and Progress.” Text of Iranian proposals. http://enduringamerica.com/2009/09/11/
irans-nukes-full-text-of-irans-proposal-to-51-powers/
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Jallili, resulted in tentative agreements to (1) meet again later in October; (2) allow the IAEA to
inspect the newly revealed Iranian facility near Qom; and (3) allow Russia and France, subject to
technical talks to begin by mid-October, to re-process about 75% of Iran’s low-enriched uranium
for medical use.
The technical talks were held October 19-21, 2009, at IAEA headquarters in Vienna, Austria, and
chaired on the U.S. side by Deputy Energy Secretary Daniel Poneman. A draft agreement was
approved by the P5+1 countries and the IAEA. Iran has not accepted the draft, instead offering
tentative counter-proposals to ship its enriched uranium to France and Russia in increments. On
the other hand, some Iranian officials have floated the concept of having the uranium sent to
Turkey for enrichment, a proposal that U.S. officials reportedly offered a substitute for Russian or
French enrichment. All of Iran’s proposals were deemed insufficiently specific or responsive to
meet P5+1 demands by the end of 2009. Some attribute the Iranian refusal to agree to the October
1 terms as due to the internal political pressure from reformist leaders, such as Musavi, who are
trying to paint Ahmadinejad as so politically weak that he is forced to accept a deal that
disadvantages Iran. The Qom facility was inspected during October 25-29, 2009, as agreed.
Because Iran did not accept the October 1 terms by the end of 2009, the P5+1 countries have
returned to considering sanctions against Iran. The P5+1 met in Brussels on November 21, 2009,
issuing a statement calling on Iran to accept the October 1 proposal. Later, with reported help
from China, which had received an NSC briefing on the likely adverse implications for the oil
market if Iran’s nuclear program proceeds apace, the IAEA Board adopted a resolution on
November 27, 2009. China and Russia voted for the Resolution.28 The Resolution (Gov/2009/82)
urged Iran to suspend construction at the Qom site; and called on Iran to confirm it had not
decided to construct any other undeclared nuclear facility. As a response to the Resolution, which
Iran viewed as contrary to the spirit of negotiated resolution of the nuclear disputes, Iranian
officials announced they would construct 10 new uranium enrichment sites, and Ahmadinejad, in
early December, declared Iran would enrich uranium to 20% purity for medical uses (but which
could be taken as an intent to later make weapons grade uranium).
Some of the specific sanctions ideas under consideration before the latest phase of the dispute
included those previously considered: cutting Iran’s banks off from the international banking
system; banning insurance or re-insurance to carry gasoline products to Iran; and a ban on arms
sales to Iran. In light of the unrest in Iran, several December 2009 and January 2010 press reports
say the Administration is focusing on sanctioning the Revolutionary Guard and other security
organs that are suppressing the Iranian protesters. (See further in “Further International and
Multilateral Sanctions” section below.) However, the support of Russia and China for any new
sanctions remains uncertain. Despite comments by Secretary Clinton on January 4, 2010, that
new sanctions are needed, China’s Ambassador to the United Nations said on January 6, 2010,
that diplomacy is still possible and that, therefore, “some more time and patience” are needed
before new sanctions should be enacted. The reluctance of the two countries to sanction Iran has
increased discussion of a group of “like-minded” countries enacting additional sanctions on Iran.



28 Three countries voted no: Malaysia, Cuba, and Venezuela. Six abstained: Afghanistan, Pakistan, Turkey, Brazil,
Egypt, and South Africa. Azerbaijan left the meeting before voting.
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Table 6. Summary of Provisions of U.N. Resolutions on Iran Nuclear Program
(1737, 1747, and 1803)
Require Iran to suspend uranium enrichment
Prohibit transfer to Iran of nuclear, missile, and dual use items to Iran, except for use in light-water reactors
Prohibit Iran from exporting arms or WMD-useful technology
Freeze the assets of 40 named Iranian persons and entities, including Bank Sepah.
Require that countries exercise restraint with respect to travel of 35 named Iranians and ban the travel of 5 others
Cal s on states not to export arms to Iran or support new business with Iran
Calls for “vigilance” (a non-binding call to cut off business) with respect to all Iranian banks, particularly Bank Melli and
Bank Saderat
Calls on countries to inspect cargoes carried by Iran Air Cargo and Islamic Republic of Iran Shipping Lines if there are
indications they carry cargo banned for carriage to Iran.

Chemical Weapons, Biological Weapons, and Missiles
Official U.S. reports and testimony continue to state that Iran is seeking a self-sufficient chemical
weapons (CW) infrastructure, and that it “may have already” stockpiled blister, blood, choking,
and nerve agents—and the bombs and shells to deliver them. This raises questions about Iran’s
compliance with its obligations under the Chemical Weapons Convention (CWC), which Iran
signed on January 13, 1993, and ratified on June 8, 1997. These officials and reports also say that
Iran “probably maintain[s] an offensive [biological weapons] BW program ... and probably has
the capability to produce at least small quantities of BW agents.”
Ballistic Missiles/Warheads
At the February 2009 Annual Threat Assessment of the Intelligence Community, Director of
National Intelligence, Dennis Blair, testified “although many of their statements are
exaggerations, Iranian officials throughout the past year have repeatedly claimed greater ballistic
missile capabilities that could threaten U.S. and allied interests.”29 Tehran appears to view its
ballistic missiles as an integral part of its strategy to deter or retaliate against forces in the region,
including U.S. forces. However, Iran’s technical capabilities are a matter of some debate among
experts, and Iran appears to be focus more on missiles capable of hitting regional targets rather
than those of intercontinental range. The chart below contains some details on Iran’s missile
programs and recent tests.
In August 2008, the George W. Bush Administration reached agreements with Poland and the
Czech Republic to establish a missile defense system to counter Iranian ballistic missiles. These
agreements were reached over Russia’s opposition, which was based on the belief that the missile
defense system would be used to neutralize Russian capabilities. However, reportedly based on
assessments of Iran’s focus on missiles of regional range, on September 17, 2009, the Obama
Administration reoriented this missile defense program to focus, at least initially, on ship-based

29 Annual Threat Assessment of the Intelligence for the Senate Select Committee on Intelligence, Dennis C. Blair,
Director of National Intelligence, February 12, 2009.
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systems, possibly later returning to the idea of Poland and Czech-based systems. Some saw this
as an effort to win Russia’s support for additional sanctions on Iran, and Russian statements did
shift somewhat toward the U.S. position on Iran after the Obama missile defense announcement.
Table 7. Iran’s Ballistic Missile Arsenal
Shahab-3
800-mile range. Two of first three tests (July 1998, July 2000, and September 2000) reportedly
(“Meteor”)
unsuccessful. After successful test in June 2003, Iran called missile operational (capable of hitting
Israel). Despite claims, some U.S. experts say the missile not completely reliable—some observers
said Iran detonated in mid-flight a purportedly more accurate version on August 12, 2004. On May
31, 2005, Iran announced it had tested a solid-fuel version. Iran tested several of the missiles on
September 28, 2009, in advance of the October 1 meeting with the P5+1.
Shahab-4 /Sijji 1,200-1,500-mile range. In October 2004, Iran announced it had extended range of the Shahab-3 to
1,200 miles, and it added in early November 2004 that it is capable of “mass production” of it.
Agence France Presse report (February 6, 2006) said January 2006 test succeeded. Related missiles
claimed by Iran to have 1,200 mile range, include the “Ashoura” (claimed in November 2007); the
“Ghadr” (displayed at military parade in September 2007); and the “Sijil,” tested on November 12,
2000 (solid fuel). “Sijil 2” tested successfully on May 20, 2009 and December 16, 2009, but
Secretary Gates said the range is likely closer to 1,200 miles than to 1,500. Still, this test potentially
puts large portions of the Near East and Southeastern Europe in range, including U.S. bases in
Turkey.
BM-25
1,500-mile range. On April 27, 2006, Israel’s military intelligence chief said that Iran had received a
shipment of North Korean-supplied BM-25 missiles. Missile said to be capable of carrying nuclear
warheads. The Washington Times appeared to corroborate this reporting in a July 6, 2006, story,
which asserted that the North Korean-supplied missile is based on a Soviet-era “SS-N-6” missile.
ICBM
U.S. officials believe Iran might be capable of developing an intercontinental ballistic missile (3,000
mile range) by 2015. In February 2008 Iran claimed to have launched a probe into space, suggesting
its missile technology might be improving to the point where an Iranian ICBM is realistic.
Other
On September 6, 2002, Iran said it successfully tested a 200 mile range “Fateh 110” missile (solid
Missiles
propel ent), and Iran said in late September 2002 that it had begun production. Iran also possesses a
few hundred short-range ballistic missiles, including the Shahab-1 (Scud-b), the Shahab-2 (Scud-C),
and the Tondar-69 (CSS-8). In January 2009, Iran claimed to have tested a new air-to-air missile.
Space
Following an August 2008 failure, in early February 2009, Iran successfully launched a small, low-
Vehicle
earth satellite on a Safir-2 rocket (range about 155 miles). The Pentagon said the launch was
“clearly a concern of ours” because “there are dual-use capabilities here which could be applied
toward the development of long-range missiles.”
Warheads
Wall Street Journal report of September 14, 2005, said that U.S. intelligence believes Iran is working
to adapt the Shahab-3 to deliver a nuclear warhead. Subsequent press reports say that U.S.
intelligence captured an Iranian computer in mid-2004 showing plans to construct a nuclear
warhead for the Shahab.30 The IAEA is seeking additional information from Iran.

Foreign Policy and Support for Terrorist Groups
Iran’s foreign policy is a product of the ideology of Iran’s Islamic revolution, blended with long-
standing national interests. Some interpret Iran’s objectives as the overturning of the power
structure in the Middle East, which Iran believes favors the United States, Israel, and their

30 Broad, William and David Sanger. “Relying On Computer, U.S. Seeks to Prove Iran’s Nuclear Aims.” New York
Times
, November 13, 2005.
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“collaborators”—Sunni Muslim regimes such as Egypt, Jordan, and Saudi Arabia. The State
Department report on international terrorism for 2008 released April 30, 2009, again stated (as it
has for more than a decade) that Iran “remained the most active state sponsor of terrorism” in
2008, and it again attributed the terrorist activity primarily to the Qods Force of the Revolutionary
Guard. The report focused particular attention on Iran’s lethal support to Shiite militias in Iraq as
well as on shipments to and training of “selected” Taliban fighters in Afghanistan.31 On October
27, 2008, the deputy commander of the Basij became the first top Guard leader to publicly
acknowledge that Iran supplies weapons to “liberation armies” in the region, a reference to pro-
Iranian movements discussed below. The appointment of Brig. Gen. Ahmad Vahidi, the former
Qods Forces commander, as Defense Minister in September 2009 (who got the highest number of
Majles votes for his confirmation) caused concern in some neighboring states.
Some experts believe that Iran has been ascendant in the region because of the installation of pro-
Iranian regimes in Iraq and Afghanistan, and the strength of Hezbollah in Lebanon and Hamas in
Gaza. Iran might, according to this view, seek to press its advantage to strengthen regional Shiite
movements and possibly drive the United States out of the Gulf. During a visit to the Middle East
in March 2009, Secretary of State Clinton said, after meeting with several Arab and Israeli leaders
in the region, that “There is a great deal of concern about Iran from this whole region.”
Others reach an opposite conclusion, stating that Iran now feels more encircled than ever by pro-
U.S. regimes. Elections in Lebanon in 2009 that boosted pro-U.S. factions, U.S. engagement with
Syria, stability in Iraq, and an influx of U.S. troops to Afghanistan have rendered Iran weaker
than it has been in recent years.
Relations with the Persian Gulf States
The Persian Gulf monarchy states (Gulf Cooperation Council, GCC: Saudi Arabia, Kuwait,
Bahrain, Qatar, Oman, and the United Arab Emirates) fear the strategic influence of Iran but they
do not openly support U.S. conflict with Iran that might cause Iran to retaliate against Gulf state
targets. The Gulf states privately welcome Iran’s postelection turmoil because it means that Iran
might be strategically weakened and consumed by internal infighting. However, there is concern
in the Gulf that Iran might assert itself in the region to focus public attention outside Iran.
Commercial relations between the Gulf states and Iran are normal, and several of the Gulf states,
particularly Kuwait and UAE, have excess oil refining capacity and sell gasoline to Iran.
Since the mid-1990s, Iran has tried to blunt Gulf state fears of Iran by curtailing activity,
conducted during the 1980s and early 1990s, to sponsor Shiite Muslim extremist groups in these
states, all of which are run by Sunni governments. Iran found, to its detriment, that such activity
caused the Gulf states to ally closely with the United States. In part to counter Iran’s perceived
growing influence in the Gulf, in December 2006 the summit of the GCC leaders announced that
the GCC states might jointly study their own development of “peaceful nuclear technology.” On
the other hand, seeking to avoid further tensions with Iran, the GCC leaders invited Ahmadinejad
to speak at the December 2007 summit of the GCC leaders in Doha, Qatar, marking the first time
an Iranian president had been invited since the GCC was formed in 1981. His speech reiterated a
consistent Iranian theme that the Gulf countries, including Iran, should set up their own security

31 U.S. Department of State. Country Reports on Terrorism 2008. Released April 30, 2009. http://www.state.gov/s/ct/
rls/crt/2008/index.htm
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structure without the help of “outside powers” but also called for a “new chapter” in Iran-GCC
relations.
Saudi Arabia. Many observers closely watch the relationship between Iran and
Saudi Arabia because of Saudi alarm over the emergence of a pro-Iranian
government in Iraq and Iran’s nuclear program. Saudi Arabia sees itself as leader
of the Sunni Muslim world and views Shiite Muslims as heretical and disloyal
internally. However, the Saudis, who do not want a repeat of Iran’s sponsorship
of disruptive and sometimes violent demonstrations at annual Hajj pilgrimages in
Mecca in the 1980s and 1990s—or an increase in Iranian support for Saudi Shiite
dissidents—are receptive to easing tensions with Iran. The Saudis continue to
blame a pro-Iranian movement in the Kingdom, Saudi Hezbollah, for the June
25, 1996, Khobar Towers housing complex bombing, which killed 19 U.S.
airmen.32 After restoring relations in December 1991 (after a four-year break),
Saudi-Iran ties progressed to high-level contacts during Khatemi’s presidency,
including Khatemi visits in 1999 and 2002, and Ahmadinejad has visited on
several occasions.
United Arab Emirates (UAE) concerns about Iran never fully recovered from the
April 1992 Iranian expulsion of UAE security forces from the Persian Gulf island
of Abu Musa, which it and the UAE shared under a 1971 bilateral agreement. (In
1971, Iran, then ruled by the U.S.-backed Shah, seized two other islands, Greater
and Lesser Tunb, from the emirate of Ras al-Khaymah, as well as part of Abu
Musa from the emirate of Sharjah.) In general, the UAE (particularly the
federation capital, Abu Dhabi, backs U.S. efforts to dissuade Iran from
developing its nuclear capability through international sanctions. Abu Dhabi
generally takes a harder line against Iran than does the emirate of Dubai, which
has an Iranian-origin resident community as large as 300,000 and business ties to
Iran). On the islands dispute, the UAE wants to refer the dispute to the
International Court of Justice (ICJ). Iran insists on resolving the issue bilaterally.
The UAE formally protested Iran’s setting up of a maritime and ship registration
office on Abu Musa in July 2008. The United States supports UAE proposals but
takes no formal position on sovereignty. Still seeking to avoid antagonizing Iran,
in May 2007 the UAE received Ahmadinejad (the highest level Iranian visit since
the 1979 revolution) and allowed him to lead an anti-U.S. rally of a reported
several hundred Iranian-origin residents of Dubai at a soccer stadium there.
Qatar, like most of the other Gulf states, does not seek confrontation and seeks to
accommodate some of its interests, yet Qatar remains wary that Iran might
eventually seek to encroach on its large North Field (natural gas). It shares that
field with Iran (called South Pars on Iran’s side) and Qatar earns large revenues
from natural gas exports from it. Qatar’s fears were heightened on April 26,
2004, when Iran’s deputy Oil Minister said that Qatar is probably producing
more gas than “her right share” from the field and that Iran “will not allow” its

32 Walsh, Elsa. “Annals of Politics: Louis Freeh’s Last Case.” The New Yorker, May 14, 2001. The June 21, 2001,
federal grand jury indictments of 14 suspects (13 Saudis and a Lebanese citizen) in the Khobar bombing indicate that
Iranian agents may have been involved, but no indictments of any Iranians were announced. In June 2002, Saudi
Arabia reportedly sentenced some of the eleven Saudi suspects held there. The 9/11 Commission final report asserts
that Al Qaeda might have had some as yet undetermined involvement in the Khobar Towers attacks.
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wealth to be used by others. Possibly to try to ease such implied threats, Qatar
invited Ahmadinejad to the December 2007 GCC summit there.
Bahrain is about 60% Shiite, many of whom are of Persian origin, but its
government is dominated by the Sunni Muslim Al Khalifa family. In 1981 and
again in 1996, Bahrain publicly accused Iran of supporting Bahraini Shiite
dissidents (the Islamic Front for the Liberation of Bahrain, Bahrain-Hezbollah,
and other Bahraini dissident groups) in efforts to overthrow the ruling Al Khalifa
family. Bahraini fears that Iran would try to interfere in Bahrain’s November 25,
2006, parliamentary elections by providing support to Shiite candidates did not
materialize, although the main Shiite opposition coalition won 18 out of the 40
seats of the elected body. Tensions have flared several times since July 2007
when Iranian editorialists asserted that Bahrain is part of Iran—that question was
the subject of the 1970 U.N.-run referendum in which Bahrainis opted for
independence. The issued flared again after a February 20, 2009, statement by Ali
Akbar Nateq Nuri, an adviser to Khamene’i, that Bahrain was at one time an
Iranian province. The statement caused major criticism of Iran throughout the
region, and contributed to a decision by Morocco to break relations with Iran.
Still, Bahrain has sought not to antagonize Iran and has apparently allowed Iran’s
banks to establish a presence in Bahrain’s vibrant banking sector. On March 12,
2008, the Treasury Department sanctioned the Bahrain-based Future Bank under
Executive order 13382 that sanctions proliferation entities. Future Bank
purportedly is controlled by Bank Melli. The bank remains in operation.
Oman. Of the GCC states, the Sultanate of Oman is closest politically to Iran and
has refused to ostracize or even harshly criticize Iranian policies. Some press
reports say local Omani officials routinely turn a blind eye to or even cooperate
in the smuggling of western goods to Iran. Sultan Qaboos made a state visit to
Iran in August 2009, coinciding with the inauguration of Ahmadinejad.
Iranian Policy in Iraq
The U.S. military ousting of Saddam Hussein benefitted Iran strategically,33 and during 2004-
2008, U.S.-Iran differences in Iraq widened to the point where some were describing the
competition as a U.S.-Iran “proxy war” inside Iraq. The acute source of tension was evidence,
detailed on several occasions by U.S. commanders in Iraq, that the Qods Force was providing
arms (including highly lethal “explosively forced projectiles,” EFPs, which have killed U.S.
soldiers), training, guidance, and financing to Shiite militias involved in sectarian violence.
However, recent Defense Department reports on Iraq stability—most recently in September
2009—corroborate a widespread perception that Iranian interference in Iraq has lessened,
including fewer Iranian weapons shipments. In Iraq itself, the Shiite militias and political parties
that benefit most from Iranian support fared poorly in the January 31, 2009, provincial elections
in Iraq, and the results were viewed as a setback for Iran’s influence in Iraq. One Shiite militia,
Asa’ib al Haq (League of the Righteous) has reconciled with the government and its leaders
(Khazali brothers) have been released from U.S. custody. Iran was unable to derail the U.S.-Iraq
defense pact (which took effect January 1, 2009). In January 2009, Iraqi Prime Minister Nuri al-

33 This issue is covered in greater depth in CRS Report RS22323, Iran's Activities and Influence in Iraq, by Kenneth
Katzman.
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Maliki visited Iran for the fourth time since he became Prime Minister, reportedly to assure Iran
that the pact did not threaten Iran.
Iran also has signed a number of agreements with Iraq on transportation, energy cooperation, free
flow of Shiite pilgrims, border security, intelligence sharing, and other cooperation; several more
agreements, including a $1 billion credit line for Iranian exports to Iraq, were signed during
Ahmadinejad’s March 2-3, 2008, visit to Iraq; implementing agreements were signed in April
2008. The two countries now do about $4 billion in bilateral trade.
After at first rejecting dialogue with Iran on the Iraq issue, the George W. Bush Administration
supported and attended several regional conferences on Iraq, attended by Iran, and undertook
bilateral talks with Iran on the Iraq issue. Several meetings were held in Baghdad in 2007, with
no concrete results, according to former Ambassador to Iraq Crocker, who led the U.S. side at the
talks. A round of talks was tentatively scheduled for December 18, 2007, but Iran repeatedly
postponed them because of differences over the agenda and the level of talks (Iran wanted them
to be at the ambassador level). On May 5, 2008, Iran indefinitely suspended this dialogue, and, in
February 2009, Iran said there was no need to resume it.
A provision of the FY2008 defense authorization bill (P.L. 110-181) required a report to Congress
on Iran’s interference in Iraq. On several occasions since January 2008, the Treasury Department
has taken action against suspected Iranian and pro-Iranian operatives in Iraq by designating
individuals and organizations as a threat to stability in Iraq under the July 17, 2007, Executive
Order 13438, which freezes the assets and bans transactions with named individuals. The named
entities, which includes a senior Qods Forces leader, are in the tables on sanctioned entities in
CRS Report RS20871, Iran Sanctions, by Kenneth Katzman. On July 2, 2009, a pro-Iranian
militia offshoot, Khata’ib Hezbollah (Hezbollah Battalions) was named under the order, and was
also designated a Foreign Terrorist Organization (FTO) under the Immigration and Naturalization
Act. On July 9, 2009, the United States military turned over to Iraqi custody five Iranian Qods
Forces operatives (Iran claims they are diplomats) arrested in 2007 in Irbil, northern Iraq. The
men returned to Iran.
Supporting Palestinian Militant Groups
Iran’s support for Palestinian militant groups has long concerned U.S. Administrations, as part of
an apparent effort by Tehran to obstruct an Israeli-Palestinian peace, which Iran believes would
strengthen the United States and Israel. Ahmadinejad’s various statements on Israel were
discussed above, although Supreme Leader Khamene’i has repeatedly called Israel a “cancerous
tumor.” He used that term again during a March 4, 2009, press conference in Tehran. In
December 2001, Rafsanjani said that it would take only one Iranian nuclear bomb to destroy
Israel, whereas a similar strike against Iran by Israel would have far less impact because Iran’s
population is large.
Iran has hosted numerous conferences to which anti-peace process terrorist organizations were
invited (for example: April 24, 2001, and June 2-3, 2002). During his presidency, Khatemi also
issued sharp criticisms and recriminations against Israel, but he also conversed with Israel’s
president at the 2005 funeral of Pope John Paul II. The formal position of the Iranian Foreign
Ministry, considered a bastion of moderates, is that Iran would not seek to block an Israeli-
Palestinian settlement but that the peace process is too weighted toward Israel to result in a fair
settlement.
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Iran and Hamas
The State Department report on terrorism for 2007 (mentioned above) again accused Iran of
providing “extensive” funding, weapons, and training to Hamas, Palestinian Islamic Jihad (PIJ),
the Al Aqsa Martyr’s Brigades, and the Popular Front for the Liberation of Palestine-General
Command (PFLP-GC). All are named as foreign terrorist organizations (FTO) by the State
Department for their use of violence to undermine the Arab-Israeli peace process. Some saw
Iran’s regional policy further strengthened by Hamas’s victory in the January 25, 2006,
Palestinian legislative elections, and even more so by Hamas’s June 2007 armed takeover of the
Gaza Strip. The Hamas gains potentially positioned it to block any peace settlement with Israel.
Hamas activists downplay Iranian influence on them, asserting that Iran is mostly Shiite, while
Hamas members are Sunni Muslims.34 Hamas was reputed to receive about 10% of its budget in
the early 1990s from Iran, although since then Hamas has cultivated funding from wealthy
Persian Gulf donors and supporters in Europe and elsewhere.
Still, it was evident from the December 27, 2008-January 17, 2009, Israel-Hamas war in Gaza,
that Iran provides material support to Hamas. Joint Chiefs Chairman Adm. Mike Mullen said on
January 27, 2009, that the United States boarded but did not seize a ship carrying light arms to
Hamas from Iran; the ship (the Monchegorsk) later went to Cyprus. On March 11, 2009, a U.N.
committee monitoring Iran’s compliance with Resolution 1747, which bans Iranian arms exports,
said Iran might have violated that resolution with the alleged shipment. Hamas appeared to
corroborate allegations of Iranian weapons supplies when its exiled leader, Khaled Meshal, on
February 1, 2009, publicly praised Iran for helping Hamas achieve “victory” over Israel in the
conflict.35 On December 29, 2008, Khamene’i said that Muslims worldwide were “duty-bound”
to defend Palestinians in the Gaza Strip against the Israeli offensive against the Hamas-run
leadership there, but the Iranian leadership did not attempt to send Iranian volunteers to Gaza to
fight on Hamas’ behalf. Iranian weaponry might also have been the target of a January 2009 strike
on a weapons delivery purportedly bound for Gaza in transit via Sudan (presumably via Egypt).
Sunni Arab leaders in Egypt, Jordan, Saudi Arabia, and throughout the region apparently fear
Iran’s reported attempts to discredit these leaders for what Iran considers insufficient support for
Hamas in its recent war with Israel. Some Iranian efforts reportedly involve establishing
Hezbollah cells in some of these countries, particularly Egypt, purportedly to stir up opposition to
these governments and build public support for Hezbollah and Hamas. 36 These countries are also
said to fear that President Obama’s outreach to Iran might lead the United States to downplay
their concerns about Iran—a sentiment that Secretary of Defense Gates tried to allay during his
visit to the Middle East in May 2009.
Lebanese Hezbollah and Syria
Iran has maintained a close relationship with Hezbollah since the group was formed in 1982 by
Lebanese Shiite clerics who were sympathetic to Iran’s Islamic revolution and belonged to the
Lebanese Da’wa Party. Hezbollah was responsible for several acts of anti-U.S. and anti-Israel

34 CNN “Late Edition” interview with Hamas co-founder Mahmoud Zahar, January 29, 2006.
35 Hamas Leader Praises Iran’s Help in Gaza ‘Victory.’ CNN.com. February 1, 2009.
36 Slackman, Michael. “Egypt Accuses Hezbollah of Plotting Attacks in Sinai and Arms Smuggling to Gaza.” New
York Times, April 14, 2009
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terrorism in the 1980s and 1990s.37 Hezbollah’s attacks on Israeli forces in southern Lebanon
contributed to an Israeli withdrawal in May 2000, but, despite United Nations certification of
Israel’s withdrawal, Hezbollah maintained military forces along the border. Hezbollah continued
to remain armed and outside Lebanese government control, despite U.N. Security Council
Resolution 1559 (September 2, 2004) that required its dismantlement. In refusing to disarm,
Hezbollah says it was resisting Israeli occupation of some Lebanese territory (Shib’a Farms).
Although Iran likely did not instigate Lebanese Hezbollah to provoke the July-August 2006 war,
Iran has long been its major arms supplier. Hezbollah fired Iranian-supplied rockets on Israel’s
northern towns during the fighting. Reported Iranian shipments to Hezbollah prior to the conflict
included the “Fajr” (dawn) and Khaybar series of rockets that were fired at the Israeli city of
Haifa (30 miles from the border), and over 10,000 Katyusha rockets that were fired at cities
within 20 miles of the Lebanese border.38 Iran also supplied Hezbollah with an unmanned aerial
vehicle (UAV), the Mirsad, which Hezbollah briefly flew over the Israel-Lebanon border on
November 7, 2004, and April 11, 2005; at least three were shot down by Israel during the conflict.
On July 14, 2006, Hezbollah apparently hit an Israeli warship with a C-802 sea-skimming missile
probably provided by Iran. (See Table 5 above for information on Iran’s acquisition of that
weapon from China.) Iran also purportedly provided advice during the conflict; about 50
Revolutionary Guards Qods Force personnel were in Lebanon (down from about 2,000 when
Hezbollah was formed, according to a Washington Post report of April 13, 2005) when the
conflict began; that number might have increased during the conflict to help Hezbollah operate
the Iran-supplied weaponry. In November 2009, Israel intercepted a ship that it asserted was
carrying 500 tons of arms purportedly for Hezbollah.
Even though Hezbollah reduced its overt military presence in southern Lebanon in accordance
with the conflict-related U.N. Security Council Resolution 1701 (July 31, 2006), Hezbollah was
perceived as a victor in the war for holding out against heavy Israeli air-strikes and some ground
action. Iran supported Hezbollah’s demands and provided it with leverage by resupplying it, after
the hostilities, with 27,000 rockets, more than double what Hezbollah had at the start of the 2006
war.39 Among the post-war deliveries were 500 Iranian-made “Zelzal” (Earthquake) missiles with
a range of 186 miles, enough to reach Tel Aviv from south Lebanon. Iran also made at least $150
million available for Hezbollah to distribute to Lebanese citizens (mostly Shiite supporters of
Hezbollah) whose homes were damaged in the Israeli military campaign.40 The State Department
terrorism report for 2008, referenced above, specifies Iranian aid to Hezbollah as exceeding $200
million in 2008, and says that Iran trained over 3,000 Hezbollah fighters in Iran during the year.
Neither Israel nor the United States opposed Hezbollah’s progressively increased participation in
peaceful Lebanese politics. In March 2005, President George W. Bush indicated that the United
States might accept Hezbollah as a legitimate political force in Lebanon if it disarms. In the

37 Hezbollah is believed responsible for the October 1983 bombing of the U.S. Marine barracks in Beirut, as well as
attacks on U.S. Embassy Beirut facilities in April 1983 and September 1984, and for the hijacking of TWA Flight 847
in June 1985 in which Navy diver Robert Stetham was killed. Hezbollah is also believed to have committed the March
17, 1992, bombing of Israel’s embassy in that city, which killed 29 people. Its last known terrorist attack outside
Lebanon was the July 18, 1994, bombing of a Jewish community center in Buenos Aires, which killed 85. On October
31, 2006, Argentine prosecutors asked a federal judge to seek the arrest of Rafsanjani, former Intelligence Minister Ali
Fallahian, former Foreign Minister Ali Akbar Velayati, and four other Iranian officials for this attack.
38“Israel’s Peres Says Iran Arming Hizbollah.” Reuters, February 4, 2002.
39 Rotella, Sebastian. “In Lebanon, Hezbollah Arms Stockpile Bigger, Deadlier.” Los Angeles Times, May 4, 2008.
40 Shadid, Anthony. “Armed With Iran’s Millions, Fighters Turn to Rebuilding.” Washington Post, August 16, 2006.
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Lebanese parliamentary elections of May—June 2005, Hezbollah expanded its presence in the
parliament to 14 out of the 128-seat body, and it gained two cabinet seats. In mid May 2008,
Hezbollah, for the first time ever, used its militia wing for domestic purposes. Its fighters took
over large parts of Beirut in response to an attempt by the U.S. and Saudi-backed Lebanese
government to curb Hezbollah’s media and commercial operations. The success of its fighters
contributed to a Qatar-brokered settlement on May 21, 2008, in which the majority coalition
agreed to give Hezbollah and its allies enough seats in a new cabinet (one Hezbollah cabinet seat
and seven allies holding cabinet seats as well) to be able to veto government decisions. Hezbollah
agreed to the compromise candidate of Lebanese Army commander Michel Suleiman to become
president.
Based on the strength, Hezbollah was viewed as a likely winner in June 7, 2009, parliamentary
elections in Lebanon. However, its coalition won 57 seats in the elections, failing to overturn the
majority of the pro-U.S. factions led by Sa’d al-Hariri, son of assassinated leader Rafiq Hariri,
which won 71 seats (one more than they had previously). A new cabinet was formed in November
2009, but Hezbollah’s political strength in that government was reduced only slightly compared
to the pre-election government. Nonetheless, the election defeat for Hezbollah allies set back
Tehran’s regional influence. As a matter of policy, the United States does not meet with any
Hezbollah members, even those in the parliament or cabinet. Hezbollah is a designated FTO, but
that designation bars financial transactions with the group and does not specifically ban meeting
members of the group.
Syria
Iran’s support for Hezbollah is linked in many ways to its alliance with Syria. Syria is the transit
point for the Iranian weapons shipments to Hezbollah and both countries see Hezbollah as
leverage against Israel to achieve their regional and territorial aims. In order to preserve its links
to Syria, which is one of Iran’s few real allies, Iran purportedly has acted as an intermediary with
North Korea to supply Syria with various forms of WMD and missile technology. Some see
Israel-Syria negotiations—and recent Obama Administration engagement with Syria—as means
to wean Syria away from its alliance with Iran. However, Iran is a major investor in the Syrian
economy, which attracts very little western investment, and some believe the Iran-Syria alliance
is not easily severed. On December 13, 2009, the Syrian and Iranian defense ministers signed a
defense agreement to “face common enemies and challenges.”
Central Asia and the Caspian
Iran’s policy in Central Asia has thus far emphasized Iran’s rights to Caspian Sea resources,
particularly against Azerbaijan. That country’s population, like Iran’s, is mostly Shiite Muslim,
but its leadership is secular. In addition, Azerbaijan is ethnically Turkic, and Iran fears that
Azerbaijan nationalists might stoke separatism among Iran’s large Azeri Turkic population, which
demonstrated some unrest in 2006. These factors could explain why Iran has generally tilted
toward Armenia, which is Christian, even though it has been at odds with Azerbaijan over
territory and control of ethnic Armenians. In July 2001, Iranian warships and combat aircraft
threatened a British Petroleum (BP) ship on contract to Azerbaijan out of an area of the Caspian
that Iran considers its own. The United States called that action provocative, and it is engaged in
border security and defense cooperation with Azerbaijan directed against Iran (and Russia). The
United States successfully backed construction of the Baku-Tblisi-Ceyhan oil pipeline, intended
in part to provide alternatives to Iranian oil. Along with India and Pakistan, Iran has been given
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observer status at the Central Asian security grouping called the Shanghai Cooperation
Organization (SCO—Russia, China, Kazakhstan, Kyrgyzstan, Uzbekistan, and Tajikistan). In
April 2008, Iran applied for full membership in the organization, which opposes a long-term U.S.
presence in Central Asia.
Afghanistan and Pakistan41
Iran is viewed by U.S. officials as pursuing a multi-track strategy—attempting to help develop
Afghanistan and enhance its influence there, while also building leverage against the United
States by arming anti-U.S. militant groups. Iran is particularly interested in restoring some of its
traditional sway in eastern, central, and northern Afghanistan where Persian-speaking Afghans
predominate. Iran may want to be in position to threaten the air base at Shindand, in Herat
Province, which is now used by U.S. and allied forces and which Iran believes could be used for
surveillance of or strikes on Iran.
The State Department terrorism report for 2008 again accused the Qods Force of supplying
various munitions, including 107mm rockets, to Taliban and other militants in Afghanistan; some
Taliban commanders openly say they are obtaining Iranian weapons. The 2008 reports also, and
for the first time, accuses Iran of training Taliban fighters in small unit tactics, small arms use,
explosives, and indirect weapons fire. Among specific shipments noted by the United States: on
April 17, 2007, U.S. military personnel in Afghanistan captured a shipment of Iranian weapons
that purportedly was bound for Taliban fighters. On several occasions in 2007, NATO officers
said they directly intercepted Iranian shipments of heavy arms, C4 explosives, and advanced
roadside bombs (explosively forced projectiles, or EFPs, such as those found in Iraq) to Taliban
fighters in Afghanistan. U.S. commanders in Afghanistan maintain that the intercepted shipments
are large enough that the Iranian government would have to have known about them. U.S. and
Afghan officials say the shipments continue, but are not consistent or necessarily decisive in the
Afghanistan war.
These shipments and contacts have caused debate over Iran’s goals because Iran long opposed the
regime of the Taliban in Afghanistan on the grounds that it oppressed Shiite Muslim and other
Persian-speaking minorities. Iran nearly launched a military attack against the Taliban in
September 1998 after Taliban fighters captured and killed nine Iranian diplomats based in
northern Afghanistan, and Iran provided military aid to the Northern Alliance factions. During the
major combat phase of the post-September 11 U.S.-led war in Afghanistan, Iran offered search
and rescue of any downed service persons and the transshipment to Afghanistan of humanitarian
assistance. Iran and U.S. diplomats were in continuous contact in forging a post-Taliban
government in Afghanistan at the December 2001 “Bonn Conference.” In March 2002, Iran
expelled Gulbuddin Hikmatyar, an Afghan militant leader; it froze his assets in January 2005.
After 2004, Iran’s influence waned somewhat as Northern Alliance figures were marginalized in
Afghan politics. To build financial and alternative political influence in Afghanistan, Iran has
funded projects that total about $1.2 billion million since 2001 (close to a pledged amount in
international donors conferences), mostly in neighboring Herat but also in Kabul (Shiite
theological seminaries there). Afghan officials and observers in Herat Province say Iran’s
influence is substantial there but not necessarily against the Afghan government.42 Iran’s

41 See CRS Report RL30588, Afghanistan: Post-Taliban Governance, Security, and U.S. Policy, by Kenneth Katzman.
42 Conversations with observers and officials in Herat during CRS visit there. October 2009.
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construction of Shiite mosques and seminaries could indicate Iran is trying to support
Afghanistan’s Shiite (Hazara tribe) minority, and Iran has funded several media outlets in
Afghanistan catering to Shiites.
At the same time, some commanders, including CENTCOM Commander Gen. David Petraeus,
have said that U.S. engagement with Iran on Afghanistan might help U.S. stabilization efforts
there. Others say that working with Iran on Afghanistan might help build a broader understanding
with Iran on other issues, including the nuclear issue.
Perhaps in recognition of Iran’s role in Afghanistan, or as part of a broader effort to build
dialogue with Iran, the United States invited Iran to an international conference on Afghanistan
held in the Netherlands on March 31, 2009. Iran’s representatives there had a brief side exchange
there with U.S. special representative for Afghanistan and Pakistan Ambassador Richard
Holbrooke. At the meeting, Iran pledged cooperation on preventing drug smuggling out of
Afghanistan and in helping economically develop that country.
Pakistan
Iran’s relations with Pakistan have been partly a function of events in Afghanistan, although
relations have worsened somewhat in late 2009 as Iran has accused Pakistan of supporting Sunni
Muslim rebels in Iran’s Baluchistan region. These Sunni guerrillas have conducted a number of
attacks on Iranian regime targets in 2009, as discussed above (“Jundullah”).
Iran had a burgeoning military cooperation with Pakistan in the early 1990s, and as noted Iran’s
nuclear program benefitted from the A.Q. Khan network. However, Iran-Pakistan relations
became strained in the 1990s when Pakistan was supporting the Taliban in Afghanistan, which
committed alleged atrocities against Shiite Afghans (Hazara tribe), and which seized control of
Persian-speaking areas of Afghanistan. Currently, Iran remains suspicious that Pakistan might
want to again implant the Taliban in power in Afghanistan—and Iran itself is aiding the Taliban to
some extent—but Iran and Pakistan now have a broad agenda that includes a potential major gas
pipeline project, discussed further below.
Al Qaeda
Iran is not a natural ally of Al Qaeda, largely because Al Qaeda is an orthodox Sunni Muslim
organization. However, some experts believe that hardliners in Iran might want to use Al Qaeda
activists as leverage against the United States and its allies. Some say Iran might want to
exchange them for a U.S. hand-over of PMOI activists under U.S. control in Iraq. The 9/11
Commission report said several of the September 11 hijackers and other plotters, possibly with
official help, might have transited Iran, but the report does not assert that the Iranian government
cooperated with or knew about the plot. Another bin Laden ally, Abu Musab al-Zarqawi, killed by
U.S. forces in Iraq on June 7, 2006, reportedly transited Iran after the September 11 attacks and
took root in Iraq, becoming an insurgent leader there.
However, Iran might see possibilities for tactical alliance with Al Qaeda. Iran asserted on July 23,
2003, that it had “in custody” senior Al Qaeda figures. On July 16, 2005, Iran’s Intelligence
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Minister said that 200 Al Qaeda members are in Iranian jails.43 U.S. officials have said since
January 2002 that Iran has not prosecuted or extradited any senior Al Qaeda operatives. The three
major Al Qaeda figures believed to have been in Iran include spokesman Sulayman Abu Ghaith,
top operative Sayf Al Adl, and Osama bin Laden’s son, Saad.44 although some U.S. officials said
in January 2009 that Saad bin Laden might have left Iran and could be in Pakistan. That
information was publicized a few days after the Treasury Department (on January 16, 2009)
designated four Al Qaeda operatives in Iran, including Saad bin Laden (and three lesser known
figures) as terrorist entities under Executive Order 13224. (U.S. officials blamed Saad bin Laden,
Adl, and Abu Ghaith for the May 12, 2003, bombings in Riyadh, Saudi Arabia, against four
expatriate housing complexes on these operatives, saying they have been able to contact
associates outside Iran.45) Saad bin Laden was subsequently said to have possibly been killed in a
U.S. air strike against Al Qaeda locations in Pakistan, although there has been no confirmation of
that.
In December 2009, Iran’s Foreign Minister confirmed that a teenage daughter of Osama bin
Laden had sought refuge in the Saudi embassy in Tehran—the first official confirmation that
members of bin Laden’s family have been in Iran. Other family members are said to have been
living in a compound in Iran since the September 11, 2001, attacks. Some family members have
said the young bin Ladens have never been affiliated with Al Qaeda.
Latin America
A growing concern has been Iran’s developing relations with countries and leaders in Latin
America considered adversaries of the United States, particularly Cuba and Venezuela’s Hugo
Chavez. Ahmadinejad made a high profile visit to five Latin American countries in November
2009, including Brazil but also including, as expected, Venezuela. On January 27, 2009, Secretary
of Defense Gates said Iran was trying to build influence in Latin America by expanding front
companies and opening offices in countries there. Recent State Department terrorism reports have
said that Cuba maintains “close relationships with other state sponsors of terrorism such as Iran.”
Iran has offered Bolivia $1 billion in aid and investment, according to an Associated Press report
of November 23, 2008.
Chavez has visited Iran on several occasions, offering Iran additional gasoline during Iran’s fuel
shortages in 2007 as well as joint oil and gas projects. A firm deal for Petroleos de Venezuela to
supply Iran with gasoline was signed in September 2009, apparently in a joint effort to
circumvent any potential worldwide ban on sales of gasoline to Iran. The two countries have
established direct air links, and 400 Iranian engineers have reportedly been sent to Venezuela to
work on infrastructure projects there. However, many accounts say that most of the agreements
between Iran and Venezuela are agreements in principle that have not been implemented in
reality. On October 30, 2007, then Secretary of Homeland Security Michael Chertoff said that
Iran’s relationship with Venezuela is an emerging threat because it represents a “marriage” of
Iran’s extremist ideology with “those who have anti-American views.”

43 “Tehran Pledges to Crack Down on Militants.” Associated Press, July 18, 2005.
44 Gertz, Bill. “Al Qaeda Terrorists Being Held by Iran.” Washington Times, July 24, 2003.
45 Gertz, Bill. “CIA Points to Continuing Iran Tie to Al Qaeda.” Washington Times, July 23, 2004.
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India
Iran and India have cultivated good relations with each other in order to enable each to pursue its
own interests and avoid mutual conflict. The two backed similar anti-Taliban factions in
Afghanistan during 1996-2001 and have a number of mutual economic and even military-to-
military relationships and projects, discussed further in CRS Report RS22486, India-Iran
Relations and U.S. Interests
, by K. Alan Kronstadt and Kenneth Katzman.
One aspect of the relationship involves not only the potential building of a natural gas pipeline
from Iran, through Pakistan, to India, but also the supplies of gasoline to Iran. A key supplier is
Reliance Industries Ltd., which by some accounts supplies up to 40% of Iran’s imports of
gasoline. In December 2008, some Members of Congress expressed opposition to a decision by
the Export-Import Bank to provide up to $900 million in loan guarantees to Reliance, because of
its gasoline sales to Iran. A provision of H.R. 3081, a FY2010 foreign aid appropriation, would
end provision of such export credits to companies that sell gasoline to Iran. Another source of
U.S. concern has been visits to India by some Iranian naval personnel.
Africa
Some Members of Congress are concerned that Iran is support radical Islamist movements in
Africa. In the 111th Congress, H.Con.Res. 16 cites Hezbollah for engaging in raising funds in
Africa by trafficking in “conflict diamonds.” Iran also might have supplied Islamists in Somalia
with anti-aircraft and anti-tank weaponry. The possible transfer of weaponry to Hamas via Sudan
was discussed above.
U.S. Policy Responses, Options, and Legislation
The February 11, 1979, fall of the Shah of Iran, a key U.S. ally, opened the long and deep rift in
U.S.-Iranian relations. On November 4, 1979, radical “students” seized the U.S. Embassy in
Tehran and held its diplomats hostage until minutes after President Reagan’s inauguration on
January 20, 1981. The United States broke relations with Iran on April 7, 1980 (just after the
failed U.S. military attempt to rescue the hostages) and the two countries had only limited official
contact thereafter.46 The United States tilted toward Iraq in the 1980-1988 Iran-Iraq war, including
U.S. diplomatic attempts to block conventional arms sales to Iran, providing battlefield
intelligence to Iraq47 and, during 1987-1988, direct skirmishes with Iranian naval elements in the
course of U.S. efforts to protect international oil shipments in the Gulf from Iranian mines and
other attacks. In one battle on April 18, 1988 (“Operation Praying Mantis”), Iran lost about a
quarter of its larger naval ships in a one-day engagement with the U.S. Navy, including one
frigate sunk and another badly damaged. Iran strongly disputed the U.S. assertion that the July 3,

46 An exception was the abortive 1985-1986 clandestine arms supply relationship with Iran in exchange for some
American hostages held by Hezbollah in Lebanon (the so-called “Iran-Contra Affair”). Iran has an interest section in
Washington D.C. under the auspices of the Embassy of Pakistan; it is staffed by Iranian-Americans. The U.S. interest
section in Tehran has no American personnel; it is under the Embassy of Switzerland.
47 Sciolino, Elaine. The Outlaw State: Saddam Hussein’s Quest for Power and the Gulf Crisis. New York: John Wiley
and Sons, 1991. p. 168.
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1988, U.S. shoot-down of Iran Air Flight 655 by the U.S.S. Vincennes over the Persian Gulf
(bound for Dubai, UAE) was an accident.
In his January 1989 inaugural speech, President George H.W. Bush laid the groundwork for a
rapprochement, saying that, in relations with Iran, “goodwill begets goodwill,” implying better
relations if Iran helped obtain the release of U.S. hostages held by Hezbollah in Lebanon. Iran
reportedly did assist in obtaining their releases, which was completed in December 1991, but no
thaw followed, possibly because Iran continued to back groups opposed to the U.S.-sponsored
Middle East peace process, a major U.S. priority.
Policy During the Clinton and George W. Bush Administrations
Upon taking office in 1993, the Clinton Administration moved to further isolate Iran as part of a
strategy of “dual containment” of Iran and Iraq. In 1995 and 1996, the Clinton Administration and
Congress added sanctions on Iran in response to growing concerns about Iran’s weapons of mass
destruction, its support for terrorist groups, and its efforts to subvert the Arab-Israeli peace
process. The election of Khatemi in May 1997 precipitated a U.S. shift toward engagement; the
Clinton Administration offered Iran official dialogue, with no substantive preconditions. In
January 1998, Khatemi publicly agreed to “people-to-people” U.S.-Iran exchanges as part of his
push for “dialogue of civilizations, but he ruled out direct talks. In a June 1998 speech, then
Secretary of State Albright called for mutual confidence building measures that could lead to a
“road map” for normalization. Encouraged by the reformist victory in Iran’s March 2000 Majles
elections, Secretary Albright, in a March 17, 2000, speech, acknowledged past U.S. meddling in
Iran, announcing some minor easing of the U.S. trade ban with Iran, and promised to try to
resolve outstanding claims disputes. In September 2000 U.N. “Millennium Summit” meetings,
Albright and President Clinton sent a positive signal to Iran by attending Khatemi’s speeches.
George W. Bush Administration Policy
The George W. Bush Administration policy priority was to prevent Iran from obtaining a nuclear
weapons capability, believing that a nuclear Iran would be even more assertive in attempting to
undermine U.S. objectives in the Middle East than it already is. The George W. Bush
Administration undertook multi-faceted efforts to limit Iran’s strategic capabilities through
international diplomacy and sanctions—both international sanctions as well as sanctions enforced
by its allies, outside Security Council mandate. At the same time, the Administration engaged in
bilateral diplomacy with Iran on specific priority issues, such as Afghanistan and Iraq. The policy
framework was supported by maintenance of a large U.S. conventional military capabilities in the
Persian Gulf and through U.S. alliances with Iran’s neighbors.
At times, the George W. Bush Administration considered or pursued more assertive options.
Some Administration officials, reportedly led by Vice President Cheney, believed that policy
should focus on using the leverage of possible military confrontation with Iran or on U.S. efforts
to change Iran’s regime.48 Legislation in the 110th Congress indicated support for steps to compel
other foreign companies to curtail business dealings with Iran.49

48 Cooper, Helene and David Sanger. “Strategy on Iran Stirs New Debate at White House.” New York Times, June 16,
2007.
49 The FY2007 defense authorization law (P.L. 109-364) called for a report by the Administration on all aspects of U.S.
(continued...)
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Overview of Obama Administration Policy
President Obama came into office articulating a policy of engagement with Iran as a means of
persuading it to verifiably limit its nuclear program to purely peaceful uses and to curb Iran’s
propensity to fund and arm militant movements in the region. The policy is undergoing evolution
as Iran has cracked down on democracy protesters and refused to accept proposals to limit its
nuclear program. He said in his inaugural speech that the United States would be responsive to an
Iranian “unclenched fist,” and that the Administration would pursue consistent and broad direct
diplomacy with Iran. In concert with that approach, Obama Administration officials have not
indicated support for military action should Iran continue to pursue its nuclear program—
although that option has not been explicitly “taken off the table.” No Administration official has
publicly supported “regime change” in Iran to accomplish U.S. goals, even at the height of the
election-related protests.
Some Obama Administration officials, including Secretary of State Clinton and Secretary of
Defense Gates, well before the unrest in Iran, expressed public skepticism that engagement would
yield changes in Iran’s policies. Others, including Dennis Ross, who was named in late February
2009 as an adviser to Secretary of State Clinton for “Southwest Asia” (a formulation understood
to center on Iran), and then assigned to a similar capacity in the White House in June 2009,
believe that the United States and its partners need to present Iran with clearer incentives and
clearer punishments if Iran continues to refuse cooperation on the nuclear issue.
Implementation of the Engagement Policy
Prior to the June 12 election in Iran, the steps to engage Iran included:
• The message to the Iranian people by President Obama on the occasion of
Nowruz (Persian New Year), March 21, 2009. Experts noted particularly the
President’s reference to “The Islamic Republic of Iran,” a formulation that
appears to suggest that the United States fully accepts the Islamic revolution in
Iran and is not seeking “regime change.”
• President Obama reportedly sent a letter to Iran’s leadership expressing the
Administration’s philosophy in favor of engagement with Iran. (According to
Iran’s “Tabnak” website, which is close to the Revolutionary Guard, a second
letter was sent to Iran in August 2009.)
• The major speech to the “Muslim World” in Cairo on June 4, 2009, in which
President Obama said the United States had played a role in the overthrow of
Mossadeq, and said that Iran had a right to peaceful nuclear power if it complies
with its responsibilities under the NPT.
• The public invitation for Iran to attend the March 31, 2009, conference on
Afghanistan in the Netherlands, discussed above.

(...continued)
policy and objectives on Iran (and required the DNI to prepare a national intelligence estimate on Iran, which was
released on December 3, 2007 as discussed above).
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• The U.S. announcement on April 8 that it would attend all future P5+1 meetings
with Iran, and suspension of seeking new P5+1 agreement on additional U.N.
sanctions.
• The loosening of restrictions on U.S. diplomats to meet their Iranian counterparts
at international meetings, and the message to U.S. embassies abroad that they can
invite Iranian diplomats to upcoming celebrations of U.S. Independence Day.
(The July 4 invitations did not get issued because of the Iran unrest.)
• On the other hand, President Obama issued a formal one year extension of the
U.S. ban on trade and investment with Iran on March 15, 2009, (see “U.S. Ban
on Trade and Investment with Iran,” below).
The election-related unrest in Iran did not, initially, alter the Administration’s commitment to
engagement. As Iran has resisted nuclear compromise, and as democracy protests have grown, the
Administration has begun to push for “crippling sanctions”—sanctions that bite into Iran’s
civilian economy. In particular, as of January 2010, the Administration has formulated proposals
to target the Revolutionary Guard for sanctions, in part as a symbol of support for the pro-
democracy demonstrators, and perhaps also in recognition that it cannot obtain international
agreement for crippling sanctions on Iran’s economy. The Administration continues to assert that
it is open to further talks with Iran on the nuclear issue, but it appears to be lowering its
expectations of a nuclear deal and shifting to greater support to the pro-democracy movement in
Iran.
Enhanced U.S. Interests Section
On specific future steps toward greater engagement, the George W. Bush Administration said in
late 2008 that it would leave to the Obama Administration a decision on whether to staff the U.S.
interests section in Tehran with U.S. personnel, who would mostly process Iranian visas and help
facilitate U.S.-Iran people-to-people contacts. The current interests section is under the auspices
of the Swiss Embassy. The Obama Administration appeared inclined toward that step as well but
no decision has been announced, to date, and was likely delayed or derailed outright by the
Iranian response to the postelection protests.
Engagement Efforts During the George W. Bush Administration
Prior to 2008, the George W. Bush Administration directly engaged Iran on specific regional
priority (Afghanistan and Iraq) and humanitarian issues. The United States had a dialogue with
Iran on Iraq and Afghanistan from late 2001 until May 2003, when the United States broke off the
talks following the May 12, 2003, terrorist bombing in Riyadh. At that time, the United States and
Iran publicly acknowledged that they were conducting direct talks in Geneva on those two
issues,50 the first confirmed direct dialogue between the two countries since the 1979 revolution.
The United States briefly resumed some contacts with Iran in December 2003 to coordinate U.S.
aid to victims of the December 2003 earthquake in Bam, Iran, including a reported offer—
rebuffed by Iran—to send a high-level delegation to Iran including Senator Elizabeth Dole and
reportedly President George W. Bush’s sister, Dorothy.

50 Wright, Robin. “U.S. In ‘Useful’ Talks With Iran.” Los Angeles Times, May 13, 2003.
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Prior to the July 2008 decision to have Undersecretary Burns attend the July 19, 2008, P5+1
nuclear negotiations with Iran, the George W. Bush Administration maintained it would join
multilateral nuclear talks, or even potentially engage in direct bilateral talks, only if Iran
suspended uranium enrichment. Some believe the Administration position was based on a view
that offering to participate in a nuclear dialogue with Iran would later increase international
support for sanctions by demonstrating U.S. willingness to negotiate.
The George W. Bush Administration did indicate that it considers Iran a great nation and respects
its history; such themes were prominent in speeches by President George W. Bush such as at the
Merchant Marine Academy on June 19, 2006, and his September 18, 2006, speech to the U.N.
General Assembly. Then Secretary of State Rice said in January 2008 that the United States does
not consider Iran a “permanent enemy.” An amendment by then Senator Biden (adopted June
2006) to the FY2007 defense authorization bill (P.L. 109-364) supported the Administration’s
offer to join nuclear talks with Iran.
“Grand Bargain Concept”
The George W. Bush Administration did not offer Iran an unconditional, direct U.S.-Iran bilateral
dialogue on all issues of U.S. concern: nuclear issues, Iranian support of militant movements,
involvement in Iraq, and related issues. Some argue that the issues that divide the United States
and Iran cannot be segregated, and that the key to resolving the nuclear issue is striking a “grand
bargain” on all outstanding issues. The Obama Administration outreach appears to suggest a
willingness to consider such a comprehensive agreement, if such agreement could be reached.
Some say the George W. Bush Administration “missed an opportunity,” saying that U.S. officials
rebuffed a reported comprehensive overture from Iran just before the May 12, 2003, Riyadh
bombing, along the lines of a so-called “grand bargain.” The Washington Post reported on
February 14, 2007 (“2003 Memo Says Iranian Leaders Backed Talks”), that the Swiss
Ambassador to Iran in 2003, Tim Guldimann, had informed U.S. officials of a comprehensive
Iranian proposal for talks with the United States. However, State Department officials and some
European diplomats based in Tehran at that time question whether that proposal represented an
authoritative Iranian communication. Others argue that the offer was unrealistic because an
agreement would have required Iran to abandon key tenets of its Islamic revolution.
Containment and Possible Military Action
The George W. Bush Administration consistently maintained that military action to delay or halt
Iran’s nuclear program was an option that was “on the table.” The Obama Administration has not
ruled this option out but has not indicated any inclination toward it. Secretary of Defense Gates
said in interviews on September 27, 2009, that military action could only temporarily set back
Iran’s program, not end it. Although some oppose most forms of military action against Iran,
others fear that military action might be the only means of preventing Iran from acquiring a
working nuclear device. A U.S. ground invasion to remove Iran’s regime has not, at any time,
appeared to be under serious consideration in part because of the likely resistance an invasion
would meet in Iran.
Proponents of U.S. air and missile strikes against suspected nuclear sites argue that military
action could set back Iran’s nuclear program because there are only a limited number of key
targets, and these targets are known to U.S. planners and vulnerable, even those that are hardened
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or buried.51 Estimates of the target set range from 400 nuclear and other WMD-related targets, to
potentially a few thousand targets crucial to Iran’s economy and military. Those who take an
expansive view of the target set argue that the United States would need to reduce Iran’s potential
for retaliation by striking not only nuclear facilities but also Iran’s conventional military,
particularly its small ships and coastal missiles.
Still others argue that there are military options that do not involve air or missile strikes. Some
say that a naval embargo or related embargo is possible that could pressure Iran into
reconsidering its stand on the nuclear issue. Such action was “demanded” in H.Con.Res. 362.
Others say that the imposition of a “no-fly zone” over Iran might also serve that purpose. Either
action could still be considered acts of war, and could escalate into hostilities.
Most U.S. allies in Europe, not to mention Russia and China, oppose military action. These states
tend to agree with experts who maintain that any benefits would be temporary, and are not
justified by the risks. Some believe that a U.S. strike would cause the Iranian public to rally
around Iran’s regime, others say a strike would provoke a new regional war.
An Israeli Strike?
Israeli officials view a nuclear armed Iran as an existential threat and have repeatedly refused to
rule out the possibility that Israel might strike Iran’s nuclear infrastructure. Speculation about this
possibility increased in March and April 2009 with statements by Israeli Prime Minister Benjamin
Netanyahu to The Atlantic magazine stating that “You don’t want a messianic apocalyptic cult
controlling atomic bombs,” which generated testimony in Congress by CENTCOM commander
General Petraeus indicating that Israel has become so frightened by a prospect of a nuclear Iran
that it might decide to launch a strike on Iran’s nuclear facilities. Adding to the prospects for this
scenario, in mid-June 2008, Israeli officials confirmed reports that Israel had practiced a long
range strike such as that which would be required. In 2008, the George W. Bush Administration
reportedly strongly discouraged an Israeli plan to conduct such a strike, and it denied Israel’s
requests for certain equipment useful to that operation. The issue was again highlighted in
comments on July 5, 2009, by Vice President Biden when he indicated Israel had the right, as a
sovereign country, to decide when its own national security was threatened to the point where it
felt military action was the only viable option. Several senior U.S. officials (Secretary of Defense
Gates, and National Security Advisor James Jones) visited Israel in late July 2009 to express the
view that the Obama Administration is committed to strict sanctions on Iran—with the
implication that Israeli or U.S. military action should not be undertaken, at least as of this time.
Although Israeli strategists say this might be a viable option, several experts doubt that Israel has
the capability to make such action sufficiently effective to justify the risks. U.S. military leaders
are said by observers to believe that an Israeli strike would inevitably draw the United States into
a conflict with Iran but without the degree of planning that would be needed for success.

51 For an extended discussion of U.S. air strike options on Iran, see Rogers, Paul. Iran: Consequences Of a War. Oxford
Research Group, February 2006.
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Iranian Retaliatory Scenarios52
Some officials and experts warn that a U.S. military strike on Iran could provoke unconventional
retaliation. At the very least, such conflict is likely to raise world oil prices significantly out of
fear of an extended supply disruption. Others say such action would cause Iran to withdraw from
the NPT and refuse any IAEA inspections. Other possibilities include firing missiles at Israel—
and Iran’s July 2008 missile tests could have been intended to demonstrate this retaliatory
capability—or directing Lebanese Hezbollah or Hamas to fire rockets at Israel. Iran could also try
to direct anti-U.S. militias in Iraq and Afghanistan to attack U.S. troops.
Iran has developed a strategy for unconventional warfare that partly compensates for its
conventional weakness. Then CENTCOM commander Gen. John Abizaid said in March 2006
that the Revolutionary Guard Navy, through its basing and force structure, is designed to give
Iran a capability to “internationalize” a crisis in the Strait of Hormuz. On January 30, 2007, his
replacement at CENTCOM, Admiral William Fallon, said that “Based on my read of their
military hardware acquisitions and development of tactics ... [the Iranians] are posturing
themselves with the capability to attempt to deny us the ability to operate in [the Strait of
Hormuz].” (General David Petraeus became CENTCOM commander in September 2008.) In July
2008 Iran again claimed it could close the Strait in a crisis but the then commander of U.S. naval
forces in the Gulf, Admiral Kevin Cosgriff, backed by Joint Chiefs Chairman Mullen, said U.S.
forces could quickly reopen the waterway.
Iran has nonetheless tried to demonstrate that it is a capable force in the Gulf. Iran has conducted
at least five major military exercises since August 2006, including exercises simultaneous with
U.S. exercises in the Gulf in March 2007. Iran has repeatedly stated it is capable of closing the
Strait of Hormuz and would do so, if attacked. In early 2007, Iranian ships were widening their
patrols, coming ever closer to key Iraqi oil platforms in the Gulf. In February 2007, Iran seized 15
British sailors that Iran said were patrolling in Iran’s waters, although Britain says they were in
Iraqi waters performing coalition-related searches. They were held until April 5, 2007. On
January 6, 2008, the U.S. Navy reported a confrontation in which five IRGC Navy small boats
approached three U.S. Navy ships to the point where they manned battle stations. The IRGC
boats veered off before any shots were fired. In October 2008, Iran announced it is building
several new naval bases along the southern coast, including at Jask, indicating enhanced
capability to threaten the entry and exit to the Strait of Hormuz. In late November 2009, Iran
seized and held for about one week a British civilian sailing vessel and its crew that Iran said had
strayed into its waters.
A recent study published by the Office of Naval Intelligence says that Iran has developed new
capabilities and tactics over the past few years, backed by new acquisitions, that could pose a
threat to U.S. naval forces in the Gulf. If there were a conflict in the Gulf, some fear that Iran
might try to use large numbers of boats to attack U.S. ships, or to lay mines, in the Strait. In April
2006, Iran conducted naval maneuvers, including test firings of what Iran claims are underwater
torpedoes that can avoid detection, presumably for use against U.S. ships in the Gulf, and a
surface-to-sea radar-evading missile launched from helicopters or combat aircraft. U.S. military
officials said the claims might be an exaggeration. The Gulf states fear that Iran will fire coastal-

52 See also, Washington Institute for Near East Policy. The Last Resort: Consequences of Preventive Military Action
Against Iran, by Patrick Clawson and Michael Eisenstadt. June 2008.
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based cruise missiles at their oil loading or other installations across the Gulf, as happened during
the Iran-Iraq war.
Containment and the Gulf Security Dialogue
The Obama Administration is continuing the efforts of its predecessor to strengthen containment
of Iran by enhancing the military capabilities of U.S. regional allies. The policy may have been
enhanced somewhat in May 2009 when France inaugurated a small military base in UAE, its first
in the region, and which was clearly a signal that France is committed to containing Iran.
An assertive military containment component of George W. Bush Administration policy was
signaled in the January 10, 2007, Iraq “troop surge” statement by President George W. Bush. In
that statement, he announced that the United States was sending a second U.S. aircraft carrier
group into the Gulf,53 extending deployment of Patriot anti-missile batteries in the Gulf,
reportedly in Kuwait and Qatar, and increasing intelligence sharing with the Gulf states. Secretary
of Defense Gates said at the time that he saw the U.S. buildup as building leverage against Iran
that could bolster diplomacy.
The U.S. Gulf deployments built on a containment strategy inaugurated in mid-2006 by the State
Department, primarily the Bureau of Political-Military Affairs (“Pol-Mil”). It was termed the
“Gulf Security Dialogue” (GSD), and represented an effort to revive some of the U.S.-Gulf state
defense cooperation that had begun during the Clinton Administration but had since languished as
the United States focused on the post-September 11 wars in Afghanistan and Iraq.
One goal of the GSD is to boost Gulf state capabilities through new arms sales to the GCC states.
The emphasis of the sales is to improve Gulf state missile defense capabilities, for example by
sales of the upgraded Patriot Advanced Capability-3 (PAC-3),54 as well as to improve border and
maritime security equipment through sales of combat littoral ships, radar systems, and
communications gear. Several GSD-inspired sales include PAC-3 sales to UAE and Kuwait, and
Joint Direct Attack Munitions (JDAMs) to Saudi Arabia and UAE (notified to Congress in
December 2007 and January 2008). A sale to UAE of the very advanced “THAAD” (Theater
High Altitude Area Defense) has also been notified.
Presidential Authorities and Legislation
A decision to take military action might raise the question of presidential authorities. In the 109th
Congress, H.Con.Res. 391, introduced on April 26, 2006, called on the President to not initiate
military action against Iran without first obtaining authorization from Congress. A similar bill,
H.Con.Res. 33, was introduced in the 110th Congress. An amendment to H.R. 1585, the National
Defense Authorization Act for FY2008, requiring authorization for force against Iran, was
defeated 136 to 288. A provision that sought to bar the Administration from taking military action
against Iran without congressional authorization was taken out of an early draft of an FY2007
supplemental appropriation (H.R. 1591) to fund additional costs for Iraq and Afghanistan combat
(vetoed on May 1, 2007). Other provisions, including requiring briefings to Congress about

53 Shanker, Thom. “U.S. and Britain to Add Ships to Persian Gulf in Signal to Iran,” New York Times, December 21,
2006.
54 “New Persian Gulf Security Effort Expected to Fuel Arms Sales in FY-07.” Inside the Pentagon, November 9, 2006.
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military contingency planning related to Iran’s nuclear program, is in the House-passed FY2009
defense authorization bill (H.R. 5658). In the 111th Congress, H.Con.Res. 94 calls for the United
States to negotiate an “Incidents at Sea” agreement with Iran.
Regime Change
A major early feature of George W. Bush Administration policy—promotion of “regime
change”—receded in the latter stages of the Administration. The Obama Administration has
clearly distanced itself from the prior Administration’s attraction to this option, for example by
explicitly referring to Iran by its formal name—“the Islamic Republic of Iran.” Judging from
statements by President Obama in December 2009 that seem to support pro-democracy
demonstrators, there are indications that the Obama Administration might see the resiliency of the
opposition as providing a realistic opportunity to change the regime.
There has been some support in the United States for regime change since the 1979 Islamic
revolution; the United States provided some funding to anti-regime groups, mainly pro-
monarchists, during the 1980s.55 The George W. Bush Administration’s belief in this option
became apparent after the September 11, 2001, attacks, when President George W. Bush
described Iran as part of an “axis of evil” in his January 2002 State of the Union message.
President George W. Bush’s second inaugural address (January 20, 2005) and his State of the
Union messages of January 31, 2006, stated that “our nation hopes one day to be the closest of
friends with a free and democratic Iran.” Other indications of affinity for this option included
increased public criticism of the regime’s human rights record and the funding of Iranian pro-
democracy activists. However, the George W. Bush Administration shifted away from this option
as a strategy employing multilateral sanctions and diplomacy took form in 2006, in part because
U.S. partners believe regime change policies harm diplomacy.
Although it was clearly hoping for opportunities to change the regime, the George W. Bush
Administration said that the democracy promotion programs discussed below were intended to
promote political evolution in Iran and change regime behavior, not to overthrow the regime. A
few accounts, such as “Preparing the Battlefield” by Seymour Hersh in the New Yorker (July 7
and 14, 2008) say that President George W. Bush authorized U.S. covert operations to destabilize
the regime,56 involving assistance to some of the ethnic-based armed groups discussed above.
CRS has no way to confirm assertions in the Hersh article that up to $400 million was
appropriated and/or used to aid the groups mentioned. In January 2009, Iran tried four Iranians on
charges of trying to overthrow the government with U.S. support.
Democracy Promotion Efforts
The George W. Bush Administration’s efforts to promote democracy in Iran began in FY2004 and
were supported by many in Congress. Clear congressional sentiment in favor of this effort came

55 CRS conversations with U.S. officials responsible for Iran policy. 1980-1990. After a period of suspension of such
assistance, in 1995, the Clinton Administration accepted a House-Senate conference agreement to include $18-$20
million in funding authority for covert operations against Iran in the FY1996 Intelligence Authorization Act (H.R.
1655, P.L. 104-93), according to a Washington Post report of December 22, 1995. The Clinton Administration
reportedly focused the covert aid on changing the regime’s behavior, rather than its overthrow.
56 Ross, Brian and Richard Esposito. Bush Authorizes New Covert Action Against Iran. http://blogs.abcnews.com/
theblotter/2007/05/bush_authorizes.html.
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in the 109th Congress with enactment of the Iran Freedom Support Act (P.L. 109-293, signed
September 30, 2006, which authorized funds (no specific dollar amount) for Iran democracy
promotion and modified the Iran Sanctions Act.57
The Obama Administration has not announced a discontinuation of the democracy promotion
efforts, but has shifted toward working directly with Iranians inside Iran who are organized
around certain issues such as health care, the environment, science, and like issues.58 There is less
emphasis than previously on sponsoring visits by Iranians to the United States.
Another part of the effort is broadcasting to Iran. As noted below, the Voice of America and Radio
Free Europe/Radio Liberty have been expanding broadcasts to Iran of information about Iran and
about the United States. The Department has also formed a Persian-language website. Some
oppositionists have criticized these broadcasting services for covering longstanding exiled
opposition groups such as supporters of the Shah’s son, and downplaying some of the newer,
emerging pro-democracy groups inside Iran.
Until the post-election unrest, many questioned the prospects of U.S.-led Iran regime change
because of the weakness of opposition groups. Providing overt or covert support to anti-regime
organizations, in the view of many experts, would not make them materially more viable or
attractive to Iranians. Even before the post-election crackdown, Iran was arresting civil society
activists by alleging they are accepting the U.S. democracy promotion funds, while others have
refused to participate in U.S.-funded programs, fearing arrest.59 In May 2007—Iranian-American
scholar Haleh Esfandiari, of the Woodrow Wilson Center in Washington, DC, was imprisoned for
several months, on the grounds that the Wilson Center was part of this effort. The Center has
denied being part of the democracy promotion effort in Iran.
The State Department has been the implementer of U.S. democracy promotion programs. The
Department has used funds in appropriations (see Table 8 below) to support pro-democracy
programs run by 26 organizations based in the United States in Europe; the Department refuses to
name grantees for security reasons.
In 2006, the George W. Bush Administration also began increasing the presence of Persian-
speaking U.S. diplomats in U.S. diplomatic missions around Iran, in part to help identify and
facilitate Iranian participate in U.S. democracy-promotion programs. The Iran unit at the U.S.
consulate in Dubai has been enlarged significantly into a “regional presence” office, and “Iran-
watcher” positions have been added to U.S. diplomatic facilities in Baku, Azerbaijan; Istanbul,
Turkey; Frankfurt, Germany; London; and Ashkabad, Turkmenistan, all of which have large
expatriate Iranian populations and/or proximity to Iran.60 An enlarged (eight person) “Office of

57 This legislation was a modification of H.R. 282, which passed the House on April 26, 2006, by
a vote of 397-21, and S. 333, which was introduced in the Senate.
58 CRS conversation with U.S. officials of the “Iran Office” of the U.S. Consulate in Dubai. October 2009.
59 Three other Iranian Americans were arrested and accused by the Intelligence Ministry of actions contrary to national
security in May 2007: U.S. funded broadcast (Radio Farda) journalist Parnaz Azima (who was not in jail but was not
allowed to leave Iran); Kian Tajbacksh of the Open Society Institute funded by George Soros; and businessman and
peace activist Ali Shakeri. Several congressional resolutions called on Iran to release Esfandiari (S.Res. 214 agreed to
by the Senate on May 24; H.Res. 430, passed by the House on June 5; and S.Res. 199). All were released by October
2007. Tajbacksh was re-arrested in September 2009 and remains incarcerated.
60 Stockman, Farah. “‘Long Struggle’ With Iran Seen Ahead.” Boston Globe, March 9, 2006.
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Iran Affairs” has been formed at State Department, and it is reportedly engaged in contacts with
U.S.-based exile groups such as those discussed earlier. Iran asserts that funding democracy
promotion represents a violation of the 1981 “Algiers Accords” that settled the Iran hostage crisis
and provide for non-interference in each others’ internal affairs.
Funding
As shown below, $67 million has been appropriated for Iran democracy promotion ($19.6 million
through DRL and $48.6 million through the Bureau of Near Eastern Affairs/USAID). (Of these
amounts, $58 million has been obligated as of July 2009). Additional funds, discussed in the chart
below, have been appropriated for cultural exchanges, public diplomacy, and broadcasting to Iran.
The Obama Administration requested funds for Near East regional democracy programs in its
FY2010 budget request, but no specific request for funds for Iran were delineated. This could be
an indication that the new Administration views this effort as inconsistent with its belief in
dialogue with Iran. No U.S. assistance has been provided to exile-run stations. (The conference
report on the FY2006 regular foreign aid appropriations, P.L. 109-102, stated the sense of
Congress that such support should be considered.)
Table 8. Iran Democracy Promotion Funding
FY2004
Foreign operations appropriation (P.L. 108-199) earmarked $1.5 million for “educational, humanitarian
and non-governmental organizations and individuals inside Iran to support the advancement of
democracy and human rights in Iran.” The State Department Bureau of Democracy and Labor (DRL)
gave $1 million to a unit of Yale University, and $500,000 to National Endowment for Democracy.
FY2005 $3
million from FY2005 foreign aid appropriation (P.L. 108-447) for democracy promotion. Priority
areas: political party development, media, labor rights, civil society promotion, and human rights.
FY2006
$11.15 for democracy promotion from regular FY2006 foreign aid appropriation (P.L. 109-102). $4.15
million administered by DRL and $7 million for the Bureau of Near Eastern Affairs.
FY2006
Total of $66.1 million (of $75 million requested) from FY2006 supplemental (P.L. 109-234): $20 million
supp.
for democracy promotion ($5 million above request); $5 million for public diplomacy directed at the
Iranian population (amount requested); $5 million for cultural exchanges (amount requested); and
$36.1 million for Voice of America-TV and “Radio Farda” broadcasting ($13.9 million less than
request). Of all FY2006 funds, the State Department said on June 4, 2007, that $16.05 million was
obligated for democracy promotion programs, as was $1.77 million for public diplomacy and $2.22
million for cultural exchanges (bringing Iranian professionals and language teachers to the United
States). Broadcasting funds provided through the Broadcasting Board of Governors; began under Radio
Free Europe/Radio Liberty (RFE/RL), in partnership with the VOA, in October 1998. Farda
(“Tomorrow” in Farsi) received $14.7 million of FY2006 funds; now broadcasts 24 hours/day. VOA
Persian services (radio and TV) combined cost about $10 million per year. VOA-TV began on July 3,
2003, and now is broadcasting to Iran 12 hours a day. (Farda began when Congress funded it at $4
million in the FY1998 Commerce/State/Justice appropriation, P.L. 105-119. It was to be called Radio
Free Iran but was never formal y given that name by RFE/RL.)
FY2007
FY2007 continuing resolution provided $6.55 million for Iran (and Syria) to be administered through
DRL. $3.04 million was used for Iran. No funds were requested.
FY2008
$60 million (of $75 million requested) is contained in Consolidated Appropriation (H.R. 2764, P.L. 110-
161), of which, according to the conference report $21.6 million is ESF for pro-democracy programs,
including non-violent efforts to oppose Iran’s meddling in other countries. $7.9 million is from a
“Democracy Fund” for use by DRL. The Appropriation also fully funded additional $33.6 million
requested for Iran broadcasting: $20 million for VOA Persian service; and $8.1 million for Radio Farda;
and $5.5 million for exchanges with Iran.
FY2009
Request was for $65 million in ESF “to support the aspirations of the Iranian people for a democratic
and open society by promoting civil society, civic participation, media freedom, and freedom of
information.” H.R. 1105 (P.L. 111-8) provides $15 million for democracy promotion programs in Iran
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FY2004
Foreign operations appropriation (P.L. 108-199) earmarked $1.5 million for “educational, humanitarian
and non-governmental organizations and individuals inside Iran to support the advancement of
democracy and human rights in Iran.” The State Department Bureau of Democracy and Labor (DRL)
gave $1 million to a unit of Yale University, and $500,000 to National Endowment for Democracy.
and several other countries.
FY2010
No specific democracy promotion request, but some funds (out of $40 million requested for Near East
democracy programs) likely to fund continued human rights research and public diplomacy in Iran.

Further International and Multilateral Sanctions
There are a number of options available for additional U.N. or multilateral sanctions against Iran.
U.S. officials have said that sanctions such as those below might also be considered by a
“coalition” of countries, outside Security Council authorization. Such a coalition might include
major U.S. allies in Europe, Asia, and the Middle East. U.S. allies tend to oppose the unilateral
imposition by the United States of sanctions, especially when such sanctions seek to prevent
European or other foreign companies from transacting business with Iran. Among the further
U.N. or multilateral sanctions widely discussed (and some of these ideas are appearing in U.S.
legislation to increase U.S. sanctions on Iran) are
Mandating Reductions in Diplomatic Exchanges with Iran or Prohibiting Travel
by Iranian Officials. As noted above, Resolution 1803 imposes a ban on travel by
some named Iranian officials. One option is to further expand that list of Iranian
officials. A further option is to limit sports or cultural exchanges with Iran, such
as Iran’s participation in the World Cup soccer tournament. However, many
experts oppose using sporting events to accomplish political goals.
Banning International Flights to and from Iran. Bans on flights to and from
Libya were imposed on that country in response to the finding that its agents
were responsible for the December 21, 1988, bombing of Pan Am 103 (now
lifted). There are no indications that a passenger aircraft flight ban is under
consideration among the P5+1. As noted above, inspections of Iranian
international cargo flights and shipping is authorized in Resolution 1803.
A Ban on Exports to Iran of Refined Oil Products or of Other Products. This
sanction appears to be under P5+1 and Security Council consideration because
such a ban might seriously hurt Iran’s economy and thereby meet the definition
of a “crippling” sanction. However, some members of the U.N. Security Council
oppose this sanction as likely to halt prospects for a diplomatic solution to Iran’s
nuclear program. Iran imports about 25%-40% of its gasoline needs due to a lack
of domestic refining capacity. Some experts believe Iran would be able to
circumvent this sanction by offering premium prices to suppliers willing to defy
such a U.N. resolution or by raising prices to discourage consumption by Iranian
drivers. A version of this option would prevent companies of U.N. member states
from shipping to Iran parts or technology needed to construct oil refineries or
related installations.
Financial and Trade Sanctions, Such as a Freeze on Iran’s Financial Assets
Abroad. Existing U.N. resolutions do not freeze all Iranian assets abroad, and
such a broad freeze does not appear to be under Security Council consideration at
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this time. However, what appears to be under consideration is an extensive, or
possibly comprehensive, ban on financial transactions with Iranian banks.
Fearing this possibility, Iran moved $75 billion out of European banks in May
2008.
Limiting Lending to Iran by Banks or International Financial Institutions.
Another option is to ban lending to Iran by international financial institutions, or
to mandate a reduction of official credit guarantees. British Prime Minister
Brown indicated British support a limitation of official credits on November 12,
2007. As discussed below, EU countries and their banks have begun taking these
steps, even without a specific U.N. mandate.
Banning Worldwide Investment in Iran’s Energy Sector. This option would
represent an “internationalization” of the U.S. “Iran Sanctions Act,” which is
discussed in CRS Report RS20871, Iran Sanctions, by Kenneth Katzman. On
November 12, 2007, comments, British Prime Minister Brown expressed support
for a worldwide financing of energy projects in Iran as a means of cutting off
energy development in Iran, and British officials have told CRS in August 2009
that the British government continues to favor this option.
Banning Insurance for Iranian Shipping. One option, reportedly under
consideration by the P5+1, is to ban the provision of insurance, or re-insurance,
for any shipping to Iran. Shipments of Iranian oil require insurance against losses
from military action, accidents, or other causes. A broad ban on provision of such
insurance could make it difficult for Iran to Islamic Republic of Iran Shipping
Lines (IRISL) to operate and force Iran to rely on more expensive shipping
options. Iran said in September 2008 that it would have ways to circumvent the
effect of this sanction if it is imposed. (The United States has imposed sanctions
on IRISL.)
Imposing a Worldwide Ban on Sales of Arms to Iran. Resolution 1747 called
for—but did not require—U.N. member states to exercise restraint in selling
arms to Iran. A future resolution might mandate an arms sales ban. Another
option under discussion is to eliminate the Resolution 1737 exemption from
sanctions for the Bushehr nuclear reactor project.
Imposing an International Ban on Purchases of Iranian Oil or Other Trade. This
is widely considered the most sweeping of sanctions that might be imposed, and
would be unlikely to be considered in the Security Council unless Iran was found
actively developing an actual nuclear weapon. Virtually all U.S. allies conduct
extensive trade with Iran, and would oppose sanctions on trade in civilian goods
with Iran. A ban on oil purchases from Iran is unlikely to be imposed because of
the potential to return world oil prices to the high levels of the summer of 2008.
European/Japanese/Other Foreign Country Policy on Sanctions and Trade
Agreements

U.S. allies supported the initial Obama Administration approach toward Iran more so than the
George W. Bush Administration approach, which was perceived as primarily punitive. During
1992-1997, when the United States was tightening its own sanctions against Iran, the European
Union (EU) countries maintained a policy of “critical dialogue” with Iran, and the EU and Japan
refused to join the 1995 U.S. trade and investment ban on Iran. The European dialogue with Iran
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was suspended in April 1997 in response to the German terrorism trial (“Mykonos trial”) that
found high-level Iranian involvement in killing Iranian dissidents in Germany, but resumed in
May 1998 during Khatemi’s presidency.
With Iran defiant on nuclear issues, the European countries, Japan, and other countries moved
closer to the U.S. position since 2005. This trend has accelerated as Iran’s leaders have responded
violently to the post-election protests. The EU is no longer negotiating new trade agreements and
other economic interaction with Iran, but rather has begun to implement some sanctions that
exceed those mandated in Security Council resolutions. For example, several EU countries are
discouraging their companies from making any new investments in or soliciting any new business
with Iran. In addition, several EU countries report that civilian trade with Iran is down because
Iran’s defiance on the nuclear issue is introducing more perceived risk to trading with Iran. As
noted above, some EU countries say they have reduced credit guarantee exposure to Iran since
Resolution 1737 was passed, as shown in Table 6 above. Previously, the EU countries and their
banks maintained that financing for purely civilian goods is not banned by any U.N. resolution
and that exporters of such goods should not be penalized.
Negotiations with Iran on a “Trade and Cooperation Agreement” (TCA) are not currently being
held; such an agreement would have lowered the tariffs or increased quotas for Iranian exports to
the EU countries.61 Similarly, there is insufficient international support to grant Iran membership
in the World Trade Organization (WTO) until there is progress on the nuclear issue. Iran first
attempted to apply to join the WTO in July 1996. On 22 occasions after that, representatives of
the Clinton and then the George W. Bush Administration blocked Iran from applying
(applications must be by consensus of the 148 members). As discussed above, as part of an effort
to assist the EU-3 nuclear talks with Iran, at a WTO meeting in May 2005, no opposition to Iran’s
application was registered, and Iran formally began accession talks.
In the 1990s, European and Japanese creditors—over U.S. objections—rescheduled about $16
billion in Iranian debt. These countries (governments and private creditors) rescheduled the debt
bilaterally, in spite of Paris Club rules that call for multilateral rescheduling. Iran’s improved
external debt led most European export credit agencies to restore insurance cover for exports to
Iran. In July 2002, Iran tapped international capital markets for the first time since the Islamic
revolution, selling $500 million in bonds to European banks.
World Bank Loans
The EU and Japan appear to have made new international lending to Iran contingent on Iran’s
response to international nuclear demands. This represents a narrowing of past differences
between the United States and its allies on this issue. Acting under provisions of successive
foreign aid laws (which require the United States to vote against international loans to countries
named by the United States as sponsors of international terrorism), in 1993 the United States
voted its 16.5% share of the World Bank against loans to Iran of $460 million for electricity,

61 During the active period of talks, which began in December 2002, there were working groups
focused not only on the TCA terms and proliferation issues but also on Iran’s human rights
record, Iran’s efforts to derail the Middle East peace process, Iranian-sponsored terrorism,
counter-narcotics, refugees, migration issues, and the Iranian opposition PMOI.

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health, and irrigation projects, but the loans were approved. To block that lending, the FY1994-
FY1996 foreign aid appropriations (P.L. 103-87, P.L. 103-306, and P.L. 104-107) cut the amount
appropriated for the U.S. contribution to the Bank by the amount of those loans. The legislation
contributed to a temporary halt in new Bank lending to Iran.
During 1999-2005, Iran’s moderating image had led the World Bank to consider new loans over
U.S. opposition. In May 2000, the United States’ allies outvoted the United States to approve
$232 million in loans for health and sewage projects. During April 2003-May 2005, a total of
$725 million in loans were approved for environmental management, housing reform, water and
sanitation projects, and land management projects, in addition to $400 million in loans for
earthquake relief.
Table 9. Selected Economic Indicators
Economic Growth
6.4% (2008 est.)
Per Capita Income
$13,100/yr purchasing power parity
GDP
$842
billion purchasing power parity (2008)
Proven Oil Reserves
135 billion barrels (highest after Russia and Canada)
Oil
4.0 million barrels per day (mbd)/ 2.4 mbd exports. Exports could shrink to zero by
Production/Exports
2015-2020 due to accelerating domestic consumption.
Major Oil/Gas
China—300,00 barrels per day (bpd); about 4% of China’s oil imports; Japan—600,000
Customers
bpd, about 12% of oil imports; other Asia (mainly South Korea)—450,000 bpd; Italy—
300,000 bpd; France—210,000 bpd; Netherlands 40,000 bpd; other Europe—200,000
bpd; India—150,000 bpd (10% of its oil imports; Africa—200,000 bpd. Turkey—gas: 8.6
billion cubic meters/yr
Refined Gasoline
Imports were $5 billion value per year in 2006, but now about $4 billion per year after
Import/ Suppliers
rationing. Traders and suppliers include Vitol (Switzerland), which supplies about 30% of
Iran’s gasoline; Total (France); Trafigura (Switzerland/Nethelands); Reliance Energy (India,
Jamnagar refinery); Russia’s Lukoil; Kuwait, UAE, Turkey, Venezuela (Petroleos de
Venezuela), Singapore, the Netherlands, China, Turkmenistan, and Azerbaijan. Iran
planning at least eight new or upgrade refinery projects to expand capacity to about 3
million barrels per day from 1.5 mbd.
Major Export
Japan ($9.9 billion); China ($9.2 billion); Turkey ($5.1 billion); Italy ($4.45 billion); South
Markets (2006)
Korea ($4 billion); Netherlands ($3.2 billion); France ($2.7 billion); South Africa ($2.7
billion); Spain ($2.3 billion); Greece ($2 billion)
Major Imports (2006) Germany ($5.6 billion); China ($5 billion); UAE ($4 billion); S. Korea ($2.9 billion); France
($2.6 billion); Italy ($2.5 billion); Russia ($1.7 billion); India ($1.6 billion); Brazil ($1.3
billion); Japan ($1.3 billion).
Major Non-Oil
Renault (France) and Mercedes (Germany)—automobile production in Karaj, Iran—
Investments
valued at $370 million; Renault (France), Peugeot (France) and Volkswagen (Germany)—
auto parts production; Turkey—Tehran airport, hotels; China—shipbuilding on Qeshm
Island, aluminum factory in Shirvan, cement plant in Hamadan; UAE financing Esfahan Steel
Company; India—steel plant, petrochemical plant; S. Korea—steel plant in Kerman
Province; S. Korea and Germany—$1.7 billion to expand Esfahan refinery.
Trade With U.S.
$785 million (trade is severely restricted by U.S. sanctions). Exports to U.S.—$102
(2008)
million (pomegranate juice, caviar, pistachio nuts, carpets, medicines, artwork). Imports
from U.S.—$683 million (wheat: $535 million; medicines, tobacco products, seeds).
“Oil Stabilization
$12.1 billion (August 2008, IMF estimate). Mid-2009 estimates by experts say it may have
Fund” Reserves
now been reduced to nearly zero.
External Debt
$19 billion (2007 est.)
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Economic Growth
6.4% (2008 est.)
Development
2003 (latest available): $136 million grant aid. Biggest donors: Germany ($38 million);
Assistance Received
Japan ($17 million); France ($9 million).
Inflation
15% + (May 2009), according to Iranian officials.
Unemployment Rate
11%+
Source: CIA World Factbook, various press, IMF, Iran Trade Planning Division, press, CRS conversations with
experts and foreign diplomats.
U.S. Sanctions
Any additional international or U.S. sanctions would add to the wide range of U.S. sanctions in
place since the November 4, 1979, seizure of the U.S. hostages in Tehran.62 Some experts believe
that, even before U.S. allies had begun to impose some sanctions on Iran, U.S. sanctions alone
were slowing Iran’s economy.63 However, the Obama Administration is said to oppose new U.S.
unilateral sanctions because of their potential to offend U.S. allies whose companies would be the
likely targets of such sanctions, although some Administration officials believe that the threat of
new U.S. sanctions gives the Administration added leverage with Iran. Supporters of some new
U.S. sanctions believe that allied firms should be compelled to choose between business with Iran
and business with the United States.
As expected, there have been congressional efforts to push forward on proposed sanctions
legislation because Iran has not agreed to implement the October 1, 2009, tentative nuclear
agreement discussed above. The U.S. sanctions below are discussed in far greater depth in CRS
Report RS20871, Iran Sanctions, by Kenneth Katzman.
Terrorism/Foreign Aid Sanctions
Several U.S. sanctions are in effect as a result of Iran’s presence on the U.S. “terrorism list.” The
list was established by Section 6(j) of the Export Administration Act of 1979, sanctioning
countries determined to have provided repeated support for acts of international terrorism.
Sanctions imposed as a consequence include a ban on U.S. foreign aid to Iran; restrictions on U.S.
exports to Iran of dual use items; and requires the United States to vote against international loans
to Iran.
The separate, but related, Executive Order 13224 (September 23, 2001) authorizes the President
to freeze the assets of and bar U.S. transactions with entities determined to be supporting
international terrorism.
Proliferation Sanctions
Iran is prevented from receiving advanced technology from the United States under relevant and
Iran-specific anti-proliferation laws64 and by Executive Order 13382 (June 28, 2005). The laws

62 On November 14, 1979, President Carter declared a national emergency with respect to Iran, renewed every year
since 1979.
63 “The Fight Over Letting Foreigners Into Iran’s Oilfields.” The Economist, July 14, 2001.
64 Such laws include the Atomic Energy Act of 1954 and the Energy Policy Act of 2005 (P.L. 109-58).
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include The Iran-Iraq Arms Nonproliferation Act (P.L. 102-484), and The Iran Nonproliferation
Act (P.L. 106-178, now called the Iran-Syria-North Korea Non-Proliferation Act). These
sanctions impose penalties on foreign firms that sell equipment to or assist Iran’s WMD
programs.
Targeted Financial Measures by Treasury Department
U.S. officials, particularly Undersecretary of the Treasury Stuart Levey (who has remained in the
Obama Administration), say the United States is having substantial success in separate unilateral
efforts (“targeted financial measures”) to persuade European governments and companies to stop
financing commerce with Iran on the grounds that doing so entails financial risk and furthers
terrorism and proliferation.
U.S. Ban on Trade and Investment with Iran
On May 6, 1995, President Clinton issued Executive Order 12959 banning U.S. trade and
investment in Iran.65 This followed an earlier March 1995 executive order barring U.S.
investment in Iran’s energy sector. The provisions of the trade and investment ban, exemptions,
and the debate over its application to foreign subsidiaries are discussed in substantial depth in
CRS Report RS20871, Iran Sanctions, by Kenneth Katzman.
The Iran Sanctions Act (ISA)
The Iran Sanctions Act penalizes foreign (or U.S.) investment of more than $20 million in one
year in Iran’s energy sector.66 No projects have actually been sanctioned under ISA, and
numerous investment agreements with Iran since its enactment have helped Iran slow
deterioration of its energy export sector. This Act is discussed in substantial depth in CRS Report
RS20871, Iran Sanctions, by Kenneth Katzman, which contains a chart on foreign energy
investments in Iran, and discusses pending legislation to expand ISA’s authorities to include
sanctions on companies that sell gasoline to Iran. This report contains extended discussion of
several major pieces of legislation, including the House-passed H.R. 2194, and the “Dodd-Shelby
Comprehensive Iran Sanctions, Accountability, and Divestment Act” (S. 2799). Both bills would
expand the authorities of ISA to authorize sanctions against companies that sell gasoline or
refinery-related equipment or services to Iran. The Dodd- Shelby bill has numerous provisions
beyond that, including a broad ban on imports from Iran; freezing the assets of Revolutionary
Guard Corps officials; authorizing divestment (see below); and prohibiting U.S. government
procurement from firms that do business in Iran’s energy sector or sell equipment that Iran could
use to monitor or jam the Internet.
Divestment
A growing trend not only in Congress but in several states is to require or call for or require
divestment of shares of firms that have invested in Iran’s energy sector (at the same levels

65 An August 1997 amendment to the trade ban (Executive Order 13059) prevented U.S. companies from knowingly
exporting goods to a third country for incorporation into products destined for Iran.
66 Originally called the Iran-Libya Sanctions Act, or ILSA; P.L. 104-172, August 5, 1996. It was renewed by P.L. 107-
24, August 3, 2001; renewed again for two months by P.L. 109-267; and renewed and amended by P.L. 109-293.
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considered sanctionable under the Iran Sanctions Act).67 For a discussion of pending legislation
on this issue, see CRS Report RS20871, Iran Sanctions, by Kenneth Katzman.
Counter-Narcotics
In February 1987, Iran was first designated as a state that failed to cooperate with U.S. anti-drug
efforts or take adequate steps to control narcotics production or trafficking. U.S. and U.N. Drug
Control Program (UNDCP) assessments of drug production in Iran prompted the Clinton
Administration, on December 7, 1998, to remove Iran from the U.S. list of major drug producing
countries. This exempts Iran from the annual certification process that kept drug-related U.S.
sanctions in place on Iran. According to several governments, over the past few years Iran has
augmented security on its border with Afghanistan in part to prevent the flow of narcotics from
that country into Iran. Britain has sold Iran some night vision equipment and body armor for the
counter-narcotics fight.
Travel-Related Guidance
Use of U.S. passports for travel to Iran is permitted. Iranians entering the United States are
required to be fingerprinted, and Iran has imposed reciprocal requirements. In May 2007, the
State Department increased its warnings about U.S. travel to Iran, based largely on the arrests of
the dual Iranian-American nationals discussed earlier.
Status of Some U.S.-Iran Assets Disputes
Iranian leaders continue to assert that the United States is holding Iranian assets, and that this is
an impediment to improved relations. This is discussed in CRS Report RS20871, Iran Sanctions,
by Kenneth Katzman.
Conclusion
Mistrust between the United States and Iran’s Islamic regime has run deep for almost three
decades. Many argue that a wholesale replacement of the current regime would produce major
strategic benefits for the United States, including a dramatic lessening of concerns about Iran’s
nuclear program, and an end to Iran’s effort to obstruct a broad Arab-Israeli peace.
Others argue that many Iranians are united on major national security issues and that a new
regime would not necessarily align with the United States. Some believe that many Iranians fear
that alignment with the United States would produce a degree of U.S. control and infuse Iran with
Western culture that many Iranians find un-Islamic and objectionable.
Others say that, now matter who is in power in Tehran, the United States and Iran have a common
long-term interest in stability in the Persian Gulf and South Asia regions in the aftermath of the
defeat of the Taliban and the regime of Saddam Hussein. According to this view, major
diplomatic overtures toward the regime, if it survives the unrest, might yield fruit.

67 For information on the steps taken by individual states, see National Conference of State Legislatures. State
Divestment Legislation.
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Figure 1. Structure of the Iranian Government



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Iran: U.S. Concerns and Policy Responses

Figure 2. Map of Iran

Source: Map Resources. Adapted by CRS (April 2005).

Author Contact Information
Kenneth Katzman
Specialist in Middle Eastern Affairs
kkatzman@crs.loc.gov, 7-7612

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