About one month after the American hostages were taken in Tehran, the Soviets invaded Afghanistan. With Cold War rivalries complicating matters, the Islamic Republic of Iran found itself precariously situated between the superpowers. Was Moscow hoping to use Afghanistan as an eastern staging area for an all-out invasion of Iran? If so, would the Americans overlook the hostage crisis to aid Tehran against the Soviets? Believing Soviet leaders were planning to seize Iran's oil reserves, Washington issued the 1980 Carter Doctrine, warning that any outside attempt to control the Persian Gulf would be viewed as an assault on U.S. interests and met with military force. Whether or not the U.S.S.R. was planning to occupy Iran, Soviet troops remained in Afghanistan for nearly a decade of costly conflict.

Though threats from Washington and Moscow were of great concern, Iran's attention was quickly diverted to Baghdad. With Shi'ite Muslims accounting for more than half of the Iraqi population, Iran's Shi'ite-led Islamic revolution was an exciting and inspirational event. In addition, Khomeini's intentional efforts to spread the revolution into Iraq made Saddam Hussein's secular regime extremely nervous. With Iran's conservative religious government calling the Iraqi regime “infidels” and the Iraqi administration supporting Iran's Kurdish and Arab separatists, regional tensions escalated.

Nasty Neighbors

By the summer of 1980, a type of political/religious population exchange was under way, as the Iraqi government deported thousands of Shi'ites (many of them Iranian nationals) to Iran and Iranian counterrevolutionaries traveled to Iraq to fight against their nation's new Islamic regime. For several months, sporadic skirmishes broke out in border areas until Iraq launched a full invasion on September 21.

The conflict grew quickly into a regional and international clash. In the eyes of many around the globe, this was a war between secularism and religious revivalism. Though some attempted to paint the conflict as Arab versus Persian or Sunni versus Shi'ite, most looked beyond ethnic or denominational distinctions. Many Arabs and Sunnis supported the Ayatollah as a symbol of pure Islamic resurgence, while others stood behind Saddam Hussein as the defender of secular nationalism.

Given the Islamic Republic of Iran's apparent volatility, most Western governments sided with Iraq's Ba'th Party as the more stable regime. With American hostages being held in Iran, Washington covertly supplied aid to the Iraqis. By the summer of 1981, the Reagan administration had also complied with a number of Iran's requests (including a large sum of cash and weapons), and the hostages were released. Though this arms-for-hostages arrangement gave Iran a boost, increased American aid to Iraq created a bloody balance of power.

Trouble in Paradise

With Iran at war with Saddam and friends, the Islamic republic's administration was threatened from the inside. Though the Faqih (or “Leader of the Islamic Revolution”) enjoyed supreme authority over the state, in December 1979, a new constitution created the office of president to oversee certain administrative affairs. In January 1980, Abolhassan Bani-Sadr (a Western-educated liberal) was elected president, while conservative clerics won the majority in Iran's parliament.

Opposed to Bani-Sadr's “un-Islamic” policies, the clergy-run parliament appointed a like-minded prime minister. Within a year, Bani-Sadr was pushed from power and Prime Minister Rajai took over the presidency. Two months later, Rajai was assassinated. By October 1981 the Ayatollah Ali Khamenei had been elected as Iran's third president, and the war went on. Iran had to find a way to pay for it.

To offset Iraq's massive petroleum exports, the Islamic republic attempted to expand its oil production and exporting efforts in the Persian (Arab) Gulf. The Iraqi military almost eliminated entirely the Iranians’ ability to ship oil when it carried out more than 9,000 bombing runs on Iran's Khark Island terminal during the war. Ultimately, both the Iraqi and Iranian oil industries were brought to a grinding halt. With the flow of Middle Eastern oil threatened, international involvement increased throughout the 1980s. After eight years of hardship and the war with Iraq, Iran's economy was in ruins, hundreds of thousands were dead, and close to a million others were wounded. Eager to stop the madness, Iran's citizens convinced their leaders to make peace with the Iraqi “infidels.”

Switching Supreme Leaders

On June 4, 1989, less than a year after ending the war with Iraq, Iran's eighty-seven-year-old supreme leader passed away. With Khomeini's death, President Ayatollah Ali Khamenei was appointed supreme leader of the revolution. Ali Akbar Hashemi Rafsanjani was elected as the republic's fourth president. A moderate cleric keen to implement modernization, Rafsanjani was forced to balance personal views with those of his conservative colleagues. While walking a fine line between compromise and conviction, the new Iranian president expanded his powers, eliminated the office of prime minister, and improved relations with several Western governments.

Though relations with the United States improved slightly during the early years of Rafsanjani's presidency, by the mid-1990s allegations of an Iranian nuclear arms development program changed everything. In 1995, U.S. President Bill Clinton cut all ties with Iran, accusing the Islamic republic of developing weapons of mass destruction and supporting international terrorism. The following year, a U.S.-sponsored trade embargo made it illegal for any company (American or otherwise) operating in the United States to do business with Iran. Despite the embargo, Russia agreed to build a nuclear power plant in southwestern Iran.