Relations With The United States

Relations between the United States and Iran have been strained. One tactic that Iran has used to cushion its oil-dependent economy is to accept euro dollars as payment for the oil it exports to EU and Asian countries. Since this measure has the potential to destabilize the value of the U.S. dollar, now the standard currency for trading in the global oil market, some have claimed that the true reason for U.S. opposition to Iran is not Iran's support of terrorism or possible nuclear weapons program, but its challenging of the supremacy of the U.S. dollar in the international oil market. Yet strained U.S.-Iranian relations have a long history—and have been due to a series of energy-related conflicts, rather than to the nuclear issue or the euro issue alone. For example, when Mohammad Mossadegh was prime minister of Iran (1951-53), he nationalized Iran's oil industry, which was originally under British control. In response Britain enforced an economic blockade against Iran and, working with the U.S. Central Intelligence Agency (CIA), helped to instigate Mossadegh's overthrow by Shah Mohammad Reza Pahlavi. Mossadegh was sent to prison, where he died in 1967. The shah opened Iran's oil reserves to Western companies. Whereas Mossadegh's oil policies were antagonistic to the United States and Britain, Pahlavi was an American-friendly leader who opened Iranian oil reserves to Western companies. However, Islamic fundamentalists who viewed the shah as a puppet of Western powers drove him out in 1979 during the Iranian Revolution. A new Islamic republic emerged, based on fundamentalist Islamic principles and led by the national spiritual leader Ayatollah Khomeini (1979-89).

Khomeini nationalized Iran's oil industry. Under his leadership Iran became the first modern state ruled by fundamentalist Islamic principles. When the shah entered the United States for medical treatment in 1979, Islamist militants seized the U.S. embassy in Iran and held 52 Americans hostage for 444 days. The hostage crisis, combined with the oil crisis from Arab oil embargoes, seriously challenged the United States during the presidency of Jimmy Carter (1977-81). It was at this time that the United States severed diplomatic ties with Iran, and it has considered Iran a rogue state ever since.

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