The February 11, 1979, fall of the Shah of Iran, a key U.S. ally, opened a long and deep rift in U.S.-Iranian relations. As noted in the section on Iran's foreign policy and support of terrorism, U.S.-Iran differences predated and significantly transcend the much more recent concerns over Iran's nuclear program. The nuclear issue has, according to many, made a U.S. policy focus on Iran more urgent.
Relations Since the 1979 Revolution
The Carter Administration sought a degree of engagement with the Islamic regime during 1979, but it agreed to allow in the ex-Shah for medical treatment, and Iranian officials of the new regime who engaged the United States were singled out as insufficiently loyal or revolutionary. As a result, the U.S.-Iran estrangement began in earnest on November 4, 1979, when radical pro-Khomeini "students in the line of the Imam (Khomeini)" 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 (two weeks prior to the failed U.S. military attempt to rescue the hostages during April 24-25, 1980), and the two countries had only limited official contact thereafter.57 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 Iraq58 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 one-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, 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.
Clinton Administration Policy
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 and its efforts to subvert the Arab-Israeli peace process by supporting militants opposed to peace. 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, but 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 an 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 undertook multi-faceted efforts to limit Iran's strategic capabilities through international diplomacy and sanctions--both international sanctions as well as national measures outside Security Council mandate. The policy framework was supported by maintenance of large U.S. conventional military capabilities in the Persian Gulf and through U.S. alliances with Iran's neighbors. On only one occasion during the Bush Administration, July 19, 2008, did a U.S. official attend the P5+1 nuclear negotiations with Iran. An amendment by then Senator Biden (adopted June 2006) to the FY2007 defense authorization bill (P.L. 109-364) supported the Administration joining nuclear talks with Iran.
On the other hand, Bush Administration statements that it considered Iran a great nation and respects its history could have reflected the views of those in the Bush Administration who, like those in other Administrations, believed diplomacy was the optimal policy choice. 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. Bush Administration officials engaged Iran on specific regional (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, (59) the first confirmed direct dialogue between the two countries since the 1979 revolution. The United States aided 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.
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. (60) 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."
"Grand Bargain Concept"
The George W. …