The transition of Iran's political organization and the resulting reversal of its foreign policy have drastically affected the nation's relations with members of the international community. The United States, which had friendly diplomatic relations with the Shah's administration in the 1970s, is still reeling from a severe ideological transformation under the religious leader Ayatollah Khomeini.
The election of President Khatami last August indicates some movement away from the Islamic fundamentalism of recent years. This political development should be construed as a critical turning point of relations between the United States and Iran, and the United States should not lose this window of opportunity for improving relations with this "rogue state." The current policy toward Iran consists of unilateral trade sanctions intended to devastate the economy of Iran and cause the overthrow of the political hard-liners responsible for state-sponsored terrorism and other egregious policies. But loopholes in US sanctions have prevented the policy from achieving its intended result.
While the absence of US investment in Iran temporarily affected economic growth, Iran remains fairly steady in its growth and oil exportation. The effectiveness of sanctions--especially unilateral sanctions--has been questioned in the post-Cold War era. The economic health of many nations is now inextricably linked to trade with other countries, and many countries are unwilling to forego an economic relationship with another state because of ideological differences or moral questions. Advanced technological developments, machinery, and other vital forms of capital are not in the exclusive possession of the United States, and it is now easier for "rogue states" such as Iran to acquire these goods through third-party trade; the largely ineffective sanctions do not prevent foreign companies from serving as proxies for US corporations. Thus, the sanctions have not had a substantial effect upon Iran, and it continues to meet the oil production quotas set by the Organization of Petroleum Exporting Countries. Although the trade sanctions against Iran have not significantly aggravated Iran's economy, they have led to some adverse political ramifications. Iran's ultra-nationalist forces and isolationist groups, which constantly seek to preempt the normalization of relations, have been fueled by the apparent animosity of the United States, which they call the "Great Satan." This US policy of dual containment toward Iran and Iraq in the Middle East motivates the rhetoric in Iran that views the United States as hegemonic and militaristic. For instance, Iranians continue to celebrate a National Day of the Fight against America every November 4th. The United States should try to support the political forces in Iran that seek to open relations with the West, for these forces will be the vehicles through which issues such as state-sponsored terrorism will be resolved.
The continuation of hostile policy towards Iran will not only devastate US-Iranian relations, but will also lead to the eroding of US credibility in the international community. A recent manifestation of the problems associated with US sanctions is clearly demonstrated in the controversial oil contract between Iran and a consortium of international oil firms. Under a 1996 anti-terrorism law, the United States can choose to enact punitive measures against a firm that provides technology that has the potential of being used in the production of nuclear, chemical, or biological arms. …