Iran is the world's fourth largest oil producer. Recent high oil prices allowed it to amass $70 billion in foreign exchange reserves. Current low oil prices is causing economic difficulties. Iran has 12.5% unemployment and 26% inflation.
The U.S. and Iran's Nuclear Program:
Iran is intent on producing nuclear power, and according to the Nuclear Non-Proliferation Treaty, they have that right. Whether it is for peaceful purposes (they say) or weapons (U.S. says) no one really knows. Most other countries support their right to produce nuclear fuel, and are willing to wait and see if it leads further. Surprisingly, other Gulf countries do not feel threatened by Iran's program, which they view as peaceful. Gulf states are more worried that a U.S.. air strike on Iran’s nuclear facilities would cause a radioactive leak, contaminating their oil and spreading fallout through their countries.
In 2006, the U.S. asked the United Nations Security Council to impose sanctions on Iran if it didn’t agree to suspend uranium enrichment. Iran continually ignores repeated Security Council Resolutions. It knows that sanctions would require Security Council members Russia opposes sanctions, and has offered China, France and the UK to interrupt their oil imports from Iran. The U.S. has nothing to lose from a sanction, since it imports no oil from Iran.
Iran announced in 2007 it would use euros for all foreign transactions, including oil. Iran is also converting all dollar-denominated assets held in foreign countries to the euro.
Iran's Role in Iraq:
One of Iran’s goals is to continue disruption in Iraq. They support the Shiites. Some experts say Iran encourages civil war in Iraq, consolidating their influence with the Iraqi Shiites. Between 1980-88, Iran fought a war with Iraq that led to clashes between US Navy and Iranian military forces between 1987 and 1988. Iran has been designated a state sponsor of terrorism for its activities in Lebanon.
Iran Contra Scandal:
Through much of the 1980’s, the U.S. financed the Nicaraguan “contras” rebellion against the Sandinista government by secretly selling arms to Iran, leading to the Iran-Contra Scandal in 1986 which implicated the Reagan Administration in illegal activities.
The U.S. assisted the military activities of the Nicaraguan contra rebels during an October 1984 to October 1986 prohibition on such aid. It financed this by selling U.S. arms to Iran in contravention of stated U.S. policy and in possible violation of arms-export controls.
In late November 1986, Reagan Administration officials announced that some of the proceeds from the sale of U.S. arms to Iran had been diverted to the Contras. The Iran/Contra Report of Independent Counsel found that some of Reagan’s most senior advisers and some Cabinet members sitting on the National Security Council (NSA) set up Oliver North and several other NSA staff members as scapegoats to protect the Reagan Administration in its final two years.
The report added that much of the best evidence of the cover-up was made in the final year of the Counsel’s investigation, too late for most prosecutions.