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There are no formal relations between Iran and the United States

In terms of formal diplomatic relations where countries exchange embassies, the United States and Iran have none. There is no US embassy in Iran and no Iranian embassy in the US. Instead, Iran basically has a small office in the Pakistani embassy so someone is available in an emergency situation. The US has a small office in the Swiss embassy in Iran and that’s about it.
Since 1995 the United States has imposed a trade embargo on Iran in an effort to encourage the country to behave better, essentially. They seem to be doing okay but you can expect that embargo to continue into the foreseeable future as the Iranian policies show no signs of changing and the US certainly isn’t going to soften its stance. There are many reasons for the lack of relations between the US and Iran and we’ll explore some of them.

Continuation of strained relations between Iran and the United States

The major issues between Iran and the United States happened in the ‘70s and ‘80s but they left scars so deep they’ll likely take decades more to be forgiven and forgotten, if that ever happens. A healthy relationship between the countries would be good for everyone so there have been attempts to create that but they’ve been half-hearted at best and political pandering at worst.
In 2002 President George W. Bush lumped Iran in with North Korea and Iraq in what he called the “Axis of evil.” You’d think that would have destroyed relations entirely but it seemed to have spurred on conversation and in 2003 Iran proposed what they called the “Grand Bargain.” It would have resolved all issues with the US, including Iranian sponsorship of terrorism in the Gulf region and Iran’s nuclear program. The deal was rejected, largely because the US thought they were promising things they simply could not deliver.

Iran Air Flight 655 Tragedy

The United States certainly isn’t free of blame in the strained relations between Iran and the US. An incident in 1988 is a good example of that. On July 3, 1988 the USS Vincennes shot down Iranian Airbus A300B2, a commercial plane holding nearly 300 civilians. The passengers on that plane came from six countries and included 66 children. Every person on that flight was killed by the guided missile that took it down.
The United States said it was a warplane, that it was flying outside the civilian corridor, and that it had not responded to radio calls. All of that was later proved to be false, making the US look particularly awful. The Iranian government believes it was an intentional attack and the US argued it was a case of mistaken ID. Either way it’s a serious black eye on the US military and government and further damaged relations with Iran.

Iran-Contra affair continues relations between Iran and the United States

Despite no official diplomatic relations between the United States and Iran and continued strain between the countries members of President Reagan’s administration illegally sold weapons to Iran to illegally fun the Nicaraguan Contras, a revolutionary group fighting the oppressive leader of the country. They also hoped that the arms sales would convince Iran to release US hostages in the country.

It’s unclear what President Reagan knew, but that’s how it’s supposed to work. Even if the President knows he gets cover. Oliver North knew everything though, and he testified endlessly in front of congress about his role in the Iran-Contra affair. Ultimately it was a bit of a black eye on the administration but they did secure the release of several hostages so perhaps it’s not all bad. Either way it ended up being a smaller deal than you might imagine if you were there when it happened.

Economic impact of frosty relations between Iran and the United States

The United States played a huge part in modernizing Iran and helping them develop a strong economy, including tapping the great oil reserves the country possessed. This all happened before the Revolution though, and some believe it contributed to the unrest in the country. Whatever the cause, once the Revolution unfolded the American economic support was finished.
The United States froze roughly $12 billion in Iranian assets once the hostages were taken and to this day some of those assets remain frozen as legal claims are brought against Iran. That money will be used to pay any damages. In 1995 President Clinton made official sanctions against Iran, banning the purchase of any goods from the country and ceasing any US goods traveling into Iran. There is no end in sight to the sanctions, particularly since the government of Iran hasn’t gotten any friendlier over the years.

The 1979 Iran hostage crisis further injures relations

Perhaps relations between the United States and Iran could have survived the Islamic Revolution with hard work from both sides to create a lasting and peaceful relationship but the Iran hostage crisis that unfolded during the Revolution largely made that impossible. When President Carter allowed the Shah into the United States a revolution group called Muslim Student Followers of the Imam’s Line occupied the American embassy and took all 52 American diplomats inside hostage.
They were held for an astounding 444 days, during which time they were treated well enough to survive. In Iran the hostage taking was seen as a victory for the country and a major blow to America. In the United States it was seen as a major violation of international law that states diplomats are given immunity from arrest and diplomatic compounds are basically foreign soil. The hostage crisis directly led to the end of relations between the United States and Iran.

1979 Islamic Revolution shatters relations between United States and Iran

The unbelievable thing about the Islamic Revolution in Iran is that the United States never saw it coming. CIA reports in the six months leading up to it had nothing to say about the level of unrest in the country, even going so far as to comment that Iran wasn’t even in a “prerevolutionary state.” Clearly they were wrong about that and better intelligence perhaps could have prevented Ayatollah Khomeini from taking over.
The Shah was given refuge in the United States and that further enflamed the passions and angers of Iranians determined to believe the man leading their country for the past 40 years was little more than a puppet for the US. The revolution was fairly swift and from that point on relations between Iran and the United States have been largely bad if not utterly hostile.

1979 and the destruction of relations between Iran and the United States

The United States was active in helping Shah Mohammad Reza Pahlavi maintain the rule he established in 1941 via underhanded activity in the country (the CIA overthrowing Prime Minister Mohammed Moassadeq in 1953, for instance) and outright financial support. His pro-Western positions were seen as a good thing for the US and its economy and people so the government chose to throw their full support behind him, a decision that would eventually come back to haunt them.
The Islamic Revolution happened in 1979 and it took on a deeply anti-American sentiment in large part because the United States was seen as having propped up the man the country overthrew. Ever since that time, the US has been a convenient boogeyman for the leaders of Iran to point to when they need a global villain to rally their people to a cause that offers little actual benefit to them.

Early history of relations between the United States and Iran

Relations between Iran and the United States began in 1856 when the Shah of Persia sent Persia’s first ambassador to Washington, DC. His name was Mirza Abolhasan Shirazi and in 1883 the United States finally sent a diplomatic envoy to Iran, a man named Samuel Benjamin. It wasn’t until 1944 the ambassadorial relations were officially established though.
The United States was integral in assisting Iran as it attempted to gain its freedom from Russian and British influence in its quest for independence. American businessman saw another country in which to expand, a thought that was proven correct when an American company was hired to build a railroad in the country. Obviously that didn’t work out long term but in the short term there were benefits to being on the side of the Iranian people in early Iran and United States relations.

United States believes Iran is developing a nuclear bomb

Iran has never been shy about it’s desire to destroy the Western powers it sees as promoting global hegemony and threatening their way of life. That’s why the United States feels such concern over the notion that Iran is developing a nuclear bomb. They’ve never come out and said as much but there are strong signs largely related to the acquisition of materials needed to create such a powerful device.
The thinking generally goes that if Iran develops a nuclear bomb it will almost immediately use it on Israel, a country it seems to harbor more anger for than it does for the United States. Israel is a close ally of the US and so a nuclear bomb dropped there would be an enormous disaster for all concerned. Thus there is an enormous strain between US and Iran relations.