The Islamic conservative minorityrunning the government has a plan to keep reformers, who represent the majority of the population,at bay. The newly elected (via a rigged election that banned nearly all reform minded candidates) government is pushing for economic reforms. This will be difficult to do, since a major reason for a weak economy is the large portion of the economy owned by corrupt religious leaders. Most of this property was taken from the later Shah, and his followers, in the wake of the 1979 revolution, and turned over to religious organizations. But the new government is going to try some kind of reform, for unemployment and corruption are two of the biggest complaints most Iranians have.
In the meantime, the government continues to support the official line that the United States, and the West in general, are enemies of the Islamic Republic of Iran, and must be destroyed. This is why many in the West are nervous about Iran's nuclear weapons program. While Iranian diplomats dismiss the "death to America" stuff as just rhetoric for domestic consumption, many in the West are reluctant to accept that excuse. Iran remains determined to build nuclear weapons, and work on that project continues. This is real, not rhetoric, and Irans neighbors, and most major nations, are nervous about what those weapons will be used for, and by whom.
Continued Iranian support for radical groups in Iran and Lebanon provides a hint of what Iranians might do with their nuclear weapons. Iran has not sponsored a lot of international terrorism, showing some restraint in the face of threatened retaliation. But with nuclear weapons, prudence might morph into boldness. It's an unstable situation.
September 27, 2005: Iran has threatened to cancel a gas deal with India because of India's support for IAEA sanctions. India was supposed to become a major political and military ally of Iran, but apparently even India was nervous about Iran's nuclear ambitions. India has remained steadfast in the face of Iranian threats.
September 25, 2005: Iran's eastern border remains something of a war zone. Drug smuggling gangs bring hundreds of tons of opium, morphine and heroin across each year, and several of the gangsters are killed or wounded in shootouts each month. But despite seizing several tons of drugs a month, the army and police have not been able to halt the traffic. There are close to six million drug addicts in Iran, and the situations continues to get worse.
September 23, 2005: The International Atomic Energy Agency (IAEA) did the improbable and asked the UN Security Council to consider sanctions against Iran. The nuclear weapons program in Iran had the tacit support of Russia, China and many developing countries, which was believed sufficient to keep the IAEA from making a fuss. But Iran's arrogance in brushing off the IAEA, gave the IAEA the spine no one thought it had.