Khomeini's revolutionary regime initiated sharp changes from the foreign policy pursued by the Shah, particularly in reversing the country's orientation toward the West. In the Middle East, Iran's only significant ally has been Syria, but Iran has made great strides in improving relations with its Gulf neighbors, particularly Saudi Arabia. Iran's regional goals are dominated by wanting to establish a leadership role, curtail the presence of the United States and other outside powers, and build trade ties. In broad terms, Iran's "Islamic foreign policy" emphasizes:

• Vehement anti-U.S. and anti-Israel stances;
• Eliminating outside influence in the region;
• Support for Muslim political movements abroad; and
• A great increase in diplomatic contacts with developing countries.

Despite these guidelines, however, bilateral relations are frequently confused and contradictory due to Iran's oscillation between pragmatic and ideological concerns.

The country's foreign relations since the revolution have been tumultuous. In addition to the ongoing U.S. hostage crisis, Iraq invaded Iran in September 1980. Much of the dispute between the two countries centered around sovereignty over the waterway between the two countries, the Shatt al-Arab, although underlying causes included each nation's overt desire for the overthrow of the other's government. Iran demanded the withdrawal of Iraqi troops from Iranian territory and the return to the status quo ante for the Shatt al-Arab as established under the 1975 Algiers Agreement signed by Iraq and Iran. After 8 punishing years of war, in July 1988, Iran agreed to UN Security Council Resolution 598, which called for a cease-fire. The cease-fire was implemented on August 20, 1988; neither nation had made any real gains in the war.

Iran's relations with many of its Arab neighbors have been strained by Iranian attempts to spread its Islamic revolution. In 1981, Iran supported a plot to overthrow the Bahrain Government. In 1983, Iran expressed support for Shi'ites who bombed Western embassies in Kuwait, and in 1987, Iranian pilgrims rioted during the Hajj (pilgrimage) in Mecca, Saudi Arabia. Nations with strong fundamentalist movements, such as Egypt and Algeria, also mistrust Iran. Iran backs Hizballah, Hamas, the Palestinian Islamic Jihad, and the Popular Front for the Liberation of Palestine-General Command--all groups violently opposed to the Arab-Israeli peace process. Relations with west European nations have taken a turn for the better with Iran attempting to present itself as a more reliable partner in diplomatic and commerical affairs.

Iran maintains regular diplomatic and commercial relations with Russia and the former Soviet Republics. Both Iran and Russia believe they have important national interests at stake in developments in Central Asia and the Transcaucasus, particularly regarding energy resources from the Caspian Sea. Russian and other sales of military equipment and technology to Iran concern Iran's neighbors and the United States.

Iran spends about 4% of its GDP on its military. Branches of its military include ground forces, a navy, an air force, and Revolutionary Guard Corps. The Iran-Iraq war took a heavy toll on these military forces. Iran is trying to modernize its military and acquire weapons of mass destruction; it does not yet have, but continues to seek, nuclear capabilities.