Iran: A Century of Grievance, Mistrust and the Question of What Comes Next

By Keith Fox | Civiltalk

For most Americans, the story of Iran begins in 1979. The Islamic Revolution. The American Embassy. Fifty-two hostages held for 444 days. Ayatollah Khomeini. “Death to America.”

But Iran’s story with the West did not begin in 1979.

And if we hope eventually to build something different after nearly half a century of hostility, it may be useful to understand how we got here—not to excuse what Iran’s current regime has done, but to understand the history each side carries into the conversation.

That distinction matters.

Understanding someone’s grievance is not the same thing as agreeing with it. That is true between people. It is also true between nations.

Before America Was the Enemy

At the beginning of the 20th century, Iran—then generally called Persia internationally—was formally independent but caught between two great powers: Britain and Russia.

In 1907, Britain and Russia divided Persia into spheres of influence.

Then came oil. Oil was discovered in 1908, and British interests acquired enormous influence over its development. Iranian oil eventually became strategically important to the British Empire and its navy.

During World War I, Persia declared neutrality, but Foreign armies entered anyway.

During World War II, Iran again declared neutrality. Britain and the Soviet Union invaded anyway. They forced Reza Shah Pahlavi to abdicate and installed his young son, Mohammad Reza Pahlavi—the Shah Americans would later know so well.

From an Iranian perspective, there was already a lesson forming:

Powerful countries talked about Iranian sovereignty when convenient, but frequently ignored it when their own strategic interests were involved.

Interestingly, America was not initially the villain in this story.

The United States had a considerably better reputation in Iran than either Britain or Russia. America had supported Iranian sovereignty at important moments, including resisting continued Soviet occupation after World War II.

That began to change over oil.

1953: The Event Iran Never Forgot

In 1951, Iranian Prime Minister Mohammad Mossadegh nationalized Iran’s oil industry, challenging British control. Britain retaliated economically. Then the Cold War entered the calculation.

The Eisenhower administration feared instability could eventually open Iran to Soviet influence. Britain wanted Mossadegh removed. In 1953, the CIA and British intelligence participated in the operation that helped overthrow Mossadegh.

The Shah returned with substantially greater power.

For Washington, this initially looked like a strategic success. Iran remained firmly outside the Soviet orbit. It became an important American ally. Oil flowed. Iran modernized.

But there was another side - For many Iranians, 1953 became proof that when Iranian nationalism conflicted with Western interests, outsiders would intervene.

That memory never disappeared.

The Shah: Modernization Without Enough Political Freedom

The Shah transformed Iran:

• Education expanded.

• Women gained rights.

• Infrastructure improved.

• Industry developed.

Iran became increasingly modern and increasingly wealthy. America saw Iran as a critical ally against Soviet expansion and as an anchor of stability in the Persian Gulf.

But modernization came with authoritarianism.

• Political opposition was suppressed.

• The Shah’s security apparatus became feared.

• Corruption and inequality became increasingly visible.

• Rapid urbanization and Westernization disrupted traditional Iranian society.

Oil wealth accelerated everything.

By the 1970s, Iran was changing at breathtaking speed economically and socially while remaining politically constrained. That created an unlikely opposition coalition: religious conservatives, secular liberals, nationalists, students, Marxists, intellectuals, traditional merchants, and ordinary Iranians frustrated by corruption, inflation and political repression.

They agreed on remarkably little. Except one thing: The Shah had to go, and Ayatollah Ruhollah Khomeini became the figure capable of uniting those grievances.

In January 1979, the Shah left Iran, Khomeini returned, the monarchy collapsed. But many of the people who participated in the revolution did not understand that they were helping create the Islamic Republic that followed.

The Islamists ultimately consolidated power.

1979: Americans Develop Their Own Grievance

Then history turned.

• The Shah, suffering from cancer, was admitted to the United States.

• Iranian revolutionaries remembered 1953 and feared Washington might once again intervene to restore him.

• Students seized the American Embassy.

• Khomeini embraced the takeover.

• Fifty-two Americans were held hostage for 444 days.

Whatever grievances Iran carried against America, Americans now acquired a profound grievance of their own.

Diplomatic relations were severed, and to this day have never been restored.

And from this point forward, both countries increasingly interpreted the other’s actions through the worst experiences of their shared history.

Iran remembered 1953. America remembered 1979.

Reagan: Confrontation—and an Attempt to Talk Anyway

The 1980s made everything worse.

• Iran supported militant organizations throughout the region.

• Iran-linked forces were associated with attacks against Americans, most horrifically the 1983 bombing of the Marine barracks in Beirut that killed 241 American service members.

• The United States tilted toward Saddam Hussein’s Iraq during the Iran-Iraq War.

• American and Iranian naval forces eventually fought directly in the Persian Gulf.

Despite all of that, Ronald Reagan tried talking to Iran.

The result was Iran-Contra. The Reagan administration secretly facilitated weapons sales to Iran partly in hopes that Tehran could help obtain the release of American hostages held in Lebanon. It became a political scandal, but it demonstrated something that would repeat for the next four decades:

American presidents could confront Iran and still eventually wonder whether there was someone on the other side with whom they could make a deal.

Bush, Clinton and Containment

George H.W. Bush tried a cautious opening, famously suggesting that Iranian “goodwill” would produce American goodwill. It went nowhere.

Bill Clinton increasingly turned toward economic containment.

Sanctions targeted Iran’s oil industry and financial relationships.

America began using something more powerful than military force: access to the American economy and financial system.

Iran meanwhile continued supporting Hezbollah and other regional organizations hostile to Israel and the United States.

The mistrust deepened.

George W. Bush: The Nuclear Problem Arrives

After September 11, something surprising happened. Iran and America briefly cooperated against the Taliban in Afghanistan.

Then President George W. Bush placed Iran in his “Axis of Evil.” In 2002, previously undisclosed Iranian nuclear facilities became public. Now the relationship had another potentially existential issue: Could Iran develop a nuclear weapon?

At the same time, America’s invasion of Iraq removed Saddam Hussein—ironically eliminating Iran’s greatest regional enemy. Iranian influence inside Iraq subsequently expanded enormously. Iran-backed militias fought American troops. The conflict was no longer simply America versus Iran. It had become a network of indirect conflicts stretching across the Middle East.

Obama: Squeeze Iran—Then Make a Deal

Barack Obama initially attempted engagement.

When that failed, his administration helped construct extraordinarily powerful international sanctions.

• Iran’s oil exports fell.

• Banks became isolated.

• Foreign reserves became difficult to access.

• The Iranian currency suffered.

Eventually Iran negotiated and that produced the 2015 nuclear agreement—the JCPOA. Iran accepted significant restrictions on its nuclear program and international inspections. In exchange, nuclear-related sanctions were lifted. Iran regained access to substantial financial resources and could once again sell significantly more oil.

Separately, in 2016, the United States settled a decades-old Iranian claim involving military equipment purchased before the revolution. Iran received $400 million representing its original payment plus approximately $1.3 billion in settlement interest.

The Obama administration’s theory was understandable: Use economic pressure to obtain verifiable limits on Iran’s nuclear capability without another Middle Eastern war.

The criticism was equally understandable: The nuclear agreement addressed the nuclear program without resolving Iran’s missiles, proxies, terrorism, IRGC activities or hostility toward Israel.

And once Iran regained greater access to oil revenues and its own financial resources, money was fungible.

America could sanction particular activities. It could not control Iran’s entire national budget.

Trump: Don’t Give Away the Leverage

Donald Trump reached a fundamentally different conclusion.

In 2018, he withdrew from the JCPOA. Sanctions returned. Iranian oil exports fell dramatically.

Trump called this “maximum pressure.”

In 2020, he ordered the killing of Qasem Soleimani, commander of the IRGC’s Quds Force and architect of much of Iran’s regional proxy strategy.

Iran retaliated against American bases.

Yet Trump stopped short of a full-scale war.

Biden: Try Diplomacy Again

Joe Biden tried to restore the nuclear agreement. Negotiations failed.

Meanwhile Iran moved much closer technically to weapons-grade uranium enrichment.Also, Iran supplied Russia with drones.

Then came October 7, 2023.

• Hamas attacked Israel.

• Hezbollah attacked from Lebanon.

• The Houthis attacked shipping.

• Iran-backed militias attacked American forces.

• Iran and Israel eventually began attacking each other directly.

The distinction between proxy confrontation and direct confrontation was disappearing.

Trump Returns—and the Strategy Changes Again

Trump returned to office in 2025 facing an Iran considerably closer to nuclear weapons capability and a Middle East transformed by several years of war.

Diplomacy was attempted again. It failed to produce an agreement.

Then military force replaced negotiation.

• Iranian nuclear facilities were attacked.

• Missile infrastructure was attacked.

• Military and naval capabilities were attacked.

But perhaps the most consequential part of the strategy is what followed.

Attack Iran’s ability to fight—and then attack its ability to finance rebuilding.

• Iranian oil exports have now been dramatically curtailed by the American blockade.

• Treasury is simultaneously pursuing the international shadow-banking architecture Iran built to move oil proceeds and evade sanctions.

• Secretary Scott Bessent’s new Operation Economic Outcast explicitly seeks to sever Iran’s remaining financial connections to the outside world.

That brings this century-long story to an extraordinary point.

What Happens When the Money Runs Out?

For nearly fifty years, the Islamic Republic has funded a state built partly around confrontation: the IRGC, Ballistic missiles, the nuclear program, Hezbollah, Regional militias, Domestic security, Subsidies, Government employment, and the institutions necessary to preserve the regime itself.

All require money.

Oil provided much of it.

Shadow financial networks helped move it.

If those revenues and reserves become progressively inaccessible, Iran eventually confronts choices it has successfully postponed for decades.

But America and its allies should confront another question too. What happens if the pressure actually works?

Destroying military capability is one problem. Exhausting the regime financially is another. Building whatever comes afterward is something entirely different.

Iran is a nation of roughly 90 million people with an ancient civilization, enormous natural resources, an educated population and a strategic location connecting Central Asia, the Middle East, the Persian Gulf and the Indian Ocean.

Iran does not disappear if the Islamic Republic fails. The Iranian people remain, and eventually they will need relationships with the outside world for:

• Investment.

• Banking.

• Technology.

• Energy customers.

• Infrastructure.

• Trade.

• Tourism.

• Universities.

• International institutions.

Perhaps even relationships with countries they have been taught for generations to regard as enemies.

Which creates the question I find most interesting: How does Iran rebuild trust?

Not merely its nuclear facilities, ports, power plants or economy.

Trust.

Nobody gets to erase the parts of history that are inconvenient to their argument.Why should an international bank trust a new Iranian government?

Why should an American company invest?

Why should Israel believe Iranian missiles will not return?

Why should Gulf states believe Iran will stop financing militias?

Why should Europe release capital?

Why should Iranian citizens believe promises from Western governments after remembering 1953?

And why should Americans forget hostages, terrorism, attacks on American servicemen and nearly half a century of “Death to America”?

Iran has legitimate historical grievances.

So does America.

So does Israel.

So do many of Iran’s Arab neighbors.

Understanding those grievances does not require accepting every claim made in their name.

It requires listening to them.

The Civiltalk Question

This is where I think the lessons of human conversation become relevant to geopolitics.

We often believe trust begins when people agree.

It doesn’t.

Trust often begins when people can accurately describe the other person’s position—even while disagreeing with it.

An Iranian should be able to understand why Americans remember the hostages, Beirut, Hezbollah, Soleimani and attacks on American troops.

An American should be able to understand why Iranians remember foreign occupation, control over their oil, 1953, the Shah and decades of sanctions.

Understanding is not absolution.

Context is not justification.

But without context, every generation simply inherits the anger of the previous one.

Iran may soon face an economic question:

How much longer can this regime finance itself?

The rest of us may eventually face a harder question:

If the answer becomes “not much longer,” what do we want to happen next?

• Another failed state?

• Another revolution followed by revenge?

• Another authoritarian government?

• Or an Iran capable of rejoining the international community while protecting its sovereignty and accepting the sovereignty and security of its neighbors?

If Iran eventually wants reconstruction and normalization, perhaps the bargain has to be bigger than another nuclear agreement. It could require verifiable commitments around nuclear weapons, missiles, terrorism, proxies and regional sovereignty.

But the other side of that bargain matters too.

The outside world would need to demonstrate that compliance produces something tangible: trade, investment, access to capital, reconstruction and ultimately a legitimate place in the international community.

Trust would not arrive with the signing ceremony.

It would have to be earned - Transaction by transaction, Inspection by inspection. Investment by investment.

Conversation by conversation.

For more than a century, Iran’s relationship with outside powers has repeatedly revolved around control, fear and mistrust.

Perhaps the question after the current confrontation isn’t simply: Who won? It is:

Can everyone involved finally build something that doesn’t recreate the conditions for the next conflict?

That may ultimately be the more important conversation.

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