The war finally ended for the same reason it was prolonged: the need to sustain the revolution at home. By 1988, Iran was exhausted and weary from having waged an eight-year war without any measurable international support. Iraqi counterattacks and the war of cities, whereby Iraq threatened Iranian urban centers with chemical weapons, undermined the arguments for war. The difficulties of the war were compounded by a smaller pool of volunteers, which undercut Iran’s strategy of utilizing manpower to overcome Iraq’s technological superiority. The inability of Iran to muster sufficient volunteers meant it had to embark on a more rigorous conscription effort that further estranged the population. Continuation of the war threatened the revolution and perhaps even the regime.

The war left a significant imprint on Iran’s international orientation. The quest for self-sufficiency and self-reliance is a hallmark of the Islamic Republic’s foreign policy, as the guardians of the revolution recognized that the survival of their regime depended entirely on their own efforts. International organizations, global opinion and prevailing conventions did not protect Iran from Iraq’s chemical-weapons assaults. Saddam’s aggression, his targeting of civilians, persistent interference with Persian Gulf commerce and use of weapons of mass destruction were all condoned by the great powers. The idea that Iran should forgo its national prerogatives for the sake of treaty obligations or Western sensibilities didn’t resonate with the aggrieved clerics. Thus, the war went a long way toward imposing the clerical template on Iran’s ruling system.

As Khomeini approached the end of his life, he grew apprehensive about the vitality of his revolution. Suddenly there was a risk that the vanguard Islamic Republic would become a tempered and cautious state. At this point, he undertook two specific acts to ensure that his disciples would sustain his revolutionary radicalism and resist moderation. In 1988, shortly after the cease-fire with Iraq, he ordered one of his last acts of bloodletting—the execution of thousands of political prisoners then languishing in Iran’s jails. The mass executions, carried out in less than a month, were designed to test Khomeini’s supporters and make certain that they were sufficiently committed to his revolution. Those who showed hesitancy would be seen as halfhearted and dismissed from power. And this indeed did happen to Ayatollah Hossein Ali Montazeri, who objected. Khomeini was confident that the government he would leave behind had the courage to inflict massive and arbitrary terror to maintain power. However, he still worried about possible backsliding on the issue of relations with the West.

Thus did Khomeini manufacture another external crisis to stoke the revolutionary fires. The publication of Salman Rushdie’s Satanic Verses, which depicted the Prophet Muhammad in an unflattering light, offered a perfect opportunity. In February 1989, Khomeini issued his famous fatwa, designed to radicalize the masses in support of the regime’s ideology. While the international community saw his egregious act as an indication of his intolerance and militancy, Khomeini considered domestic political calculations to be paramount. Iran was once more ostracized, a development entirely acceptable to Khomeini.

WITH THE end of the prolonged war with Iraq and Khomeini’s death, Iran’s focus shifted from external perils to its own domestic quandaries, and the 1990s became one of the most important periods of transition for the Islamic Republic. It was a period of intense factionalism. On the one hand, the new president, Ali Akbar Hashemi Rafsanjani, and his allies sensed that for the Islamic Republic to survive, it had to craft a new national compact and reestablish its legitimacy. Iran had to restructure its economy and provide for the practical needs of its people. It also had to adjust to new international realities fostered by the collapse of the Soviet Union and the 1991 Gulf War. To realize his vision of economic renovation and foreign-policy adjustment, Rafsanjani sought to mend fences with the neighboring Gulf states and reach out to the European community and Russia. But the United States remained too unpopular in Iran for any such outreach.

Standing against Rafsanjani and his cohort was a conservative faction that gradually would be led by the new supreme leader, Ali Khamenei. This faction appreciated that, in the aftermath of the war and due to economic demands, a relaxation of tensions was necessary. But its international outlook continued to be influenced by the need to sustain Iran’s Islamic culture. This became all the more pressing as many Iranians began to move beyond the revolutionary legacy and seek a new future. Given this popular challenge, the conservatives became even more invested in rejecting normalization with the West for fear that such a move could provoke a cultural subversion that would further erode the foundations of the state. The dual themes of the “Great Satan” and the “clash of civilizations” laced their pronouncements and defined their political identity. The West remained a sinister source of cultural pollution whose influence and temptations had to be resisted even more strenuously after Khomeini’s passing and the emergence in Iran of popular interest in Western ways and vogues. The fact that Iran’s youth no longer paid attention to its ponderous theological musings was immaterial to a political class that perceived its legitimacy as deriving from God’s will. Foreign policy was seen paradoxically as a way of isolating Iran from the international integration that this class feared. Iran would now move in opposing directions, confounding both its critics and supporters.

This contradictory nature of Iran’s foreign policy was most evident in the Persian Gulf. Iran behaved moderately and judiciously during the American campaign to evict Iraq from Kuwait. In the aftermath of the war, Iran began discussing a regional-security arrangement whereby the stability of the Persian Gulf would be ensured by indigenous actors in a cooperative framework. Instead of seeking to instigate Shia uprisings and exhorting the masses to embrace Iran’s revolutionary template, Rafsanjani called for greater economic and security cooperation. To be sure, this served Iran’s interests, as it naturally would emerge as the leading power in such a Gulf order. Still, this new policy accepted the legitimacy of the monarchical regimes that Khomeini long had maligned.

In a manner that bewildered the international community, Iran started speaking with multiple voices. Rafsanjani called for better relations, but hard-liners denounced what they considered his betrayal of the revolution. Moreover, Iran continued to pursue subversive activities and terrorism, including the 1996 bombing of Khobar Towers in Saudi Arabia, which housed American military personnel. Nineteen U.S. servicemen were killed in the attack. While one arm of the state emphasized diplomacy and cooperation, the other engaged in incendiary propaganda and acts of terror. In the end, Rafsanjani couldn’t convince the Gulf community that Iran had turned a new page, and relations with the sheikhdoms remained tense.

A similar pattern was seen in Rafsanjani’s desire to improve relations with Europe. Iran’s need for foreign technologies and investments, as well as its desire to escape its isolation, propelled it toward this new outlook. The European states initially embraced the new Iranian president and responded to his call for reconciliation. The Europeans labeled this diplomatic exchange a “critical dialogue,” which suggested that Iran could be persuaded to modify its behavior through diplomatic discussions and economic incentives. But the death sentence on the British author Salman Rushdie and the assassination of Iranian dissidents on European soil soon militated against better relations.

Rafsanjani sought to tone down the Rushdie affair by suggesting that, although Khomeini’s decree could not be countermanded, Iran would not necessarily carry out the order. These statements were soon contradicted by Iranian politicians who insisted that the fatwa was irreversible. In the meantime, powerful religious foundations maintained bounties on Rushdie’s head. Britain actually expelled a number of Iranian diplomats on the suspicion that they were plotting Rushdie’s murder. Whatever the validity of those allegations, Iran’s inability to separate itself from Khomeini’s decree obstructed its attempt to mend fences with Europe.

And terror remained an instrument of Iran’s policy in Europe, as reflected in Iran’s assassination of Kurdish dissidents in the Berlin restaurant of Mykonos. The German judiciary blamed Iran for the attack, particularly its Ministry of Intelligence and Security. As a result, the European states all withdrew their envoys from Iran. Ultimately, Iran’s failure to craft a different relationship with the accommodating Europeans reflected its inability to balance competing mandates.

The one policy area where Rafsanjani’s pragmatism prevailed unmolested concerned the Russian Federation. Like many Third World countries struggling for autonomy within the international order, Iran found the collapse of the Soviet Union initially disturbing. That turned to alarm for the clerical elite with the massive deployment of U.S. forces to the Persian Gulf and the expressed American commitment to contain “outlaw” regimes. As a price for strategic support and arms trade, the Islamic Republic made its own adjustments to the emergence of Central Asia. In a rare display of judiciousness, Iran largely tempered its ideology, stressing the importance of trade and stability rather than propagation of its Islamist message. The full scope of Iranian pragmatism became evident during the Chechnya conflict. At a time when Russian soldiers were massacring Muslim rebels indiscriminately, Iran merely declared the issue to be an internal Russian matter.