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— Domestic and international issues facing Iran
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NUCLEAR QUESTION: Iran has expanded its uranium enrichment and expects to have its first reactor fully operational later this year. Iran says it only seeks a peaceful nuclear program for energy and research. But the United States and other nations worry that Iran could seek atomic weapons, which would threaten neighbors and could open a regional arms race. Iran has received offers of economic incentives and easing of sanctions to suspend uranium enrichment, but Iranian leaders have so far rejected the proposals.
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U.S. RELATIONS: President Barack Obama has offered to open dialogue with Iran's ruling clerics after a nearly 30-year diplomatic freeze. The outreach was repeated during Obama's highly anticipated speech to the Muslim world in Cairo. Iran's leader has given no hint they are willing to move quickly to engage Washington and suggest they first want tangible U.S. policy shifts, such as lifting sanctions or removing Iran from the State Department list of terror-sponsoring states.
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REGIONAL ROLE: U.S.-led military interventions have allowed Iran to expand its influence in Afghanistan and with the majority Shiites in Iraq, where the United States accuses Tehran of aiding Shiite militias. Iran also maintains strong ties to the Lebanese Shiite militant group Hezbollah and the Palestinian faction Hamas. Sunni Arab states, including Egypt and Gulf nations, are increasingly worried about Iran's widening clout. Iran is seeking to boost links to Pakistan as a gateway for energy exports to south Asia.
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ECONOMY: Iran's economy has struggled despite the country having some of the world's largest oil and gas reserves. A lack of refinery capacity forces Iran to buy fuel at market prices to meet domestic demand, which kept it from foreign currency windfalls during record-high oil prices last year. Inflation and unemployment are both in double digits.
