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Shortly before his death on June 3, 1989, Ruhollah Khomeini declared a fatwa against the Indian-born British author Salman Rushdie over his supposedly blasphemous novel The Satanic Verses (1988), decreeing death for Rushdie and anyone else involved in the book’s publication. After Khomeini’s death, President Khaman’i was elected to succeed him as Iran’s spiritual leader, the wali faqih. In July Ali Akbar Hashemi Rafsanjani, former speaker of parliament, was elected President. Iran’s relations with the West began to improve under Rafsanjani’s leadership. This was due in part to Rafsanjani’s role in obtaining the release of Western hostages held by pro-Iranian Shiite groups in Lebanon, the last of whom was released in 1992. In June 1990 a massive earthquake in north-western Iran took at least 35,000 lives. Iran condemned both Iraq’s invasion of Kuwait in August and the subsequent deployment of US troops in Saudi Arabia, but resumed diplomatic relations with Iraq, which dropped its territorial claims against Iran. In the Gulf War, Iran remained officially neutral, but provided refuge for more than 100 Iraqi warplanes, which it later seized. After hostilities between Allied and Iraqi forces ended, Iran offered limited help to Shiite rebels in southern Iraq fighting against the Baghdad government. Iran also provided shelter for more than 1 million Kurds fleeing the Iraqi forces who had crushed their rebellion at the end of the Gulf War. Iran received little outside help in caring for the refugees, who swelled an existing refugee population of more than 2 million, mostly Afghanis and Iraqis. Rafsanjani supporters won a parliamentary majority in 1992. The following year he was elected to serve a second presidential term.
The Iranian economy fared poorly under Rafsanjani as the national debt grew and inflation rose sharply; free market reforms were introduced in an attempt to improve the situation. In January 1993, under pressure from hardliners, Rafsanjani reaffirmed the 1989 fatwa against Salman Rushdie, although he stressed that it was a point of law, not government policy. Iran also continued to deny that it was an international sponsor of terrorism and turned aside accusations by both Algeria and Egypt that Iran sponsored terrorist groups in their countries. In June 1993 Rafsanjani was re-elected President. In 1994 the Rafsanjani government sponsored the launch of privately owned banks. On April 30, 1995, US president Bill Clinton imposed a total ban on trade with Iran to compel the government to abandon its nuclear programme and its alleged sponsorship of international terrorism. In early 1996 the EU warned Iran that it would also impose sanctions unless Iran condemned international terrorism. As this action was not supported by all member states, negotiations continued in an attempt to provide Iran with a face-saving exit from the impasse. The March 1996 general election was greeted mostly with apathy by the voters. A ban on both political parties and campaigning, plus the failure of many would-be parliamentary candidates to meet the Islamic credentials required, meant that electioneering was very subdued. Despite a low turnout at the polls, those loosely allied to the pro-Rafsanjani Servants of Construction fared extremely well, gaining about 70 per cent of the seats. This group consists of many high-profile technocrats, favouring economic reform following free-market principles, reduced economic subsidies, and increased contact with the West. Their electoral success was viewed as implying that the Iranian public was growing tired of revolutionary rhetoric and the country’s perilous economic situation. The opposition wing, the Militant Clergy Organization, led by the Speaker of Parliament, Nateq Nouri, has been blamed for many of Iran’s economic ills. The daughter of Rafsanjani was one of the successful parliamentary candidates. Tensions between Iran and Europe continued with the raising, by the Khordad Foundation, of the reward for the assassination of Salman Rushdie in February 1997. Two months later, a German court implicated the Iranian government in the killing of Kurdish dissidents residing in Germany. Iran denied involvement.
Presidential elections in May 1997 became a contest between the conservative Nateq Nouri, and the relatively moderate Mohammad Khatami. Khatami, who had relaxed restrictions on publishing and entertainment during his years as Cultural Minister (1982-1992), was favoured by the intelligentsia and by women and the young in general. In an election that saw a turnout of more than 90 per cent, Khatami scored a convincing victory, winning 69 per cent of votes cast. His success raised hopes among many within and outside Iran of liberalization of social and political restrictions and improvement of foreign relations, particularly with the United States. Nevertheless, radical change would seem to be unlikely while the conservative clergy remain powerful and the government continues to be under the ultimate control of Khaman’i as wali faqih. In July, further US sanctions were put in place to prevent third-party investment in Iran’s weapons programmes, or in its oil industry. The sanctions were met with widespread international opposition. At the eighth summit of the OIC held in Tehran in December 1997, a clear split between moderates and conservatives was evident. Iran’s foreign minister issued a statement in September, which appeared to end ten years of confrontation surrounding the fatwa declared against the author Salman Rushdie in 1989. It is not possible to lift a fatwa, as according to Islamic law only the person who issues a fatwa is able to lift it and Ayatollah Khomeini died soon after proclaiming the fatwa against Rushdie. The statement declared that the government threatened no harm to the author or anybody associated with his work. This led to the renewal of full diplomatic links between Iran and the United Kingdom, in May 1999.
The power struggle between the conservatives and the reformists came into focus with the attack on US nationals in November 1998, and the murder in December of several dissident writers and intellectuals who were opposed to censorship and associated with secularism. This led to a number of arrests within the Information Ministry, which controls intelligence issues. A trial before a military court opened in Tehran in December 2000. Eighteen people stand accused. The first local elections to be held in Iran since the 1979 revolution took place in February 1999, with supporters of the reformist president doing well in the elections, particularly in Tehran. President Khatami became the first Iranian leader to visit Europe since the 1979 revolution, when he made a three-day visit to Italy in March. He met Pope John Paul II in the Vatican, in an unprecedented meeting between the Roman Catholic Church and the head of an Islamic state.
Pro-reform students, long opposed to hard-line politicians and cleric-led authorities, began a campaign of protests, which culminated, in July 1999, in the worst riots since the revolution. Demonstrations continued until a landmark parliamentary election was held in February 2000. This sixth general election in the Islamic Republic produced a landslide victory for the reformists and created a legislature committed to democracy and civil liberties. The results were well received internationally (the United States relaxed some of the sanctions against Iran in March, extending, however, the ban on American oil contracts). Within Iran the reaction was rather different: angered by the success of reformist candidates, conservative factions were reported to have made attempts to delay the formation of the new reformist-dominated Majlis. In a rare address to parliament in March 2001, Khatami remained committed to the future of democratic government, despite the thwarting of his attempts to implement his programme of reforms by conservative hardliners in control of important state institutions. He stood in the presidential elections of June and won an overwhelming 77 per cent of the vote. However, his swearing-in for this second term was delayed by infighting between the reformers and hardliners. The dispute was ended when two hardliner nominees were elected to the Council of Guardians, a body that ensures that Islamic principles continue to be observed. In January 2002, in his first State of the Union address, President George W. Bush referred to Iran as one of three countries operating as an “axis of evil” (alongside Iraq and North Korea) because of their development of long-range missiles. The statement was uniformly condemned in Iran. In the war in Iraq, which started in March 2003, Iran pledged to remain a neutral state. The historic town of Bam in the south-east of Iran was hit by an earthquake in December 2003. It is believed that around 40,000 people, over a third of the town’s population, were killed as a result. Sections of the Iranian press were critical of the government’s lack of preparation for dealing with such a disaster and the failure to impose building regulations that could have reduced the impact of the tremors. Parliamentary elections were held in February 2004 and resulted in a majority of the seats being won by the conservatives. The elections were controversial—with critics protesting over the disqualification by the Council of Guardians of a number of reformist candidates. International criticism was also widespread, with the elections being described as neither free nor fair. In June 2005 elections were held to choose a successor to Khatami. After the first round of the election failed to produce a clear winner, former president Rafsanjani, who presented himself as a moderate, faced the conservative mayor of Tehran Mahmoud Ahmadinejad in a run-off. Ahmadinejad, who campaigned as a devout and honest man of the people, won the support of Ayatollah Khaman’i and was popular among the Islamist militias, the Revolutionary Guard and the Basij. This helped him to a convincing victory over Rafsanjani, though supporters of the reformist candidates alleged that the elections had not been fairly conducted. Of particular concern to governments in Europe and the United States was Ahmadinejad’s commitment to Iran’s controversial nuclear technology programme.
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