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This report discusses the developments in Iranian foreign policy, their involvement with terrorist organizations, the developments made with respect to weapons of mass destruction, and human rights concerns. It also details the Bush Administration's efforts to maintain the sanctions put in place by the Clinton Administration.

Inspections in 2003 and 2004 of Iran’s nuclear program revealed significant undeclared activities with potential applications for nuclear weapons. The International Atomic Energy Agency (IAEA) uncovered two uranium enrichment programs (centrifuges and lasers) and plutonium separation efforts. Iran has been pressured to give up its enrichment and reprocessing activities and has declared twice (November 2003 and November 2004) that it would halt all such activities in exchange for technical cooperation with Germany, France, and the UK. It is not clear whether Iran is buying time for a clandestine program or effectively using its program as a bargaining chip for wider economic gain. Iran signed an Additional Protocol to its safeguards agreement in December 2003 but has not yet ratified it. Ever on the brink of being declared in violation of the NPT, Iran has allowed IAEA inspectors access only when pressed. After several months, Iran recently agreed to let inspectors visit a military site: Parchin. This report, which is updated as needed, analyzes the significance of the IAEA’s findings for a possible Iranian nuclear weapons program.

This report analyzes developments in U.S. policy toward Iran, including existing U.S. sanctions in force against that country. The report discusses changes in Iranian policy and in U.S. policy toward Iran since the May 1997 election of a relative moderate, Mohammad Khatemi, as Iran's President. The report analyzes the outstanding issues that divide the two countries, and conditions under which Iran might agree to U.S. overtures to improve relations with Iran's government.