The Islamic Republic of Iran accords priority to its relations with the states of the region and with the Islamic world. This includes a strong commitment to the Organization of the Islamic Conference (OIC) and the Non-Aligned Movement. Relations with the states of the Gulf Cooperation Council (GCC), especially with Saudi Arabia, have improved in recent years. An unresolved territorial dispute with the United Arab Emirates concerning three islands in the Persian Gulf continues to mar its relations with these states, however. Tehran supports the interim Governing Council in Iraq but strongly advocates a prompt and full transfer of state authority to the Iraqi people. Iran hopes for stabilization in Afghanistan and supports the reconstruction effort so that the Afghan refugees in Iran (approximately 2.5 million) can return to their homeland and the flow of drugs from Afghanistan can be stemmed. Iran is also pursuing a policy of stabilization and cooperation with the countries of the Caucasus and Central Asia, whereby it is seeking to capitalize on its central location to establish itself as the political and economic hub of the region.

Relations with the United States of America and the Member States of the European Union

Relations between Iran and the United States have been disrupted since the revolution in Iran. Iran does not maintain diplomatic relations with either the United States or Israel. It views the Middle East peace process with scepticism. Relations between Iran on the one hand and the European Union and its Member States on the other hand are slowly but surely increasing in importance, a fact underscored by President Seyed Mohammad Khatami's visits to Italy, France and Germany in July 2000 and to Austria and Greece in March 2002 as well as by reciprocal visits of European heads of state and government to Tehran and a lively exchange at ministerial level. In 2002 the European Union launched negotiations on a Trade and Co-operation Agreement (TCA) with Iran. Parallel to these negotiations, the EU voiced its expectation that the political dialogue with Iran must lead to concrete results in the areas of human rights, efforts to counter terrorism, Iran's stance on the Middle East peace process and issues associated with the non-proliferation of weapons of mass destruction. During a joint visit to Tehran in October 2003, the foreign ministers of France, Germany and the United Kingdom successfully prompted the Iranian government to sign an additional protocol to the nuclear Non-Proliferation Treaty and commit itself to fully cooperate with the International Atomic Energy Agency (IAEA) and suspend its uranium enrichment and processing activities.