At that time, Iran was the closest U.S. ally in the Persian Gulf and welcomed U.S. military presence. Iran was also the most powerful military force and the most populous country in the region, as well as the world's second largest oil exporter. To date, the oil-dollar link has given the United States a huge advantage in international trade. Corporations and countries carry out trade in U.S. dollars, making the U.S. Treasury and the U.S. Federal Reserve Board the ultimate arbiters of global monetary policy. That weakness became evident in 1979, when the Shah of Iran was overthrown by Ayatollah Khomeini's Islamic revolution, and the United States lost its main military ally in the global oil patch.
U.S.-Iranian relations are hostile and tense.
The U.S. has troops based in Saudi Arabia, but they are not welcome. In the early 1990s, several governments and many people in the Persian Gulf region tolerated and even welcomed the presence of U.S. troops out of fear of Iraq's dictator Saddam Hussein. Today, U.S. support to Israel in the face of the Palestinian struggle for statehood is not seen as that of an even-handed mediator. Rather, it has fueled more anti-U.S. sentiment. Ariel Sharon who, as Defense Minister, presided over a terrible massacre of Palestinians during the Israeli invasion of Lebanon in 1982-83, has just become Prime Minister of Israel.