	Introduction: U.S. and Regional Interests1

As the Administration and Congress move forward to pursue engagement, harsher sanctions, or both, regional actors are evaluating their policies and priorities with respect to Iran. Iran's neighbors share many U.S. concerns, but often evaluate them differently than the United States when calculating their own relationship with or policy toward Iran. Because Iran and other regional concerns—the Arab-Israeli peace process, stability in Lebanon and Iraq, terrorism, and the ongoing war in Afghanistan—have become increasingly intertwined, understanding the policies and perspectives of Iran's neighbors could be crucial during the consideration of options to address overall U.S. policy toward Iran. Iran's neighbors seek to understand and influence changes in the following areas:
Iran's regional influence, Iran's nuclear program, Iran's role as an energy producer, and Iran's support for terrorism and non-state actors. For some of Iran's neighbors, Iran's regional influence is a domestic political concern. Bahrain relies on its relations with the United States and Saudi Arabia for its external security. On December 17, 2009, U.S. Issues for Congressional Consideration134

Although the Obama Administration may share many goals of the previous administration on Iran, it also sees the need for new strategies and approaches. The Obama Administration advocated a policy of engagement with Iran to determine the nature of its nuclear program and address other subjects of international concern. While post-election turmoil in Iran delayed these efforts temporarily, the Administration pursued engagement through the P5+1 framework. The United States, Israel, and the EU proposed the end of 2009 as a "firm" deadline for Iran to demonstrate its willingness to cooperate on the nuclear issue. That deadline has lapsed with no visible progress toward a resolution and the Administration is now working with its P5+1 partners to determine a course of action for 2010. Possible Regional Implications

Regardless of how they decide to proceed, any actions on the part of the Obama Administration, Congress, or the international community, and any developments in or provocations by Iran, will have implications for U.S. interests in the region as Iran's neighbors react and reevaluate their policies accordingly.
As the Administration and Congress move forward to pursue engagement, harsher sanctions, or both, regional actors are evaluating their policies and priorities with respect to Iran. Iran's neighbors share many U.S. concerns, but often evaluate them differently than the United States when calculating their own relationship with or policy toward Iran. Because Iran and other regional concerns—the Arab-Israeli peace process, stability in Lebanon and Iraq, terrorism, and the ongoing war in Afghanistan—have become increasingly intertwined, understanding the policies and perspectives of Iran's neighbors could be crucial during the consideration of options to address overall U.S. policy toward Iran.
Iran's neighbors seek to understand and influence changes in the following areas:
Iran's regional influence, Iran's nuclear program, Iran's role as an energy producer, and Iran's support for terrorism and non-state actors.
Although the Obama Administration may share many goals of the previous administration on Iran, it also sees the need for new strategies and approaches. The Obama Administration has advocated a policy of engagement with Iran to determine the nature of its nuclear program and address other subjects of international concern. While post-election turmoil in Iran delayed these efforts temporarily, it appears that the Administration is committed to pursue engagement through the P5+1 framework. At the same time, some Members of Congress have called for increased sanctions on Iran.
The United States, Israel, and the EU proposed the end of 2009 as a deadline for Iran to demonstrate its willingness to cooperate on the nuclear issue. That deadline has lapsed with no visible progress toward a resolution and the Administration is now working with its P5+1 partners to determine a course of action for 2010. Regardless of how they decide to proceed, any actions on the part of the Obama Administration, Congress, or the international community, and any developments in or provocations by Iran, will have implications for U.S. interests in the region as Iran's neighbors react and reevaluate their policies accordingly.
This report provides a description of Iran's neighbors' policies and interests, options for Congressional consideration, and an analysis of potential regional implications. For more information on Iran and regional perspectives, see CRS Report RL32048, Iran: U.S. Concerns and Policy Responses, by [author name scrubbed]; CRS Report RL33476, Israel: Background and Relations with the United States, by [author name scrubbed]; CRS Report RS20871, Iran Sanctions, by [author name scrubbed]; CRS Report RL33533, Saudi Arabia: Background and U.S. Relations, by [author name scrubbed]; CRS Report RS22323, Iran's Activities and Influence in Iraq, by [author name scrubbed]; and CRS Report R40653, Iran's 2009 Presidential Elections, by [author name scrubbed].