Despite an announced halt in demonstrations, the mobs of angry students continued to appear. While similar, on the surface, to the street demonstrations that overthrew the Shah twenty years ago, this time it is somewhat different. University admissions give preference to supporters of the government, so these are students are seeking reform more than revolution. The counter demonstrations by government supporters show that there is a split in the population. While civil war is not likely, continued unrest is. Most Iranians are willing to accept an "Islamic Republic" (which is what the current government is), especially since there are generally free and fair elections. But the religious fundamentalists want strict control of lifestyle and the economy and much of the population resists this. Most Iranians today are under age 25, and over two thirds of the young adults are unemployed. Since the revolution, literacy has gone from 50 percent to 80 percent, so the unemployed are more aware of the reforms needed to improve their economic prospects.

Starting on July 8^th, government crackdowns on student protests have led to several deaths and hundreds of injuries. The protests continue daily. Twenty years ago, student protests against the Shah's government led to the installation of religious rulers. But elections have gradually brought pro-democracy politicians into power. But the religious militants still control the police and intelligence services. The current demonstrations ended on July 12^th as hundreds of students barricaded themselves inside Tehran university. The protests were triggered by a new law that, in effect, banned some popular publications. The conservative controlled legislature, fearful that next years elections would see the legislature controlled by moderates, are apparently trying to goad the students into demonstrations that will discredit the moderate politicians.

In early July, Iranian rebels made bomb and mortar attacks in two Iranian cities. There were some civilian casualties, and perhaps half a dozen rebels were killed within Iran or on the Iraqi border shortly thereafter.

Iran and Iraq continue to quarrel over the fate of POWs from their 1980-1988 war. Since the end of the war, 90,000 POWs have been returned. But Iran claims that 5,000 Iranians are still being held by Iraq. Iraq denies this. Iran still holds 5,000 POWs, while Iraq claims Iran still holds 20,000 Iraqis. It is difficult to nail down all the numbers as there were hundreds of thousands of missing in action troops, and many captured Iraqis asked for political asylum. It is also quite likely that Iraq executed many Iranian POWs and does not wish to admit this. The POW issue continues to poison relations between the two nations, as does the support of rebel groups by each country in the other.

Relations with Afghanistan are damaged by very active drug smuggling from Afghanistan into Iran. Shootouts between Iranian forces and heavily armed smugglers are common. Iran has been seizing some 200 tons of drugs each year. There are also religious disputes, as the mostly Sunni Taliban persecute the Shia (same sect as Iranians) in western Afghanistan. Iran has been supplying weapons, money and advice to Shia partisans in Afghanistan. The conflict between Iran and Afghanistan has grown since the Taliban captured the Shia populated areas in western Afghanistan in 1996. Iran has stationed substantial forces on it's eastern border, at one point several hundred thousand troops. But logistical problems prevented keeping that large a force out there on a regular basis. But the Iranian troops that are on the Afghan border often cross the frontier to fight smugglers or Afghan troops.

An internal political struggle between religious conservatives and moderates turned into an international crises with military implications. Iran's counterespionage police arrested 13 Iranian Jews, including rabbis and students, and put them on trial for espionage. This was a bid by the religious conservatives to discredit the moderate elected government of Iran Israel responded by threatening to release documents showing how the conservatives, when in power during the 1980s and 90s, and worked with Israel to obtain military equipment. At the end of the month, the issue was still in doubt.