The popular anger against the government is still growing, and still backed by a minority of the population. While most Iranians are unhappy with the economy and how the country is run, most (about 55 percent) consider the current government legitimate. That is changing as the economy continues to degenerate. The government is believed to be producing false economic statistics, to try and hide the decline. That will eventually cause more resentment at the government. This is seen (and feared by the government) as a much speeded up version of what happened with the communist governments of Eastern Europe in 1945-89. The religious dictatorship has been running Iran for 31 years now, and it took the communist dictators 44 years to drive their populations to rebel. The West wants to expedite this process by imposing sanctions that will make things worse (like halting gasoline imports, which are necessary because the sanctions prevent Iran from building refineries.) While the Eastern European rebellions were bloodless (because the security forces refused to shoot), the Iranian Revolutionary Guard is full of religious fanatics who appear ready to gun down Iranians for God.
Iran has developed some innovative methods for running a police state that pretends to be democracy. Iran is selling that knowledge, and one of its customers is Zimbabwe, a police state that has no oil and has trashed its economy. What little cash Zimbabwe has is going to pay Iranian experts in intelligence, crowd control and how to intimidate the media. In this last area, Iran is world class. About a third of the imprisoned journalists in the world, are in Iranian jails. Iran is believed to be helping Zimbabwe at bargain rates, in return for having access to Zimbabwe for whatever covert activities they want to hide in Africa.
Over the last decade, building underground storage, research and industrial facilities has become a growing industry. Four companies that specialize in this work are owned by the Revolutionary Guard, and this construction effort has created numerous supporting service firms. There are technical consultants, and even satellite photography experts, to help hide the tunnel entrances and construction from American satellites.
Efforts to impose more damaging sanctions on Iran continue to come up against major suppliers, like India and China, which disagree with sanctions. These two countries have political, economic and military reasons for not imposing more severe sanctions. Neither India nor China believes Iran is as dangerous as the West believes. Both nations trade a lot with Iran, and both see military advantages to being on good terms with Iran.
Anti-government demonstrations have died down, and pro-government rallies are more common. So far, ten reformist leaders have been condemned to death, and thousands arrested (most were later released, but only after the more important movement leaders were revealed.) The government also continues to arrest members of religious minorities, like Bahais (a new religion developed in Iran in the 19th century, and particularly hated by Iranian Islamic clergy).
Western nations are concerned about the growing power of the Revolutionary Guard. Some of the more radical clergy and laymen work for the Revolutionary Guard, and the growing need for street muscle, to keep anti-government mobs under control, gives these radicals more influence in the government. This could lead to the government tolerating more aggressive support for Islamic terrorism overseas. That could mean Hezbollah in Lebanon and Hamas in Gaza being encouraged to attack Israel.
The Iranian nuclear weapons development effort continues (despite government announcements that there is no weapons program). But the government has apparently concluded that North Korea has demonstrated that, once you have nukes, you cannot be threatened with military attack. That's dubious, since North Korea was never threatened with attack, it simply believed it had been, and that became a fact for them.
March 7, 2010: Security agreements were signed with Qatar, Oman and Kuwait. The main thing here is that everyone pledges to not allow their territory to be used to attack each other. This is directed against the United States, and any possible attack on Iran. These agreements also have Iran promising to behave towards the three Arab nations.
Iran has ordered Russian commercial pilots to leave the country within two months. This is believed related to Iranian anger at Russia for not delivering S-300 antiaircraft missile systems ordered two years ago. Many of these pilots were hired because Russia was the only nation willing to sell commercial aircraft to Iran. But Russia could not supply all of Iran's aircraft needs, and most large transports are aging Boeing and Airbus models. About 35 percent of these 200 aircraft are out of action because the embargo makes it difficult to get spare parts.
March 6, 2010: President Mahmoud Ahmadinejad has loudly proclaimed to the media that he believes the September 11, 2001 terror attacks were actually carried out by the CIA and Mossad, to provide an excuse to attack Moslem nations (Afghanistan and Iraq.) This is a popular myth in the region. In some countries, it's what a majority of the population believes. Ahmadinejad also likes to brag that the Americans were deceived into destroying two of Iran's greatest enemies (Saddam Hussein and the Taliban.) Don't look for logic or reason in this part of the world. Those two things are often seen as dangerous foreign influences.
March 5, 2010: A new missile launch site shows clear similarities to North Korean facilities. Iran has usually gone out of its way to hide its dependence on North Korea for missile development. No more.