At issue in Iran is the current Presidential election between Mahmoud Ahmadinejad and Mir Hossein Mousavi. Supporters of Mousavi are claiming voter fraud which is why an outpouring of demonstrations have occurred on the streets of Iran. Regardless of who won the election or who should have won the election, the power of the President in Iran is of little consequence to begin with. Who truly runs Iran is the unelected Supreme Leader, Ayatollah Ali Khamenei. He appoints the head of the judiciary, six of the members of the powerful Guardian Council, the commanders of all the armed forces, Friday prayer leaders and the head of radio and TV. He also confirms the president's election which is why the demonstrations are mostly aimed at him.
To understand the current situation in Iran and how the U.S. government should respond, you need to first understand its history. On August 19, 1953, the CIA directed a successful coup overthrowing the hugely popular Iranian Prime Minister, Mohammad Mosaddegh. After the overthrow of Mosaddegh, the U.S. put in place a "puppet" ruler by the name of Mohammad Reza Shah Pahlavi(better known as the Shah of Iran), a corrupt and brutal monarch who came to be resented by the Iranian population. This resentment led to the Iranian Revolution of 1979 in which the Shah was overthrown and a religious theocracy was instituted led by Ayatollah Ruhollah Khomeini. To criticize Iran on matters of democracy, given its past history on the situation, is a tightrope walk that the government of the United States should be very careful to engage in.
Earlier this month in Cairo, President Obama, addressed the role the U.S. played in the 1953 Iranian coup:
This issue has been a source of tension between the United States and the Islamic Republic of Iran. For many years, Iran has defined itself in part by its opposition to my country, and there is indeed a tumultuous history between us. In the middle of the Cold War, the United States played a role in the overthrow of a democratically-elected Iranian government. Since the Islamic Revolution, Iran has played a role in acts of hostage-taking and violence against U.S. troops and civilians. This history is well known. Rather than remain trapped in the past, I have made it clear to Iran's leaders and people that my country is prepared to move forward.
What do Obama's critics want him to do? The religious leaders of Iran want so badly to blame the social unrest in Iran on "western influences" instead of looking inwardly at their own corrupt policies and Obama isn't playing into it, nor should he. This will only allow the theocracy in Iran to expose our own hypocrisy regarding the matter. Besides, do you really think the religious leaders in Iran actually give a shit what the U.S. thinks anyway? And what actions, other than lip service, should the United States take? Obama has already extended sanctions that have been renewed annually since 1995, which bans US companies from trading or investing in Iran.
There is nothing I would love more than to see true democracy take root in Iran rather than the farce of religious theocracy that is currently in place. The United States government simply lacks the moral authority based on its past history with Iran to meddle in its affairs. If change is going to happen in Iran, it has to come from within.