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U.S. Secretary of State John Kerry, left, meets with Iranian Foreign Minister Mohammad Javad Zarif, right, in Vienna, Austria, Jan. 16, 2016.Kevin Lamarque/The Associated Press

Despite estranged political relations, Iran and the United States showed signs of easing tensions last week for the first time since Iran's 1979 Islamic Revolution. The historic nuclear deal between Iran and six world powers released Iran from major economic sanctions and led to a prisoner exchange with the United States. The starkest example of co-operation came last week after Iran's seizure of 10 U.S. Navy sailors, who had mistakenly trespassed into Iranian waters in the Persian Gulf. The sailors were released swiftly in less than 24 hours, highlighting Iran's determination to avoid confrontation with the United States.

It's all been milestones in bilateral relations given the dismal record of the past, when dialogue and compromise between the two countries were rare. But questions remain whether this paradigm shift can survive given the opposition in Iran and the United States to the normalization of ties. Further, factional struggle inside Iran could lead to major policy changes.

The Iranian regime is beset by internal fighting. The hard-line Revolutionary Guards, the military force set up after the revolution, fears rapprochement with the United States might lead to political reform and, in turn, to its own political demise. The force controls key bodies, including the watchdog Guardian Council, which screens candidates for major elections. There are signs that the body is preparing to bar all moderate hopefuls who have signed up to run for the election of the Council of Experts, another key body that will be responsible for picking the country's next supreme leader. The current leader, Ayatollah Khamenei, who has the final word on all state matters, is 76.

The Guards, also, refused to release Siamak Namazi, an Iranian-American businessman, along with the four dual nationals who were part of the prisoner exchange. It said the charges against Mr. Namazi were financial while the charges against the others were security related. (A fifth prisoner, a student who was held for 40 days, was also released independently of the swap.)

In the United States, the rhetoric toward Iran remained hostile. Congressional Republicans were quick to slam the Obama administration for lifting sanctions on Iran, with House Speaker Paul Ryan pledging to do "everything possible" to prevent the long-time U.S. foe from obtaining nuclear weapons. Even Democratic primary front-runner Hillary Clinton called for new sanctions on Iran for its ballistic missile program. As president, she said, her policy toward the country would be to "distrust and verify."

Iran has become a pariah state. Its human-rights record remains atrocious. The supreme leader and his appointed representatives around the country continue to use anti-Israel and anti-U.S. rhetoric during their weekly sermons, and the country's missile tests are provocative.

In Iran, hard-liners complained that U.S. President Barack Obama slapped new sanctions on Iran as soon as the American detainees left the country. U.S. officials conceded that the new sanctions – over Iran's testing last fall of ballistic missiles in violation of UN resolutions – had been delayed so as not to jeopardize freedom for the Americans, or Iran's implementation of key steps of the nuclear deal.

Yet, many are hopeful that constructive engagements will gradually wipe out bitter sentiments between the two countries. Iran has gone through its own evolution since the 1979 revolution and a breed of moderate politicians, now led by President Hassan Rouhani, pursue pragmatist policies that, at times, overlap with the United States' interests. Iran is the only country in the Middle East that is totally opposed to the Islamic State and al-Qaeda and has put boots on the ground to fight Islamic State militants.

Meanwhile, American and Iranian officials hailed the victory of diplomacy. Lifting sanctions gave Iran access to roughly $100-billion (U.S.) in impounded money and a free hand to sell as much oil as it likes. Local newspapers applauded the victory on Saturday with headlines saying "Sanctions are gone," implying their psychological burden had already diminished. Iran quickly announced it was buying 114 Airbuses to upgrade its aging civilian air fleet.

On Sunday, Mr. Obama referred to Iran as the Islamic Republic of Iran in his remarks – something his predecessors have been loath to do – and said he wanted to speak "directly to the Iranian people."

These developments are diplomatic victories and the credit goes entirely to the Obama administration and Iran's moderate forces. They also reflect the growing power of forces in Iran that favour the rule of law and better ties with the international community. They still need to win the battle against their opponents at home, but engagement with the United States and the West has certainly emboldened them.

Nazila Fathi is the author of The Lonely War: One Woman's Account of the Struggle for Modern Iran.

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