They are now availed a valuable opportunity to move towards a rapprochement to repair their ruptured relations and contribute to stabilising a region that cries out for stability and security.

When Iran signed the historic nuclear agreement with the five permanent members of the UN Security Council and Germany on July 14, 2015, after nearly two years of intense negotiations, many sceptics in the United States, Iran and the region seriously doubted Tehran's good intentions.

  Not only American, Iranian and regional hardliners, but also many academics and observers on Iran around the world echoed this sentiment.

 But the Iran of today is not that of the early 1980s, when the revolutionary fever propelled the country's Shia religious establishment to power to transform Iran into a Shia Islamic Republic in defiance of the prevailing regional and international order.

Despite its theocratic nature and many of its shortcomings, the Iranian Islamic government has grown to be more pragmatic than ideological in both its domestic and foreign policy behaviour.

Having said this, the resolution of the nuclear dispute and the lifting of sanctions does not necessarily mean that from now on the Islamic Republic is set to sail smoothly towards a more prosperous, stable and secure future. It will still have many formidable domestic and foreign policy challenges.

However, the republic is now at the crossroads, with an opportunity to reintegrate into the international system as an influential player in what is a highly volatile region, and at a time when the price of its main source of revenue, oil, is plummeting.

Amin Saikal is  director of the Centre for Arab and Islamic Studies at ANU