Over the past four decades, the United States has managed its foreign policy toward Iran through a combination of sanctions, diplomatic incentives, and threats of military intervention. This approach has come down to two choices: war or sanctions. Clearly, sanctions have deprived Iran of access to foreign investment in its oil and energy sectors, caused many oil companies to withdraw from Iran, and dramatically reduced Iran's oil revenue. However, sanctions have had a more damaging effect on ordinary people than on the targeted leaders of the country. Sanctions have neither altered Iran's foreign-policy conduct nor led to regime change. Before Iran is completely pushed into the arms of China and Russia, the third option—diplomacy with a potentially new regime—deserves attention. The next few years will likely answer the question of how these difficult and explosive US-Iranian relations will be managed: through diplomacy, ongoing sanctions, or by escalatory deterrence.