Under the US-backed regime of the Shah, or king, of Iran, religious extremism was kept in check, just like other movements that could have threatened the central government's authority. As illustrated in the novel, the Shah was not popular with the Iranian people because his lavish, European tastes and excessive lifestyle showed disregard for their interests. His oppressive policies, designed to stifle dissent and maintain internal stability at all costs, turned Iran into a police state where the people lived in fear and despair.
Iran had long been a Muslim country, but its society had traditionally accommodated a diverse mix of religions like Christianity, Judaism, and pre-Islamic native faiths. Under the Shah's Western-oriented, secular regime, religious practice was protected as long as it was moderate and non-threatening to state security. Those with more fervent religious beliefs weren't free to express them, and hostility grew between the rising populist tide of religious nationalism and the Shah's corrupt government.
The spiritual leader of this anti-American religious revival, Ayatollah Khomeini, had been living in exile in France in fear of imprisonment or execution by the Shah's forces. With the Shah out of the picture, Khomeini returned to Iran as the supreme leader of the new Islamic Republic. The Shah's regime had been brutal, but his government had a policy of tolerance for religious moderation that allowed for peaceful coexistence of multiple faiths. Khomeini's brand of ultra-conservative Shiite nationalism had no tolerance for any diversity of opinion and made Iran the sworn enemy not just of the US, but of Israel and the ultra-conservative Sunni power Saudi Arabia.