The following is a script from "8 Days in Tehran" which aired on May 18, 2014. Steve Kroft is the correspondent. James Jacoby and Michael Karzis, producers.
For the past 35 years the United States and Iran have been locked in a hostile relationship marked by diplomatic isolation, military threats, and deep mutual mistrust. Then last November, something happened. Amid rising tensions in the Middle East, and the possibility of a military attack against Iran's nuclear facilities, the two sides stepped back and signed what amounted to a temporary truce.
Iran agreed to freeze development of its nuclear capability and in exchange the U.S. and five world powers promised Iran some relief from economic sanctions. A permanent deal is still under negotiation. The primary catalyst was the election last year of Iranian President Hassan Rouhani, a reform-minded cleric who won a surprising and convincing victory by promising to improve the economy and end Iran's international isolation. Clearly something is going on in Tehran, and we wanted to see it first hand. Last month, we were granted visas and packed our bags for an eight day visit.
The thing that strikes you most about Tehran is that it defies expectation. It's a sprawling, modern city with 12 million people and most of them are offended by the perceived image of their country as a hostile, backward, dangerous place filled with terrorists; a conservative Islamic police state ruled by a religious theocracy. It's much more complicated than that. Iran is one of the wealthiest, best educated, most sophisticated countries in the Middle East. And most people here are eager to end their political and economic isolation if their government can work out a deal.
Mohammad Nahavandian: There is a lot of misinformation and disinformation about Iran.
Dr. Mohammad Nahavandian speaks from experience, having spent years in the United States getting a PhD in economics from George Washington University. Today, he is chief of staff to President Hassan Rouhani and considered by some to be the second most powerful person in the new government -- one that would like America to forget about the rantings of former President Mahmoud Ahmadinejad and try a different approach that does not lead to military confrontation and war.
Mohammad Nahavandian: Now we are opening a new chapter. A chapter of building trust. Now that both sides have recognized that this cannot and should not continue, the best way is to come into some agreement. And instead of imposing economic sanctions, try to utilize economic relations to overcome political disagreement.
In Iran, Navahandian and his boss, President Rouhani, are both pragmatic moderates less concerned about ideology than fixing the sick Iranian economy -- which was the mandate from voters. To do it Rouhani has to ease the economic sanctions that have been imposed by the U.S. and Europe as punishment for pursuing a nuclear program. The country's limited ability to export oil, import goods, and participate in the international banking system are largely responsible for high unemployment and an inflation rate of 30 percent.
"Now we are opening a new chapter. A chapter of building trust. Now that both sides have recognized that this cannot and should not continue, the best way is to come into some agreement..."
Steve Kroft: What about the sanctions. How difficult is the economy?
Male voice translating for woman and man: She hopes that it gets better, while they're negotiating and he wants things to get cheaper.
Steve Kroft: Cheaper.
While the sanctions and their effects have imposed considerable pain and hardship on many Iranians, we saw no evidence that the economy was on the verge of collapse. The bazaars were filled with goods and people were shopping.
Said Fateh: It is serious, but - as we've said, it hasn't really brought Iran onto the knee.
Said Fateh and his son Abdollah are part of the business class that President Rouhani is trying to empower by privatizing state-owned industry, increasing competition, and opening up Iran to the world. They say the sanctions have done enough harm to get Iran to the bargaining table, but not enough to force the Iranians into a final deal they don't want to make.
Steve Kroft: Do you think that Iran is willing to make concessions on its nuclear program?
Said Fateh: It depends on the concessions, doesn't it? To stop it totally, I doubt it. But to reach some middle grounds, most probably.
The Fatehs gave up a comfortable expatriate lifestyle in the states more than a decade ago to return here and become pioneers in the Iranian Internet. Their company, Pars Online, is now one of the country's largest service providers, but not as large as they would like it to be.
Steve Kroft: How do you run an Internet company and build an Internet company when there are sanctions in place?
Abdollah Fateh: Everything is possible, but it's just a bit more expensive and a bit longer to bring everything.
Said Fateh: You can get practically anything you want.
Abdollah Fateh: I'm expecting that the new Google Glass product that's coming out, hopefully-- probably within the next month or two, you'll be able to find it in Iran.
In northern Tehran we found shopping malls that would not be out of place on Rodeo Drive in Beverly Hills. They cater to the country's elite, many who made their fortunes through close ties to the government and even the clergy. We saw French perfume, designer clothes, and brand names like GoPro, Samsung, and Apple. Not far away, was a showroom for BMWs and Porsches.
Steve Kroft: And how does it get here?
Said Fateh: Well, I'm sure they have ways to get things in through various borders, I presume.
It was clear Said had no interest in discussing the details, and when we asked him about internal opposition to the negotiations with the U.S., his son Abdollah suggested in Farsi that his father not respond.
Steve Kroft: I mean, there are people in this country and people outside the country who really don't wanna see this happen.
[Foreign language not transcribed - Abdollah doesn't want his father to answer...]
Said Fateh: Well, no, why not? You do see some newspaper articles or-- talks. But whether or not that's a reality or not is different issue.
During our time in Tehran, we were able to travel around without government supervision and free to speak with anyone who would talk to us about what was going on. It wasn't always easy to get answers.
Male voice: There're people-- many people are speak English in bazaar, but no, no, none of them. None of them talks about politics.
Steve Kroft: You don't want to talk about politics.
Male Voice: No, I don't want to talk politics.
Steve Kroft: Nobody wants to talk about p--
Male Voice: Where are you from?
Steve Kroft: The United States. What do you think of President Rouhani?
Male Voice: He's better. He's better. That's it.
People in Tehran are very careful about what they say, which makes it difficult to figure out what's going on...even for Iranians. While there is wide popular support for President Rouhani's policies of moderation and engagement, there is also subterranean opposition from hardline rivals who have benefited from the status quo including powerful forces that are either invisible or inaccessible to Westerners.
One of them is the Revolutionary Guard, Iran's elite military and security force that's charged with protecting the revolution from internal and external threats. But the guard is more than that -- it is a powerful political and economic force with tentacles in industries like construction, telecommunications, and banking.
They can be seen occasionally in uniform marching in patriotic parades. But the guard operates mostly in secret -- a shadowy brotherhood that, among other things, arms and trains Iran's proxy armies like Hezbollah in its fight against Israel. They do not give interviews to Western journalists, but they've been critical of Rouhani in the Iranian press. Other hardliners have held demonstrations that oppose any Iranian concessions in negotiations with the U.S. We asked Mohammad Nahavandian, the president's chief of staff about it and he answered very carefully.
Steve Kroft: The Revolutionary Guard is very much opposed to any kind of a deal. Opposed even to the negotiations. True?
Mohammad Nahavandian: I think that generalization is not correct.
Steve Kroft: My understanding is that this is not necessarily a smooth road for President Rouhani, in terms of mustering support on all the things that he wanted to do when he ran for office.
Mohammad Nahavandian: Isn't that the definition of a Democratic election?
Steve Kroft: That seems to be an acknowledgement that there are people here that are giving you a hard time.
Mohammad Nahavandian: The elected president is being-- accepted and supported by the Supreme Leader. So the whole system are supporting the elected president. And that is the case.
President Rouhani was elected to run the Iranian government, but it's his boss, the Supreme Leader Ayatollah Khamanei, who actually runs the country and has the last word. He doesn't give interviews to Western journalists either. But he has no problem communicating with his followers through state-run media and the local mosques.
If you want to know what's on the ayatollah's mind, and we did, you can go to places like Shahr-e-Rey a religiously conservative, working class suburb on the southern outskirts of Tehran. We were there during and after Friday prayers and our presence caused quite a stir.
Male voice: Where are you from?
Steve Kroft: We're from the United States.
Male voice: What?
Steve Kroft: From America.
Male voice: America?
Male voice: What's your country?
Steve Kroft: Hmm?
Male voice: What's your--
Male voice: America, America.
Male voice: America?
Steve Kroft: Yes.
Male voice: Oh my God. (laughter) It is--
Steve Kroft: What, you've never seen an American?
Male voice: No.
Male voice #2: No.
Steve Kroft: No?
Steve Kroft: We're journalists.
Word spread quickly and within a few minutes we were surrounded by a crowd of people eager to share three decades worth of pent-up feelings about the United States...as told to them by the supreme leader.
Elder man: Negotiating is good. But what is bad is that America is doing very bad things. After negotiating, Obama is telling-- the option of-- army is on the table. It is not-- is not a good thing.
Male voice: What we want is not to impose anything to us. Nothing should be imposed by the U.S. to us.
Male voice (for woman): This lady is also saying...that our supreme leader said to the government people that go and make peace-- make that agreement. But I'm not very optimistic about this U.S. policies.
We listened to their now familiar grievances, beginning in 1953 when a U.S. backed coup brought down a popular democratic government and replaced it with the dreaded shah...all the way into the 1980s and the bloody eight-year war with Iraq, in which the U.S. favored Saddam Hussein.
Mohammad Nahavandian: Starting from foreign policy, you cannot find friends in Iran. But if you start from economics, from technological cooperation, from academic relations, from cultural relations, there can be some common ground.
Steve Kroft: The people in the United States also have grievances. Certainly the hostage crisis, supporting some groups like Hezbollah that the U.S. considers to be terrorist groups, their refusal to acknowledge Israel's right for existence -- are all issues of importance to American foreign policy?
Mohammad Nahavandian: For so long, those points of disagreement has been the focus of all the attention. Of course there are some points of disagreement. You don't negotiate if you do not have disagreements. You negotiate to turn disagreements to agreements.
"Starting from foreign policy, you cannot find friends in Iran. But if you start from economics, from technological cooperation, from academic relations, from cultural relations, there can be some common ground."
Right now those disagreements are scattered across the desert hundreds of miles from Tehran, where for decades Iranians have been aggressively developing a nuclear program they insist is for peaceful purposes all the while acquiring the technology to enrich uranium to bomb grade quality.
Steve Kroft: There are people in the international community, and scientists in the United States who say, "There would only be one reason why Iran would have all these centrifuges and that would be to build a nuclear device."
Mohammad Nahavandian: It was not. For Iran, it was just another example of technological advancement.
Mohammad Nahavandian: When this was faced by military threats, people took it as an issue of national pride.
Scientific accomplishments are a huge part of Iran's self-image. In spite of its isolation, it has launched a satellite and cloned a goat. Just a few days ago, the ayatollah unveiled Iran's own copy of a U.S. surveillance drone. But, for whatever it's worth, no one we talked to in Tehran believes the country wants to build a nuclear bomb.
Translation: There are no nuclear weapons. Nuclear weapons are forbidden.
They say it's all spelled out on the ayatollah's website. But there's no shortage of skeptics which include Israel, Saudi Arabia, and members of Congress who would like very much to scuttle any deal.
Steve Kroft: This is a tricky negotiation.
Mohammad Nahavandian: Yes.
Steve Kroft: There is some political risk involved on both sides.
Mohammad Nahavandian: You are exactly right on that because for all these long years of distance, and not having a positive and constructive dialogue, there has been a lot of suspicion. So both sides, because of that suspicion, have a hard time convincing others. But that is the nature of diplomacy.
The White House has said there is only a 50/50 chance that the negotiations will succeed. But whatever happens this will be remembered as a moment of opportunity -- lost or seized - the first one in a long time and most people in Tehran seem ready to take the chance.