The United States has begun a $75-million program to promote democracy by supporting Iranian nongovernmental organizations (NGOs). That program, coupled with loose talk about regime change from members of Congress, commentators close to the administration, and individuals within the administration, has fed a sense of vulnerability and paranoia among elements of Iran's ruling regime. Those elements believe that the United States, entangled in Iraq and Afghanistan, is no longer capable of a military intervention in Iran. Rather, they believe, it is seeking to overthrow the regime through a "velvet revolution," similar to the peaceful revolutions that brought about regime change in Ukraine, Georgia, and other former republics of the Soviet Union. The Iranian Intelligence Ministry is dedicated to uncovering a comparable "plot" for "soft" revolution in Iran and producing evidence of it for both senior government officials and the larger public. In the ministry's version of reality, American and European think tanks, foundations, and universities, and their proxies in the region, play the principal role in promoting what is, at bottom, a policy of the U.S. government. Iranian scholars and NGO activists are lured abroad with fellowships, research grants, and university appointments, and then put in touch with American and European policy makers, members of intelligence agencies, and democracy activists. That line of thinking explains official Iranian suspicion of the grant-giving programs of American foundations, universities, and think tanks. From the perspective of Tehran, the transparency of those foreign organizations, along with the presence on their staffs of members of former--and future--U.S. administrations, merely reinforces the conviction that there is a hidden agenda: The institutions are closely linked to the U.S. government and carry out its policies. In this article, the authors discuss the limited ability of the United States to spur liberalization within Iran and argue that its efforts to do so only aid the calculating and paranoid forces of repression.