This timeline assumes that Saddam Hussein did not invade Kuwait and as a result, Iraq and many other Middle Eastern and Central Asian nations acquired nuclear weapons, and tensions developed between these new nuclear powers.
1 January 1998: The reformist leader of Iran, Mohammed Khatami, is killed when the plane he is flying in is shot down by a shoulder launched surface to air missile. The army and the Council of Guardians declare a state of emergency and seize power. Large scale demonstrations break out in parts of the country.
2 January 1998: Large numbers of Iranian troops cross the Iran-Iraq border and begin attacking Iraqi military bases and forces. The defending Iraqi forces use chemical weapons on the attacking Iranians, inflicting heavy casualties, causing the Iranians to retaliate in kind. Neither side is capable of gaining an upper hand in the fighting.
3 January 1998: The front line stabilizes as the Iraqis manage to push back the Iranians to the December 31 boundaries, more or less. The Iranian air force manages to gain something of an upper hand over its Iraqi rival. Casualties so far are around 30-60000 total.
4 January 1998: Iran uses a crude tactical nuclear device on a massing Iraqi offensive. In retaliation, Iraq uses several tactical devices of its own, accompanied by copious amounts of chemical weapons. Before the day is over, some six weapons have been used and more than 400000 have died.
5 January 1998: At 0612 local time, Iraq launches a pre-emptive strike on Iraq, firing 180 out of 251 missiles at Iran. The launch is soon detected, and at 617 local time, Iran launches all 243 of its nuclear missiles at various targets. With the Iranian armies, which are basically a giant rampaging horde, pouring over the border after having had overwhelmed the depleted Iraqi Army. It is a case of mutual assured destruction. At 0618 local time, Baghdad is hit in rapid succesion by three 80 kiloton warheads. The strike completely levels most of the city, killing a good deal of the population outright. Baiji, Baquba, Basra, Nuhadra, Al Diwaniyah, Fallujah, Al Hillah, Karbala, Kirkuk, Kut, Iskandrya, Mosul, Najaf, Nassiriya, Samawah, Samarra, Ar Ramadi, Ar Rutba, As Sulaymaniyah, Tikrit and Um Qasr are all hit, destroying most of Iraq's population and industrial capacity. Since most of these bombs are designed to be extra dirty, most of Iraq will be uninhabitable for years to come. At 623 local time, Iraqi missiles begin arriving over Iranian targets. Tehran is hit with five eighty kiloton warheads, wiping it off the map and killing more than twelve million people. Tabriz, Qom, Kermanshah, Dezful, Ahvaz, Bandar-e Eman Khoymeni, Abadan, Bushehr, Bandar Abbas, Chabahar, Zahedan, Kerman, Yazd, Esfahan, Masshad, and Birjand are all hit. With most of the population of both countries dead and with central government gone, things collapse pretty quickly. In an absence of central government, the Kurdish minorities in both governments take the opportunity to revolt, fighting with other various ethnic groups. Large numbers of refugees begin moving outwards in all directions, fleeing into Kuwait, Saudi Arabia, Afghanistan, Azeribaijan, Armenia, Turkey, Turkmenistan, and Pakistan. Medical care facilites are overwhelmed in both countries and plagues erupt among the survivors. Many people are dead from radiation sickness, and many more are dying. The final population of the region is 18442282 people, barely a fifth of the prewar total. Oil prices will not return to 1997 levels until 2006.