In Iran, an Islamic theocracy, Christians and Jews occupy an unusual place. But it's not necessarily uncomfortable.

TEHRAN -- From the choir loft, a haunting aria rises and falls through an air thick with ceremony and incense. At the altar, candles illuminate a large painting of the Madonna and Child. It is nearly midnight on New Year's Eve, yet it is standing room only at St. Sarkis Church in downtown Tehran.

Here some of the faithful from an estimated population of 100,000 Armenian Christians in Iran come to celebrate the end of one year and the beginning of the next.

Images of Iran's Armenian Christian community.

Images of Iran's Jewish community.

Armenian Bishop Sebouh Sarkissian sees his people as Iranian citizens, not a religious minority.

Iran's Armenian Christians party the night away on New Year's Eve.

A New Year's Eve Christian church service in Iran.

The Armenians say they've been in Iran for hundreds of years. Many were brought by force, enslaved by Persian ruler Agha Mohammad Khan during his wars in the Caucasus.

But now many claim Iran as their own.

"We identify ourselves with Iranian society and nationality because Armenians have been living here for centuries and centuries," says Bishop Sebouh Sarkissian of the Archdiocese of Tehran. "Sometimes they call us religious minorities -- a word I've never liked, even hated, because we are not a religious minority. We are citizens of this country."

Citizens who, some say, have more privileges under the Islamic government than even Iranian Muslims.

In the Armenian Club near the church, a more festive New Year's celebration is under way. Dozens of couples twirl around the floor, their hands held high in the traditional style of Armenian dance, with live music performed by a band brought in from Armenia specifically for the occasion.

One man tells me, pouring a glass of Johnny Walker Red whisky over ice, "We have more freedoms than even the Muslims. They would never be able to do this."

Christians are allowed to have alcohol in their homes and sometimes for holiday celebrations, but for the Muslim population it's strictly forbidden.

Others at the party agree, saying they don't face discrimination in Iran and can even travel more freely, usually to Armenia and to the United States.

One woman is more circumspect about life for Armenians in Iran. "We have a little hole here in Iran," she says, "but we're very good at filling it with happiness."
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Iran also has a Jewish minority, which at its peak numbered about 80,000. Shortly after the Islamic Revolution, many immigrated to the U.S. and some to
Israel, leaving a community of about 25,000 today.

Still, it is the largest Jewish community in the Middle East, outside of Israel.

At the Jewish Community Center in Tehran, Dr. Unes Hammai-Lalehzar says the Jewish population has had its ups and downs, but he doesn't believe there's any discrimination from the general public.

I ask him about the yarmulke he's wearing and if he is comfortable wearing it in public.

"Most people here don't even know what this signifies," he laughs. "No, it's not a problem."

But I ask him if there's been any change in the climate since Iranian President Mahmoud Ahmadinejad's recent remarks both questioning the Holocaust and calling for Israel to be "wiped off the map."

He's clearly uncomfortable with the topic and says my questions are getting political. But I press him on it.

"As far as daily life goes here, there hasn't been an impact on us," he says, "We don't see any difference in our lives. But maybe others feel differently."

He continues, saying the Iranian government has made a clear effort to distinguish between Zionism and Judaism.

"Zionism is a political party that enjoys Jewish symbols and ideals, but it's not the same thing," he says. "The law that is being enforced in Israel is not Jewish law, it's not religious, its anti-religious."

In the nearby synagogue, David Zakaria, who owns a rubber factory, agrees.

"His comments were directed more to Israel as a political entity," he says of President Ahmadinejad. "I'm connected to Israel religiously, it's the Holy Land, but not politically."

But even with that religious connection, Iranian Jews, along with the rest of the population, are not permitted to travel to Israel.

And while they say they don't face discrimination from their fellow Iranians, Jews here can't be considered for jobs as teachers, unless they are teaching members of their own community. Government jobs, even junior level positions, are also off limits.

At least on the surface, the dominant Shia Muslim population seems, if anything, curious about their countrymen in the religious minority.

Back at St. Sarkis Church on New Year's, Muslims Bahrehman Shaker and Jawad Dae-Zadeh have both brought their families, 20 people in all, to witness the Christian celebration, even though they don't know anyone in the Armenian community.

"We just wanted to see," says Shaker. "We've been to [Christian] New Year's before in Australia with fireworks, but this is very different."

"We want to share their happiness," says Dae-Zadeh, "and congratulate them on their Christmas."