A theocracy is a community or nation ruled by clerics or an established religious order. A defining characteristic of a theocracy is that the state and the state religion are the same thing - that is, the civic government is the same thing as the religious hierarchy. Generally speaking, the best examples of modern theocracies are Vatican city and iran, through the latter has at least some democratic characteristics. In the case of iran, is a de jure facto republic, but in reality, it is a de facto thecracy( Since the clerics actually occupy political posts and wield not just influence, but overwhelming power).
