Media commentary on the Iranian Presidential election continues. It is sour but it adds little to the fact on the ground which is that the street protest is over. Ahmedinejad has been confirmed as President which is much as we predicted would happen at the beginning.

The main theme of the commentary, as much in hope as from any rational assessment of the facts, is that the regime faces a crisis of legitimacy and that power struggles within the system will persist for some time to come.

It would be more accurate to say that the regime is facing a challenge to its legitimacy which may or may not be legitimate in itself. In response, the Iranian opposition is moving into a new phase, circling the wagons against repression with an attempt at unity.

Similar calls declaring the illegitimacy of the Ahmedinejad Government were issued by Moussavi, Karroubi (the second ‘reformist’ candidate) and the largest reformist party Mosharekat.

We are getting to that point where we will see either a new and vigorous reformist movement operating within the system or a direct threat to the regime being suppressed because it insists on challenging the system at its very core.

The EU’s brinkmanship with Iran continues. A (wobbly) deadline of this weekend was set for the withdrawal of its Ambassadors from Tehran if four local employees of the British Embassy were not released. These employees are being released but at the convenience and on the terms of Tehran.

As for a forthcoming G8 Statement, the signals are that the members are unlikely to condemn Iran for vote-rigging (there is simply no hard evidence of this). Any criticism is likely to be of the regime’s crackdown - an interference by very definition in the internal affairs of another sovereign State.

As might be expected, the Iranians are also toughening their stance on the nuclear issue, indicating the exclusion of the EU from talks and so placing the onus on the US to maintain its engagement.

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The Guardian Council has finally confirmed Mahmoud Ahmedinejad as the victor in the June 12th election. He will be President for a second term. The security forces, including the Basij, were on high alert.

The propaganda war between the two sides continues but the protests are virtually over, thanks to a firm crackdown by the regime. The bulk of the Western media remains firmly positioned on the side of the reformers.

Moussavi continued to try to keep his campaign for a re-run of the election going to the bitter end but it was steadily being contained. The reward for his persistence may now be some form of legal action against him and his supporters.

The diplomatic centre of attention is the arrest of nine (five were later released) Iranians who worked at the British Embassy. This was condemned by all 27 nations of the EU at the Foreign Ministers Summit in Corfu with a warning that they would respond firmly to any ‘harassment or intimidation’ of their staff.

The EU governments then warned Iran that they could recall their ambassadors and implicitly threatened sanctions if the remaining four British embassy Iranians were not released.

Analysts are becoming increasingly pessimistic about Obama’s strategy of engagement and see some serious re-thinking going on in Washington in due course.

The US continues to keep open the door to talks with Iran in Paris, but the room for manouevre must have been limited by Sarkozy’s aggressive comments on the regime. The European allies (the US is not in a position to go it alone on this matter) have been far more ‘hawkish’ than Washington.

The stakes are now very high, if only because the narrative (true or false) of Western intervention increases the chances of Iran deciding to defy both the West and Israeli threats and just going for its bomb.

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Pushing the fevered fantasies of Western reporters to one side, Iran’s domestic crisis may be simmering but the boiling point has now passed – rooftop protests are continuing in pro-reform areas but the momentum for protest is diminishing, leaving behind it sullen resentment on the losing side.

The persistence of Moussavi is emotionally understandable but it raises the risk of a ‘white terror’ (including the death penalty for ‘plotters’) that would effectively end any talks with the liberal West for perhaps half a decade. The regime now merely says, ‘bring it on!’.

A Cooling Off Period

In the international arena, the effect of the crisis has been to create an instant ‘cooling off’ period on talks between the US and Iran. The officials on both sides want talks but the US needs to see that it is not dealing with a country engaged in a brutal revenge on its dissidents.

The Iranians, on the contrary, want to see some signs that the West has ended its failed strategy of actively encouraging domestic resistance to the regime. Neither side is likely to get what it wants which raises the risks of regional conflagration by several percentage points.

Since the rest of the international community wants talks as well, countries like Russia are beginning to imply that a ‘white terror’ would not be helpful. But Obama is stuck on the merry-go-round of American street expectations. His language had to harden regardless of all diplomatic common sense.

It is as if he knows he must be as offensive as he can with Iran now in order to earn political capital for talks that may take place much later than he had hoped. His extended honeymoon with the American people may not, in any case, last too much longer for unrelated domestic reasons.

The G8 is also united in its condemnation of Iran’s handling of what the regime saw as an internal coup attempt. The G8 seems equally united on driving negotiations on the nuclear issue ever harder. But everyone is now talking dangerously big.

Russia will have joined the condemnation, which they undoubtedly moderated a little, in order to maintain its position within the G8 as Iran’s best friend. However, Khamenei and Ahmedinejad may be in no mood either to be bullied or to negotiate.

The Palestine Peace Process (central to attempts by the West to reduce anti-Western feelings in the Arab street and to wider political and economic stability) is a tough enough play as it is.

Now, the pro-Iranian bloc (Syria, Hezbollah and Hamas) are highly nervous about the stability of their patron. They could either begin to wobble in the West’s direction or become very much more hard line as Ahmedinejad consolidates what appears to be a domestic victory in the months to come.

A Dangerous Time

This is a very serious international crisis. We have a recalcitrant Israel that is quite prepared to mount a direct inflammatory attack on Iran. The re-insertion of Western popular support for democratic politics into the region will unnerve many conservative Arab allies as to where such support may lead.

The Iranian regime is resentful and possibly a bit paranoid, less likely to be helpful on Iraq and Afghanistan where, in fact, Iran and the West have common interests.

For months now, Iraq and Iran have appeared to go their separate ways but the interconnection between the two countries may create new problems for the US.

The US is committed to withdrawal to its out-of-town bases and to the hand-over of control of the urban areas to the Iraqi Government during this coming week. Unfortunately, a determined element has mounted a wave of vicious suicide bombs that seem designed to anger the Shia into eventual revolt.

New rules on US military conduct (including the restriction that mine-resistant armoured vehicles may only be used in urban areas during the day) are raising worries within the US military that, for political reasons, it and the civilian population that it has protected to date are being placed at risk.

There is a profound pessimism setting in, not about the survival of the Iraqi state (which seems secure enough) but about the level of urban and civil bloodshed likely in the coming months. This is not the time to have Iran unco-operative ...

Altogether, this may seem a low point for Iran. It is apparently internally divided with an enemy within. The Lebanese election did not provide a breakthrough for Hezbollah and there is growing ‘soft power’ pressure on Damascus and Ramallah from the West.

Yet the regime was not over-turned, despite best efforts from a section of its own elite backed by the middle classes in the capital city and with immense foreign ‘soft power’ support.

The regime’s reactions from this point on are unknowable. We can expect that it will seek to consolidate its power within the country by any means necessary. This might require a bit of brutality, if only to demonstrate strength of purpose against Moussavi’s increasingly futile but persistent campaigning.

The West, under popular liberal pressure, may have lost its ability to control what happens next because it has presented itself as a determined enemy of Islamic democratic values (at least as the regime sees things).

In praising Moussavi openly, Obama has effectively challenged the Supreme Leader’s judgement just as the pro-reformers within Iran have grasped the nettle and positioned themselves as part of the liberal wave that has flowed out from Washington since the Reagan era.

This now turns a diplomatic dialogue between nation states back into a culture war. It becomes a 'reasonable' option for Iran to take up the challenge and export revolution again - and for the West to try and squeeze it dry and turn a blind eye to military action by its own radical elements.

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