The headquarters of the Islamic Revolutionary Guards Corps (IRGC) are in a European-style palace, replete with Greek columns and a grand staircase, in the eastern suburbs of Tehran. From here, the IRGC orchestrated the crackdown that followed Iran's disputed presidential vote in June, beating protestors on the street and torturing those behind bars. More ominously, the IGRC and other extreme hard-liners have sidelined fellow conservatives in the Iranian government, carving out their own power base in a regime that is becoming increasingly insular, reactionary, and violent.

So far, much of the analysis of the emerging Iranian power struggle has focused on the clash between the country's conservatives and reformers, pitting President Mahmoud Ahmadinejad and his patron, Supreme Leader Ayatollah Ali Khamenei, against Mir Hossein Mousavi and Mehdi Karroubi, two thwarted presidential candidates, and Mohammad Khatami, a former president. (Ali Akbar Hashemi Rafsanjani, a former president and seasoned kingmaker has eased toward the reformists in the election's aftermath.)

The real struggle, however, is the conflict among the hard-liners themselves, many of whom operate behind the headlines in unseen corners of the state machinery. Although Iran's opposition movement has witnessed an unprecedented surge in public support, the election and its aftermath mark a radicalization of the system not seen since the early days of the Islamic revolution.

In the reformist era of Khatami, and to some extent during Ahmadinejad's first term, the country's conservative theocrats and technocrats -- such as Ali Larijani, the speaker of the parliament, and Gholam-Hussein Mohseni-Ejei, the ousted intelligence minister who criticized the state's use of forced confessions -- held much of the power over the executive and legislative branches. Although they were entrenched status quo forces, these pragmatists believed in the dual nature of the Islamic Republic's statehood -- a country with religious and political legitimacy.

But now such figures are losing their influence to a new breed of second-generation revolutionaries from Iran's security apparatus known as "the New Right." They are joined in the emerging power structure by ultraconservative clerics and organizations such as the Alliance of Builders of Islamic Iran. These neo-fundamentalists call for the "re-Islamization" of the theocracy, but their true agenda is to block further reform to the political system in terms of reconciling with both domestic opponents and the West.

This coalition includes Hassan Taeb, the commander of the Basij, the paramilitary branch of the IRGC; Saeed Jalili, the secretary of Iran's National Security Council and the country's chief nuclear negotiator; and Mojtaba Khamenei, the supreme leader's second son, a man so feared that his name is not often uttered in public.

Hard-line figures such as the younger Khamenei and the IRGC leadership are granted religious legitimacy through the support of the most radical mullahs in the theocratic establishment: Ayatollah Ahmad Jannati, the head of the Guardian Council, the committee that certified the election tallies, and Ayatollah Mohammad Mesbah Yazdi, Ahmadinejad's spiritual adviser. Yazdi is affiliated with an underground messianic sect called the Hojjatieh Society, which hopes to quicken the coming of the apocalypse. Democratic reforms, the Majlis (parliament), and elections are mere annoyances under this radical Islamic worldview.

It is not surprising, then, that Yazdi issued a fatwa shortly before June 12 that gave authorities tacit approval to fudge the vote. Indeed, the clerics seem to have gotten the intended result: after the election, a number of employees at Iran's Interior Ministry released an open letter stating that "the election supervisors, who had become happy and energetic for having obtained the religious fatwa to use any trick for changing the votes, began immediately to develop plans for it."

Yazdi's influence on Ahmadinejad became pronounced in the early days of the president's first term, when Ahmadinejad declared that the return of the apocalyptic 12th imam would come within two years. Now, his second term will likely be marked by even more radical behavior: in a meeting with Yazdi in June to discuss his domestic agenda, Ahmadinejad promised to Islamize the country's educational and cultural systems, declaring that Iranians had not yet witnessed "true Islam." Then, in August, amid calls to purge reformist professors, a presidential panel began investigating university humanities curricula deemed to be "un-Islamic." Several progressive students told me that they have been barred from returning to campus this semester, including a top law student at Tehran University. "I was going to continue the protests with my law degree in a more effective manner," he said. "But now I am just a simple pedestrian."

But ideology remains secondary in the struggle to maintain and consolidate control within the fractured regime. It is becoming increasingly clear that Ahmadinejad and his associated faction of neo-fundamentalists no longer aim to take on the mantle of Ayatollah Ruhollah Khomeini's revolutionary ideals. As Khamenei's representative to the IRGC put it, "Some people are sticking to Imam Khomeini's ideas ... [but] the situation has changed." Accordingly, religion and revolutionary ideology have become convenient means to an end, but not the end themselves. Purges of un-Islamic faculty and students are meant to target the organizers of mass protests; the arrests and subsequent trials of political opponents, meanwhile, act to shield the financial interests of the IRGC and its hard-line partners.

The biggest prize is a number of state petrochemical contracts worth billions of dollars. During his presidency in the early 1990s, Rafsanjani steered oil development projects to family and friends. In 2005, Ahmadinejad defeated Rafsanjani and promised to take on the "oil mafia" -- but then loaded two-thirds of his cabinet with IRGC veterans, signed off on hundreds of no-bid construction and petrochemical contracts for IGRC-backed companies, and condoned the IRGC's proliferating smuggling networks, which net $12 billion a year, according to one Iranian lawmaker. A local market analyst told me that the IRGC functions like "a mafia." It uses free and low-cost labor, as well as an extensive intelligence apparatus, to undercut competing bids.

The resulting opacity and confusion have left many business and financial leaders in Iran unclear of how to navigate the new environment. "We don't know what they will do," one financial analyst told me recently. "Maybe they will stage a military coup and then open our doors like China, or maybe Pakistan," he speculated, referring to the Islamization of the Pakistani state under General Mohammad Zia ul-Haq's military rule from 1978 to 1988.

To his second-term cabinet, Ahmadinejad has appointed IRGC hard-liners to some of the most influential posts in government, such as the ministers of defense, intelligence, interior, and oil, which together not only control the country's energy industry but also domestic security.

Until recently, the IRGC was split between pragmatists and hard-liners. In 2001, three-quarters of the IRGC's 130,000 foot soldiers voted to reelect Khatami. At least one internal government poll before this summer's election showed that a "high percentage" of the IRGC's rank and file planned to vote for Mousavi. Four days before the election, the organization's weekly newspaper, the Sobhe Sadeq, warned of a "Velvet Green revolution" and promised that the IRGC would not allow the opposition to triumph. Then, immediately following the polls, IRGC commanders purged leaders who were sympathetic to the reformists, leaving a united bloc of hard-liners whose views lie at the extreme right.

These new players are wasting little time in attempting to consolidate power. In early August, Yadollah Javani, the head of the IGRC's political bureau, called for the arrest of the opposition leaders. "What is the role of Khatami, Mousavi, and Karroubi in this coup?" he asked. "If they are the main agents, which is the case, judiciary and security officials should go after them, arrest them, try them, and punish them." Such a move may not be far off: in early September, security forces raided offices connected to Mousavi and Karroubi and arrested three of their top aides. The same week, Khamenei warned during a Friday sermon that further attacks by the reformist leadership would be met with a "harsh response." (According to Rafsanjani, Khamenei already issued an arrest warrant for Karroubi in late August.)

If the neo-fundamentalist bloc is able to further concentrate its power, it will not only bode ill for the beleaguered domestic opposition but also dash any hope of an international resolution to Iran's nuclear weapons program. "The nuclear question is finished," Ahmadinejad said earlier this month. "We will not negotiate over Iran's undeniable rights." Eroded legitimacy at home means the ruling hard-liners have little room to budge on a compromise over halting fuel production, for fear of alienating a power base that depends on continued pariah status to feed its clandestine business interests. As such, U.S. administration officials indicated that they have extremely low expectations going into the October 1 meeting with their Iranian counterparts.

For now, the neo-fundamentalists seem to have settled on the tactic of intimidate and escalate. Last month, the regime put French and British diplomatic staff on trial in Tehran, in addition to bringing charges against a Canadian-Iranian Newsweek journalist and an Iranian-American academic. Ahmadinejad has defiantly declared, "We welcome sanctions" -- a signal to reconciliatory elements within the conservative camp that he and the hard-liners will not back down in the face of opposition. In any case, the neo-fundamentalists do not seem eager to jeopardize their near monopoly of the black market by reconciling with the West, particularly when China and Russia continue to extend an open hand in business.

Many of my colleagues in Tehran are preparing for a winter of confrontation. "Iranians have been living through these conditions since the Iran-Iraq war, when everything -- food, oil, clothes -- were rationed," one coworker told me. But this time, the regime must contend with an embattled opposition that is backed by mass popular support. As the last few months have proven, it is a movement that cannot be easily bullied into submission.

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