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British Embassy row: Why Iran's hard-liners are inviting isolation

A senior cleric called Friday for British Embassy employees to be tried for allegedly inciting mass protests. The move signals a heightened effort to portray recent unrest as a foreign plot.

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"If you proceed the way [Supreme Leader Ayatollah Ali] Khamenei and Ahmadinejad have proceeded, then gradual change through the ballot box cannot occur," says Parsi. "If they don't have that minimum level of credibility, the social contract has collapsed, leaving ruling by force their only option."

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The real crisis: Undermining of theocracy's moral power

When the 1979 Islamic Revolution deposed the shah, Ayatollah Ruhollah Khomeini and his followers came to power draped in a rhetoric of Islamic justice and legitimacy that promised to restore the rule of law with an Islamic bent.

That seemed a fair deal to millions of Iranians at the time, even among those who would have preferred a secular government but saw the revolution as an improvement over a monarch's arbitrary will.

But now, with the entire electoral process distrusted by many Iranians, and with tales of young protesters detained and tortured for their political views, the Islamic revolution itself – and not outside powers – may have engineered the greatest crisis for its authority in 30 years.

"The profound, great crisis of legitimacy for Iran's theocracy is not people jumping up and down calling for fair elections, it's the undermining of the theocracy's main claim: its moral power," says Babak Rahimi, an Iranian-American professor at the University of California San Diego. "In a lot of people's minds, the regime has been shown to be just another worldly power ... that is no longer divinely ordained."

Why hard-liners see Mousavi as a threat

The principal challenger to Ahmadinejad in the June 12 election was Mir Hossein Mousavi, a former prime minister and loyalist of the late Ayatollah Khomeini who favors more engagement with the West and a more open economy and political system.

But he is also a staunch nationalist often praised for his leadership during Iran's war with Iraq in the 1980s. He has said he would not support abandoning Iran's nuclear power program, and has promised that he wouldn't consider peace with Israel or withdrawing support for "resistance" groups like Hezbollah and Hamas.

The fact that his views aren't exactly radical in the context of domestic Iranian politics has raised the question of why hard-liners, particularly Supreme Leader Ayatollah Ali Khameini, appear so threatened by Mousavi and his supporters.

Parsi says part of the answer lies in the fact that Khameini and his allies view the United States an implacable threat to the Islamic Republic, and that only they have the fortitude to negotiate with the US.

"I think they started to realize that Mousavi was the winner, and they realized there was an opportunity to make one big change in foreign policy, which was to make up with the US and negotiate. And they did not want the other faction to be in control of that process or receive credit for it," he says. "In the past, when they've made decisions of this magnitude, they've eliminated the opposition. You saw Khomeini ordering mass executions in Evin just days before announcing peace with Iraq" in 1988.