Sporting his usual smile and exuding confidence, Mahmoud Ahmadi-Nejad roused the crowd at one of several recent rallies with invocations of Iranian nationalism.

Tehran should not fear the US, declared the firebrand president, flanked in the capital’s Azadi square by large portraits of himself and of Ayatollah Ali Khamenei, Iran’s supreme leader. The occasion was the 28th anniversary of the Islamic Republic, dedicated this year to celebrating Iran’s right to nuclear energy.

The enemy was looking to inject fear and sow divisions among Iranians, he said. But it could not prevail against a “huge and powerful nation”.

As Mr Ahmadi-Nejad went on to list Iran’s many achievements, he received the standard chants of “death to Israel, death to America and death to Britain”. On this occasion, the crowds joined in with another slogan: “This is not Iraq, Afghanistan or even Lebanon – this is Iran.”

A leader best known abroad for his extremist views but seen by many at home as a man of the people, Mr Ahmadi-Nejad has been seeking to build domestic support for Iran’s nuclear programme while playing down the prospect of a confrontation with the US. He is said to give the same assured message of Iranian strength in private meetings.

Yet there is little doubt, in the minds of many ordinary people and within the political establishment, that the country is living in dangerous times. The president’s supporters share his conviction that the US is plotting to break Iran’s will and deprive it of its legitimate right to nuclear technology. As Mehdi Arian, a psychology student, says: “The troubles in the Middle East are because of the US and Israel. Ahmadi-Nejad is fighting for independence and self-reliance.”

But the president’s critics say his radicalism has intensified the international and regional opposition to Iran’s nuclear programme and worsened the crisis. “Even if the world has been unfair in trying to stop Iran from developing a nuclear programme, Ahmadi-Nejad’s policies have put us in this mess with his warmongering,” says Mehdi Amini-Zadeh, a young Iranian engineer.

Mohammad Khatami, the former president who had presented to the world the moderate face of Iran, is said to have conveyed to top leaders his grave concerns about US intentions on his return from last month’s World Economic Forum in Davos. Akbar Hashemi Rafsanjani, a powerful figure in Iranian politics and the head of the Expediency Council, an advisory body appointed by Ayatollah Khamenei, has warned against “foolhardy” domestic policies that could “provoke the enemy”.

Tensions with the US are nothing new for Iranians and there is little sense of crisis on the streets of Tehran. But a series of recent US moves have raised global concern that the stand-off could become a more direct collision.

While Washington has agreed to sit with Iran at a conference in Baghdad this month to discuss stabilising war-torn Iraq, this diplomatic step follows an intense wave of pressure. A second US aircraft carrier has just arrived in the Sea of Oman, in a move interpreted as a message to Iran. US forces seized five Iranian officials in the northern Iraqi city of Arbil last month. Then, in a presentation reminiscent of American claims about Iraq’s weapons of mass destruction prior to the invasion nearly four years ago, US military officials in Baghdad displayed armour-piercing explosives and other weaponry that they said had been manufactured in Iran and supplied to Iraqi Shia militias for attacks on US and Iraqi forces.

People close to the regime in Tehran say the Iranian military is on high alert. The Revolutionary Guards, an elite force, have meanwhile held a series of war games to test-fire missiles that can reach the Gulf and beyond, indicating the likely Iranian retaliation in case of an attack on Iran’s nuclear facilities.

On the nuclear front, Iran has been pushing ahead with its nuclear experiments, in defiance of international demands for a halt in uranium enrichment – the most sensitive part of the nuclear programme – and despite limited United Nations sanctions im­posed in December. Tehran missed yet another UN deadline to suspend uranium enrichment on February 21, leading world powers to begin consultations on tougher sanctions.

“It’s a managed psychological warfare on both sides now,” says Nasser Hadian, a professor of politics at Tehran University. “What I’m afraid of is that this managed situation gets out of control and an incident happens and ignites a war.”

Both Iran and the US, he says, are underestimating the power of the other side and overestimating their own. “Iran thinks it has a lot of deterrents, in Iraq and elsewhere, and in the armed forces – and it sees the US bogged down in Iraq, Washington divided and public opinion in the Muslim world opposed to war.”

The combination of Tehran’s nuclear ambitions and its growing influence in the region has magnified perceptions in Washington and in the Arab world of a looming Iranian threat. While Iranian officials consider Washington’s interventions in the Middle East as the most destabilising factor in the region – and indeed often invite the US to pack up and leave – the US and pro-western states such as Saudi Arabia and Egypt accuse Iran of sowing instability in Iraq and Lebanon and interfering in the Palestinian-Israeli conflict.

Iran’s resurgence in recent years was, ironically, fuelled in large part by the Iraq war. The US-led invasion replaced a hostile Ba’athist regime with an elected government dominated by Shia parties close to Tehran. Since then, Tehran’s objective in Iraq has been to ensure its allies consolidate their new-found power into a regime that is friendly to Iran without allowing the US to claim a victory out of the Iraq war.

Tehran has also strengthened alliances with radical groups elsewhere in the region and with Syria, another state under American pressure, forming a front that promotes policies at odds with those of the US and the pro-western Arabs. The July war between Lebanon’s Hizbollah, the Iranian-backed Shia group, and Israel, supported by the US (see below), increased the polarisation in the Middle East. The Shia group emerged declaring victory, boosting its popularity and that of Iran.

Since his 2005 election, Mr Ahmadi-Nejad has added a new dimension to Iran’s resurgence, gathering support for Tehran among Arab masses disillusioned by the perceived impotence of their own leaders. His extremist rhetoric – including questioning the Holocaust and calling on Palestinians to wipe Israel off the map – provokes international outrage and domestic embarrassment but it resonates on the Arab street.

On one level, Iran’s nuclear programme and its regional alliances are sources of protection to the regime, potentially helping it to deter or respond to a US assault. But the political debate in Tehran these days is whether the aggressive foreign policy is backfiring, leaving Iran vulnerable and more deeply isolated. “In some ways Iran is powerful – but people in the Arab world who like Ahmadi-Nejad can’t help Iran at the UN,” says Hamdi-Reza Jalaei-Pour, a sociology professor at Tehran University.

Moreover, Iran’s policies have bred a paranoid reaction among Sunni Arab neighbours, driving them even closer to America and prompting them to announce plans for nuclear energy programmes of their own.

“Our main problem isn’t Israel, it’s Saudi Arabia, which has turned into the main lobby against Iran,” says an Iranian politician with close ties to the regime. “In Lebanon, in Iraq, the Saudis, joined by Egypt and the United Arab Emirates, are in an anti-Iran front.”

Alarmingly for Iran, the stand-off has also inflamed Sunni-Shia tensions, with anti-Shia sentiment rising in the Arab world – Iranians say with support from Arab governments – where the community is a minority.

The US and leading Sunni Arab states appear to have launched a multi-pronged offensive to curb Iranian influence in the region. The Bush administration has been trying to dismantle the infrastructure of intelligence and support that Iran has allegedly built in Iraq. At the same time, it has ratcheted up the pressure on Iran over its nuclear programme, with unilateral financial sanctions.

Meanwhile Arab states, led by Saudi Arabia, have stepped up their support for Lebanon’s embattled government in its political confrontation with Hizbollah. Riyadh has also reclaimed a lead role in the Palestinian-Israeli conflict, a crisis that Arab officials claim Tehran has been trying to exploit. Riyadh brought warring Palestinian factions to the holy city of Mecca, where they agreed to form a national unity government.

The US-Arab push has raised the pressure on Mr Khamenei, as Iran’s ultimate decision-maker, to rein in Mr Ahmadi-Nejad. The regime has made clear it has no intention to suspend unconditionally its uranium enrichment programme. But in recent weeks it has intensified its contacts with Saudi Arabia, with Mr Ahmadi-Nejad holding talks with Saudi leaders at the weekend. Tehran has backed the Mecca agreement and sought to co-ordinate with Riyadh over the political crisis in Lebanon.

Whether these moves represent more than a tactical shift remains unclear. “The regime’s dilemma is that it wants to show itself as the leader of the anti-western front, but now it cannot go forward,” says Mr Jalaei-Pour. “And it went so far in terms of slogans, so how can it back down now?”

In Tehran, reformist and so-called “pragmatist conservative” politicians are hoping gradually to erode Mr Ahmadi-Nejad’s authority so that their more moderate voices regain influence on policy-making within the regime. The president’s standing has been shaken: his allies were defeated in December local elections. But no one is writing him off yet or suggesting his popularity has been severely diminished.

True, he has alienated large segments of the Iranian elite, including a business community that has been affected by US financial sanctions and a bureaucracy that has seen many of its members sacked by the new government. Even hardline members of parliament, a base of support for Mr Ahmadi-Nejad, have been criticising his economic policies.

But analysts say the president never cared much about the elite, developing a direct relationship with people on the basis of social and economic promises. “What can bring down Ahmadi-Nejad is his economic policy – I doubt he can deliver, so he will lose popularity,” says Prof Hadian. “Two years from now [when presidential elections are due] it will be different. People will ask, ‘Where are the policies?’ ” he adds.

Politicians in Tehran monitor the inflation rate as a pointer to popular discontent with the president. When Mr Ahmadi-Nejad claimed in late January that curbing inflation has been one of his government’s achievements, one MP interrupted him and cited the rising price of tomatoes. The president reacted by telling his interlocutor to buy tomatoes from his own, more humble neighbourhood in Tehran, where prices are lower.

The reformist media had a field day with investigative stories about the price of tomatoes, revealing that the cheaper produce in stores near the president’s house was of poor quality while the better tomatoes’ prices corresponded to the rates quoted by the MP.

Intense US pressure, however, could paradoxically come to Mr Ahmadi-Nejad’s rescue. “He’s not delivering on his [economic promises] but the best way to gain credibility and domestic legitimacy is to tell people the US doesn’t want you to have nuclear technology,” says a former government official.

Prof Jalaei-Pour says an attack on Iranian nuclear sites could be “a wedding” for the president. “New religious nationalism will emerge in Iran. It will set us back 10 years.”

America and Israel wary as war drums beat

For Israel and the US, maintaining pressure on Iran is a balancing act. While talking up the threat posed by the Islamic Republic’s government – the two allies are also trying to play down the likelihood of military action.

“As the president, Condi Rice and Bob Gates have said numerous times, we’re not looking for a pretext for war with Iran, nor do we desire war with Iran,” a White House spokesman told the Financial Times, responding to reports of alleged US attack plans to wipe out Iran’s military installations. US diplomats meanwhile insist the dispatch of a second US aircraft carrier group to the Gulf is intended to reinforce the diplomatic effort, not prepare for a widening of the Iraq conflict. Activities by Iran’s Revolutionary Guards in arming and aiding anti-American factions in Iraq will be dealt with inside Iraq, Washington officials say.

Democrats now in control of Congress are not persuaded, however. “The president does not have the authority to launch military action in Iran without first seeking congressional authorisation,” declared Harry Reid, Senate Democratic leader.

Legal experts say the White House has another view of executive power – that the president has the constitutional authority to respond to an attack on the US without congressional approval. Recent accusations levelled against Iran’s alleged actions in Iraq could be seen to justify a claim of self-defence under article 51 of the United Nations charter, says Tom Farer, dean of the graduate school of international studies at Denver University.

Although a large number of military analysts in the US argue that strikes against Iran’s scattered, buried and hidden nuclear facilities do not make sense and would most likely result in serious retaliation, they also concede that this might not stop President George W. Bush.

“The ‘making sense’ filter was not applied for over four years for Iraq and it is unlikely to be applied in evaluating whether to attack Iran,” Sam Gardiner, a retired Air Force colonel and planning expert, wrote for the Century Foundation, a think-tank. In fact, he says, military operations have already begun, citing reports that US and Israeli commandos started penetrating Iran in 2004 and that covert aid has been supplied to anti-regime militants.

That Iran heads up Washington’s list of international threats is due in part to Israel’s relentless diplomacy on the issue. The Islamic Republic has been at the top of Israel’s strategic agenda since long before the war in Iraq.

In recent months, however, the spectre of a nuclear Iran has turned these long-standing concerns into a national obsession. “It’s startling to talk to people who say they are actually losing sleep over when the Iranians will attack,” says one Israeli businessman.

In a country constantly attuned to the emergence of threats, the intention of Iran’s President Mahmoud Ahmadi-Nejad to “wipe Israel off the map” – whether or not his comments have been mistranslated or misinterpreted, as Tehran claims – are not easily dismissed. As the threat posed by the Palestinian uprising has receded, Israelis have turned their attention to external dangers, particularly after a Lebanon war that delivered a smarting blow to the concept of Israeli deterrence.

Support for an early pre-emptive strike against Iran has so far been confined to ex-generals and rightwing academics and was reflected in the hawkish tone of many of the presentations at this year’s Herzliya Conference, Israel’s annual forum for right-of-centre strategic analysis.

The government, however, shows no inclination to undertake unilateral action that would be militarily even more challenging than Israel’s successful strike on Iraq’s nuclear facility in 1981.

But it is facing increasing pressure from an Israeli right wing eager to capitalise on the weaknesses of a government undermined by the Lebanon war. Latching on to Mr Ahmadi-Nejad’s rhetoric and his hosting of a Holocaust-denial conference last year, Benjamin Netanyahu, Likud opposition leader, has accused the Iranian president of preparing a second Holocaust.

“It’s 1938 and Iran is Germany,” he told a Jewish audience in Los Angeles in November. Condoleezza Rice, US secretary of state, last month chastised Mr Netanyahu for his alarmism. Asked about his comments by Ha’aretz, the Israeli daily, she said: “I am fond of historical analogies, but not that fond.”

Ehud Olmert, Israel’s prime minister, has also been more measured, perhaps anxious not to raise public expectations of an Israeli unilateral first strike to liquidate the perceived Iranian menace. He insists Iran is an international concern and that world pressure is still capable of solving the crisis and avoiding military action.

He told foreign journalists recently: “My personal view is that the sanctions that were already applied and other measures taken by the international community, including financial measures, are effective.” He added: “I think that the Iranians are not as close to the technological threshold as they claim to be and, unfortunately, they are not as far as we would love them to be.”

Guy Dinmore and Harvey Morris

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