The spines of Western leaders shivered following the election of Tehran's mayor, hardliner Mahmoud Ahmadinejad, as Iran's next president. And for good reason. Ahmadinejad's resume and rhetoric are not pretty. He was a member of the ideological Revolutionary Guards and of the paramilitary Basij. He is a leader of the Abadgaran (Developers) movement, comprised of younger hardliners who feel that their elders have lost their revolutionary fervor. In keeping with someone who looks back to the early 1980s as the golden age of the Islamic revolution, the new president celebrates the revolutionary ideals of the Khomeini era and ardently criticizes the United States.

The election stunned and alarmed the West, which had counted on the more pragmatic "wheeler-dealer" Hashemi Rafsanjani to win and invigorate negotiations with the West over Iran's nuclear program. In response, U.S. policy has already stiffened. Secretary of Defense Donald Rumsfeld has commented disparagingly on Ahmadinejad's track record, while the Europeans are gloomy about the future of negotiations on the nuclear issue, as no compromise is in sight. We are approaching an abyss.

So it is the time to step back, take stock of today's Iran and make well-informed decisions. Americans know too little about how Iranians think or about political and economic realities in that country. Many academics and policymakers alike are ill acquainted with the central beliefs among the Iranian elite on the nuclear issue and with the key realities on the ground as the Iranian policymaking community sees them.

Now is not the time to rely on ideologues--be they neoconservatives or liberal-democracy devotees--or for them to substitute their beliefs about Iran in place of the facts on the ground. Given our experience in Iraq, now is certainly not the time to rely on "our Iranians" for "inside information" as to what is happening there.

This article, in contrast, is based on discussions held in Tehran with top Iranian leaders, including leading conservatives and key members of the Supreme National Security Council. It also relies on meetings with politically connected academics whose views span the spectrum. Finally, the analysis draws on many discussions with average Iranians from many backgrounds. Accurately reporting what they are saying does not constitute endorsement, but no responsible U.S. policymaker should be charting a course of action vis-Ã -vis Iran without at least taking into account what is being said--and what is believed--by his opposite numbers in Tehran.

Based on these observations, I believe--in contrast to what others are saying--that Iran is stable and that Supreme Leader Ayatollah Ali Khamenei has consolidated his power. If that is the case, the current deadlock is increasingly likely to become a U.S.-Iranian confrontation. As a result, Washington should pursue a better-informed policy and not throw in the towel on diplomacy unless Tehran forces it to do so.

Iranian Realities

Iran has many power centers, including the presidency, the Majlis, the Guardian Council, the Expediency Council, the Revolutionary Guards, the judiciary and others. Supreme Leader Khamenei was always the primus inter pares, and he especially has had the final word on nuclear and foreign policy matters. He has now brought wayward institutions, including the presidency when it was held by reformist Mohamed Khatami, into line. Ahmadinejad is above all else loyal to the leader.

The president-elect will surely offer very hard-line security policy advice, stressing more aggressive policies and tougher negotiating tactics. The views of his new, conservative team will be buttressed by their close connection to the security services. But any Iranian president, including Ahmadinejad, is constrained by a complex, crowded and consensual foreign policy decision-making process. He is a foreign policy and bureaucratic novice and is not in a position to dominate the foreign policy establishment. Moreover, the mayor won on a populist economic platform that appealed to the poor; foreign policy does not appear to have been a prominent issue, and his mandate does not extend to this field.

In any event, U.S. policy should focus not on one individual but instead on the views of the Iranian elite, especially the supreme leader. Khamenei has a hard-line track record but is also viewed by Iranians as a balancer among different factions and institutions. On nuclear and foreign policy issues, he has a wide range of advisors, including traditional and more pragmatic conservatives such as former Deputy Foreign Minister Ali Akbar Velayati, Commander of the Army Hassan Firouzabadi, chief for relations with Islamic countries Ali Taskhiri and Secretary of the Supreme National Security Council Hassan Rowhani.

So the first reality is this: Yes, the Ahmadinejad team will be more hard-line than Khatami's--but fundamental change in Iranian foreign policy is unlikely.

Washington talking heads must also confront two other Iranian realities that clash with their cherished assumptions about Iran. First, the Iranian economy is not "near collapse." Certainly, the economy has shown a mixed performance, but for the past five years Iran has experienced growth at 5.5 percent per year.1 GDP per capita has doubled over the past five years, buttressed by record oil prices that will likely remain high. Iran may not be a booming petro-state, but it has a $10 billion stabilization fund and other off-budget funds at its disposal to deal with potential bumps in the road.

U.S. sanctions have hurt, but the regime has used second-tier technology from the east (China, India and Malaysia) to help meet the admittedly low consumer expectations of the populace. Automobile production has sextupled over the past five years. A second generation of Islamic Republic managers has emerged and is more efficient than its predecessor. The youth bulge is a threat, but not as dire as sometimes rendered; Tehran is creating about half of the 800,000 new jobs needed per year. Underemployment, a lesser evil, is as much the problem as unemployment. Ahmadinejad promised to tackle corruption; the problem is entrenched, but he may make some progress.

Structural economic problems are indeed serious. Iran's oil production is flat and will likely drop under Ahmadinejad's populist, foreign-investor-unfriendly approach. Inflation and the deficit are high, corruption is currently rampant, privatization is halting, wasteful subsidies impair efficiency, the private sector is small and high bureaucratic barriers deter new market entrants. The central point, though, is that Iran's economy has a substantial capacity to muddle through.

The second piece of unwelcome news to some in Washington is that Iran is not ripe for revolution. There is no "man in the street", no mass movement with which the United States can side. In the recent elections, turnout was over 60 percent, showing that voters want evolutionary change. Ahmadinejad's victory also indicated that for most ordinary Iranians, economic improvement, not political reform, is the paramount issue.

The democracy movement is dormant and, according to its own members, will remain so for the foreseeable future. Indeed, the movement began to lose steam after Khatami did not stand up to hardliners during the 1999 student protests; the undelivered promises of the Khatami Administration thoroughly dispirited the rank and file. Political apathy is ensconced among the middle class today, while the remaining activists have lost touch with the grassroots. Iran is not Ukraine on the eve of the Orange Revolution, with a mobilized, mass-based opposition.

The fantasy that the Islamic Republic will fold under determined U.S. pressure (just as Castro's government is perpetually "on the verge of collapse") is just that--fantasy. While many Iranians may be disillusioned with the mullahs, they are not going to rise up or accept regime change from the outside. Average Iranians, from cab drivers to hotel workers, emphasized that most Iranians are extremely nationalistic. Some despise the current regime for its corruption and repression, but a military attack will rally them around the government. Many Iranians estimated that one-third of the adult population--roughly 13 million people--would fight if Iran were invaded by the United States.

Iranian Beliefs

Any visitor to Tehran cannot help but notice the intense craving for international respect on the part of the Iranian elite. Across the political spectrum, Iran's policymakers want the United States to acknowledge that Iran is a regional great power in the Middle East. Iran's leaders believe that the great powers deny Tehran its rightful role in the region and the world; Ahmadinejad himself has stressed that the world must deal with Iran as an equal. The "face factor", a historic concern of Middle Eastern powers, is a key issue for Tehran.

Iranian leaders also feel a sense of victimization.2 The Iran-Iraq War was a formative experience for Ahmadinejad and the Abadgaran movement. International treaties banning the use of chemical weapons did not protect Iran from Saddam's gas attacks. Indeed, Washington openly supported Iraq while the U.S.-backed Gulf states poured in funds--facts remembered by Ahmadinejad and his generation. U.S. sanctions, even if warranted, have reinforced the sense of victimization. In addition, Iranian elites believe that throughout the modern era Iran has been manipulated by the West; the overthrow of nationalist Prime Minister Mossadeq in 1953 by the CIA and restoration of a repressive shah is not "ancient history" as far as they are concerned.