Power Play; Nearing a crucial election, a new group of pragmatic conservatives has emerged.

Byline: Babak Dehghanpisheh

This week marks the 25th anniversary of the Iranian revolution, when Ayatollah Ruhollah Khomeini orchestrated the fall of the monarchy and ushered in an Islamic regime. On the surface, Tehran is awash in revolutionary fervor. Colorful lights are strung between street lamps, and huge portraits of Khomeini and Supreme Leader Ayatollah Ali Khamenei adorn the fronts of many buildings.

But the capital is also filled with disillusionment and anger. Nearly 130 sitting parliamentarians resigned last week to protest the barring of more than 3,500 candidates from elections scheduled for Feb. 20. The leading reformist party is promising to boycott the elections. Khamenei is insisting that they be held as planned, and conservative candidates are expected to edge aside the reformists who have run the government since 1997. "Other countries in the region are moving toward democracy, but we're moving in the opposite direction--toward a religious monarchy," says Issa Saharkhiz, editor of the reformist magazine Aftab.

Iran's conservatives are not relying only upon electoral shenanigans to cement their hold on power. Until now the world has been mostly familiar with the more extreme face of the conservative camp, epitomized by the Guardian Council, responsible for scratching more-liberal candidates from the ballot, and by the likes of Ayatollah Ahmad Jannati, who regularly blasts protesting students as traitors and refuses any dialogue with the United States. Now, analysts say, a new movement of "can do" conservatives is rising to the fore. These men, who include former president Ali Akbar Hashemi Rafsanjani, hope to win over cynical Iranians by breaking the longstanding political deadlock, strengthening the country's ties to the rest of the world and, importantly, projecting concern about people's pocketbooks. "Many conservatives have openly adopted the China model. It has been mentioned in official speeches," says economist Sayeed Leylaz. "This model would allow for economic reform without budging on political issues."

The rising star of this conservative movement is Hassan Rowhani, a cleric who heads the Supreme National Security Council. Many believe he's being groomed as the next president. Rowhani, 55, led Iran's nuclear negotiations with European Union ministers last fall. He followed up that high-profile deal with a visit to Paris last month to discuss Iran's nuclear program with French President Jacques Chirac. Unlike reformist politicians, Rowhani, who holds a Ph.D. in law from Glasgow University, is trusted by Supreme Leader Khamenei, which allows him to negotiate with authority. "He's not a charmer--he's a dealer," says one Western diplomat in Tehran. "Rowhani and people like him prefer survival to ideology. They would be willing to deal or sacrifice some of the sacred cows of the revolution if they got the right price."

One possible result: a rapprochement with the United States. There have been some positive signs. Two weeks ago Mohammed Javad Zarif, Iran's ambassador to the United Nations, met with a half-dozen members of Congress to discuss regional issues. It was only the second time an Iranian diplomat had visited Washington since 1979. And last month Foreign Minister Kamal Kharrazi met with Sen. Joseph R. Biden in Davos, Switzerland. Neither of these meetings could have happened without a green light from conservatives at the top. "By negotiating with America we can decrease international pressure on ourselves," says Amir Mohebian, political editor for the conservative daily Resalat. "Chanting 'Death to America' is not a goal in itself."

Closer relations could have a wide- ranging impact. Iran has the fourth largest oil reserves, and second largest natural-gas reserves, in the world. But production is limited by old technology, lack of capital investment and few partnerships ...