Iran's dramatic shift to the right with the electoral victory of ultra-conservative Tehran mayor Mahmoud Ahmadinejad spells trouble for already tense nuclear negotiations with the EU and US governments.
Ahmadinejad roundly defeated his moderate challenger Rafsanjani
With Ahmadinejad as its new president, the Islamic regime is now expected to take a far more aggressive stance over its ambition to possess sensitive enrichment technology, analysts and diplomats said on Saturday.
While Ahmadinejad's victory has come as a shock, equally damaging to the prospects of the kind of deal Britain, France and Germany are seeking is the humiliating defeat and uncertain future for moderate cleric Akbar Hashemi Rafsanjani.
"I think Rafsanjani wanted a deal. Up to now he has been allowed to handle the issue, and I believe he truly wanted to go down in history as the man who solved the problem with the United States," a Western diplomat told AFP.
"He was using the nuclear issue as a bargaining chip. It would have taken a long time, but I think the chance was there."
Former Iranian president Akbar Hashemi Rafsanjani
But in the wake of such a stunning loss at the polls, Rafsanjani's ability to employ a moderating influence within the regime hierarchy -- and particularly with supreme leader Ayatollah Ali Khamenei -- looks in doubt.
"The right-wing now have total control. They are not necessarily the kind of people who want a deal," said the senior diplomat, speaking on condition that he not be named.
At the core of the nuclear issue is Iran's ambition to make its own nuclear fuel by enriching uranium, a process that can also be used to make the core of a nuclear bomb. Iran insists it only wants to generate electricity.
Iran has frozen its fuel cycle work and has entered into long-term talks with the EU-3, who are trying to convince Iran to abandon such activities altogether in a "Libya-style deal" that offers incentives in return.
Rafsanjani, an ex-president and savvy deal-maker, has stuck by Iran's suspension and by the talks -- as has his key loyalist and top negotiator Hassan Rowhani.
The president is only Iran's number-two on paper, and often lower than that in practice. But Ahmadinejad would bolster the ranks of right-wingers who argue that Iran has a "legitimate right" to press on with nuclear work and, more importantly, should do so regardless of the consequences.
Ahmadinejad has complained that "those who are handling the talks are terrified, and before they even sit down at the negotiating table they retreat 500 kilometers."
"A popular and fundamentalist government will quickly change that," he said last week, boasting that "no country, no matter how powerful they are, can attack Iran."
Foreign ministers from France, Britain and Germany have been involved in long-standing talks with Iranian officials aimed at avoiding an escalation of Tehran's standoff with the West on its nuclear program
European officials said the future direction of the talks was now uncertain, echoing French Foreign Minister Philippe Douste-Blazy's comment last week that Rafsanjani "has had a slightly more liberal attitude."
"Rafsanjani's defeat moves us into a very uncertain phase," said a European diplomat close to the talks.
"The talks were reaching something of a head anyway, but Rafsanjani was a known quantity. We were confident Iran was willing to make a deal if the price was right. I'm feeling a little pessimistic now," said the source.
Indeed, for Ahmadinejad, it should be Iran that calls the shots in the talks.
"We spend 30 billion dollars on imports, and this is an immense means of pressure in negotiations. It is we who should impose our conditions on them and not they on us. And if they do not accept our conditions, its simple -- we won't buy anything from them," he said in a campaign broadcast.
The next round of talks are scheduled for late July, when the Europeans are obliged to put forward a proposal for a deal but certain not to satisfy Iran's demands to resume enrichment.
Diplomats believe Iran's new regime will take time to "settle in", and when it has they say the crisis is likely to reach a new, more serious phase.
"Our position remains the same: No enrichment," said a European diplomat. "Otherwise this issue goes to the UN Security Council. The timing of this is entirely up to the Iranians."