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Around Khamenei's neck yesterday was the simple plaid kerchief worn by the Revolutionary Guard Corps, the military organization that, unlike the regular army, reports directly to the supreme leader.

Khamenei, now 69, was the overwhelming choice of a conservative clerical establishment that -- with his white beard, black turban and name just a few vowels away from his mentor's -- he tends to blend right into. Only a mid-ranking cleric at the time of his selection, Khamenei was immediately promoted to ayatollah. That move, analysts say, was immensely significant, instantly introducing practical politics into a religious hierarchy grounded for centuries exclusively in scholarship

President Mahmoud Ahmadinejad, who sat cross-legged in the front row at prayers yesterday, emerged from both the Revolutionary Guards and the Basij, the largely working-class, volunteer organization that is part paramilitary, part social welfare. Khamenei has nurtured both groups as constituencies and instruments of social control independent of the clergy. "Khamenei depends on them almost entirely,'' Sick said of the Basiji. "He is in no position to contradict them or take exception to their wishes. They are very conservative and want to protect the system as it is."

Ali Akbar Hashemi Rafsanjani, two-time president of Iran, current head of two major councils and, not least, the cleric historians say worked hardest to ensure that Khamenei succeeded Khomeini

Rafsanjani's absence from "possibly the most important speech by any top leader in the past 30 years strikes me as really significant."

Speaking to a large crowd in the holy city of Mashhad, Ayatollah Khamenei said Iran had "no experience with the new American government and the new American president". One gesture the US administration could make would be to ease some sanctions on passenger aeroplanes and spare parts Cyrus, Tehran Iran views: Obama message "We will observe them and we will judge," he said. "If you change your attitude, we will change our attitude." In the speech, which was carried live by Iranian television, he said Iran was yet to see such a change. "What is the change in your policy?" he asked.

Speaking to a large crowd in the holy city of Mashhad, Ayatollah Khamenei said Iran had "no experience with the new American government and the new American president".

Speaking to a large crowd in the holy city of Mashhad, Ayatollah Khamenei said Iran had "no experience with the new American government and the new American president". One gesture the US administration could make would be to ease some sanctions on passenger aeroplanes and spare parts Cyrus, Tehran Iran views: Obama message "We will observe them and we will judge," he said. "If you change your attitude, we will change our attitude." In the speech, which was carried live by Iranian television, he said Iran was yet to see such a change. "What is the change in your policy?" he asked. "Did you remove the sanctions? Did you stop supporting the Zionist regime? Tell us what you have changed. Change only in words is not enough."

"It's a wrong impression that by using street protests as a pressure tool, they can compel officials to accept their illegal demands. This would be the start of a dictatorship," Khamenei said.

"After street protests, some foreign powers ... started to interfere in Iran's state matters by questioning the result of the vote. They do not know the Iranian nation. I strongly condemn such interference," Khamenei said.

"American officials' remarks about human rights and limitations on people are not acceptable because they have no idea about human rights after what they have done in Afghanistan and Iraq and other parts of the world. We do not need advice over human rights from them," he added.

"This election was a political earthquake for [Iran's] enemies and a celebration for its friends," Khameini told the vast crowd. "This election showed religious democracy for the whole world to see."

"The enemies [of Iran] are targeting the Islamic establishment's legitimacy by questioning the election and its authenticity before and after [the vote]," Khamenei told the vast crowd.

Khamenei told the crowd that it would have been impossible under law of the Islamic Republic to fix the election results and declared Ahmadinejad's victory "definitive."

The supreme leader reportedly gave defeated reformist presidential candidate Mir Hossein Mousavi an ultimatum this week to either accept the disputed results of the recent elections, or leave the country for exile.

Khamenei had earlier instructed Mousavi to stand beside him as he uses his prayer sermon to call for national unity, according to The London Times. The reformist candidate did not accede to this request and his supporters have so far ignored Kahmeini's call to support Ahmadinejad, holding huge rallies in defiance of an official ban.

Some followers of Mousavi had called for a boycott of prayers at the university because of the refusal to annul the result of the poll, but TV pictures showed thousands of people listening to Khamenei and occasionally chanting affirmation of his words.

The speech now creates a clear dilemma for Mousavi and his supporters: do they return to the streets in open defiance of Khamenei or drop their demands? Prior to today's speech, Mousavi had called on the opposition movement to gather in Tehran tomorrow afternoon for a rally, but many may now feel too fearful of a crackdown by the authorities.

Ahmadinejad and his cabinet ministers attended the prayers, as did the parliamentary speaker, Ali Larijani, the mayor of Tehran, Mohammad Baqer Qalibaf, and senior military officers from the revolutionary guards. Many of those in the audience appeared to be government employees or members of the president's militia.

Kadivar: Above all, stands justice and the fulfillment of the will of the people. Under the rule of Ali, our first Shiite imam, there were no political prisoners, non-violent protests were permitted and critical comment even invited. One must not betray those values. SPIEGEL: And Khamenei and Ahmadinejad did? Kadivar: Yes. I plead for a truly Islamic and democratic state, a state that respects human dignity and does not refuse the rights of women, a state where people can freely elect their religious and secular leaders.

Mr. Khamenei is not that charismatic and he is currently in the process of destroying the tie of justice between the religious leaders and the people. When he, together with Ahmadinejad, speaks about foreign countries being behind the protests in Iran, he very much reminds me of the king (the Shah). He used the same arguments and could not recognize that he was witnessing a national and democratic protest movement of his own people. Towards the end, the shah only thought of holding up his regime. Today, Mr. Khamenei does not think any differently.

I can even imagine that Mr. Hashemi Rafsanjani as head of the Assembly of Experts might actually invite the religious leader to the assembly for a frank discussion. Theoretically, he could even dismiss Khamenei. Then Ahmadinejad would fall too. SPIEGEL: But for that to happen, the majority of the grand ayatollahs would have to oppose the two. Kadivar: Among the grand ayatollahs in Qum, the resentment towards Ahmadinejad's arrogance is growing. Only one of the 12 has congratulated him so far. Several, including my most revered teacher Ayatollah Hossein Ali Montazeri, who is greatly venerated in the whole country, spoke out sharply against the election fraud.

During the presidential campaign of 2005, the supreme leader endorsed Mr. Ahmadinejad because the humble son of a blacksmith appeared to be just such an obscure candidate. But he entered the presidency with a coterie of veterans and ideologues shaped by the Iran-Iraq war who were conservative, religious, largely populist and disdainful of the old guard from the 1979 revolution.

Today, these allies, many of them former midlevel Revolutionary Guard officers in their 50s, run the Interior, Intelligence and Justice Ministries. They also include the commander of the Basij popular militia, the head of the National Security Council and the head of state-run broadcasting. They are aligned with another member of their generation who has emerged as the most important figure in the Khamenei camp, the spiritual leader’s son, Mojtaba Khamenei.

Mr. Ahmadinejad has also changed all 30 of the country’s governors, all the city managers and even third- and fourth-level civil servants in important ministries like the Interior Ministry. It was Interior that announced that Mr. Ahmadinejad had won the June 12 election with just 5 percent of the votes counted, analysts pointed out, and it is the Intelligence Ministry that has been rounding up scores of supporters of the reform candidate, Mir Hussein Moussavi, and other dissidents.

At the same time, Ayatollah Muhammad Taqi Mesbah-Yazdi, Mr. Ahmadinejad’s spiritual mentor, runs three powerful educational institutions in the holy city of Qum, all spun off from the Haqqani seminary, which teaches that Islam and democracy are incompatible. The ayatollah favors a system that would preserve the post of supreme leader and eliminate elections. The Ahmadinejad administration has provided generous government subsidies to the seminary, and its graduates hold significant government posts nationwide.

Perhaps the most important media organization to spread the government’s message is the hard-line Kayhan newspaper. Its general director, Hossein Shariatmaderi, in recent days has resurrected a standard accusation: that foreign governments were manipulating the demonstrations on Iran’s streets.

Mr. Ahmadinejad and his allies have tried to demonize Mr. Rafsanjani as corrupt and weak, attacks that Ayatollah Ali Khamenei has not strongly discouraged. On the other side, opposition leaders, especially Mr. Moussavi, have received support from Mr. Rajsanjani, political analysts said.

It is a quirk of history that Mr. Rafsanjani, the ultimate insider, finds himself aligned with a reform movement that once vilified him as deeply corrupt. Mr. Rafsanjani was doctrinaire anti-American hard-liner in the early days of the revolution who remains under indictment for ordering the bombing in of a Jewish center in Buenos Aires in 1994 when he was president. But he has evolved over time to a more pragmatic view, analysts say.

He supports greater opening to the West, privatizing parts of the economy, and granting more power to civil elected institutions. His view is opposite of those in power now who support a stronger religious establishment and have done little to modernize the stagnant economy.

“At a political level what’s taking place now, among many other things, is the 20-year rivalry between Khamenei and Rafsanjani coming to a head,” Mr. Sadjadpour said. “It’s an Iranian version of the Corleones and the Tattaglias; there are no good guys and bad guys, only bad and worse.”

It is not clear what leverage Mr. Rajsanjani can bring to this contest. If he speaks out, the relative said, he will lose his ability to broker a compromise. Mr. Rafsanjani leads two powerful councils, one that technically has oversight of the supreme leader, but it is not clear that he could exercise that authority to challenge Ayatollah Khamenei directly.

Mr. Rafsanjani has been in opposition before. In the days of the shah, he was a religious student of Ayatollah Khomeini at the center of Shiite learning, in the city of Qum. He was imprisoned under the shah, and became so closely associated with the revolutionary leader he was known as “melijak Khomeini,” or “sidekick of Khomeini.”’ After 1979, he went on to become the speaker of Parliament.

Mr. Rafsanjani later served two terms as president and was instrumental in elevating Ayatollah Khamenei to replace Ayatollah Khomenei in 1989.

People who worked in the government at the time said that Mr. Rafsanjani, as president, ran the nation — while Ayatollah Khameini followed his lead. But over time the two grew apart, as Ayatollah Khameini found his own political constituency in the military and Mr. Rafsanjani found his own reputation sullied. He is often accused of corruption because of the great wealth he and his family amassed.

He was so damaged politically that after he left the presidency, he failed to win enough votes to enter Parliament. In 2002, he was appointed to the head of the Expediency Council, which is supposed to arbitrate disputes between the elected Parliament and the unelected Guardian Council.

And in 2005, he ran for president again but lost in a runoff to Mr. Ahmadinejad. He was then elected to lead the Assembly of Experts. The body has the power to oversee the supreme leader and replace him when he dies, but its members rarely exercise power day to day.

The council conducted a limited recount after the first round of the 2005 election, which put Ahmadinejad into the run-off against Hashemi Rafsanjani. The recount was carried out behind closed doors. The council gave the results a clean bill of health but did not publish its findings.

The situation this time is very different, there is far more pressure on the council and Khamenei from the street and from within the religious establishment, from important figures such as Rafsanjani. But Rafsanjani is not a council member.

The recount poses a dilemma for the opposition: to participate may imply endorsement of a process of which it is highly suspicious. To stand aloof takes away any chance of influencing the process and risks projecting the image of spoilers.

Khamenei and the council also face a dilemma: admission of any rigging would dent the pure image of Iranian democracy they have attempted to project. To deny any shortcomings, on the other hand, could trigger fury on the streets, and discredit the pillars of the Islamic republic.

Apparently trailing in the opinion polls, Ahmadinejad attempted to link Mousavi – the main reformist candidate – to the past governments of Rafsanjani and the reformist ex-president Mohammad Khatam, which he said had been guilty of widespread graft. Among others, he singled out Rafsanjani's sons as well as Ali Akbar Nateq-Nouri, the current head of the supreme leader's inspectorate.

Khamenei's criticisms echoed those of Mousavi, who told Ahmadinejad during the debate: "This is a sin. We are Muslims, we believe in God. We cannot name people like that and accuse them."

The most remarkable part of an acerbic encounter came when Ahmadinejad held up a file apparently referring to Mousavi's wife, Zahra Rahnavard, and questioned her qualifications. "Can I speak about the education background of a lady with you – shall I," Ahmadinejad said in a goading tone. He accused Rahnavard, who has been campaigning with her husband, of gaining two degrees illegally and starting a PhD without sitting an entrance exam.He also said she had become a university lecturer and chancellor without the necessary qualifications.

After the debate, pro-Mousavi students took to the streets of Tehran chanting: "Ahmadinejad, impolite person, shame on you. Leave this country alone."

French President Nicolas Sarkozy, speaking shortly after Khamenei, said Iranians deserved better leadership and pledged to support Britain in its standoff with Tehran. "Really, the Iranian people deserve better than the leaders they have today," he said at a news conference with British Prime Minister Gordon Brown, pledging France's full support for Britain in the dispute over the embassy detentions.

Last night saw violent clashes after Ahmadinejad was confirmed as the winner of the presidential election on Friday, barely an hour after the polls had closed.Protesters set fire to rubbish bins and tires, creating pillars of black smoke among the apartment blocks and office buildings in central Tehran. An empty bus was engulfed in flames on a side road.

More than 100 reformists, including Mohammad Reza Khatami, the brother of former president Mohammad Khatami, were arrested last night, according to leading reformist Mohammad Ali Abtahi. He told Reuters they were members of Iran's leading reformist party, Mosharekat.

A judiciary spokesman denied they had been arrested but said they were summoned and "warned not to increase tension" before being released.

In a sign of the anger among Mousavi's supporters, they chanted "the president is committing a crime and the supreme leader is supporting him", highly inflammatory language in a regime where the supreme leader, Ali Khamenei, is considered irreproachable.

But Khamenei replied that the election had been conducted fairly. He ordered the three defeated candidates and their supporters to avoid "provocative" behaviour. "All Iranians must support and help the elected president," he warned.

Israel reacted immediately by demanding intensified efforts to stop Iran acquiring nuclear weapons.

"The regime is making a decision to shape the direction of Iran for the next decade," Saeed Laylaz, a political analyst, said. "I'm sure they didn't even count the votes. I do not accept this result. It is false. It should be the opposite. If Ahmadinejad is president again, Iran will be more isolated and more aggressive. But he is the choice of the regime."

Laylaz had warned before the result that a second presidential term for Ahmadinejad could create a "Tiananmen-type" situation in Iran. Ominously, as three weeks of campaigning drew to a close last Wednesday, an official of the powerful Revolutionary Guard Corps warned that any attempt at a popular "revolution" would be crushed.

Overt signs of repression included the failure of phone lines for hours after the polls closed and the blocking of the English and Persian-language websites of the BBC and Voice of America - which are regularly attacked by the Iranian authorities as "imperialist". Text messaging also failed.

"The Iranian nation has repeatedly announced that it does not want nuclear weapons ... keeping nuclear arms would create a big danger and trouble and even if they pay us we do not want it," he said. Khamenei said the United States had occupied two Muslim countries, Iraq and Afghanistan, under the pretext of fighting terrorism. "The terrorists kill one, two or ten people ... but you kill 100 or 150 people," he said, referring to a rising civilian death toll as foreign and Afghan troops battle Taliban insurgents.

But outside analysts said the suspicions surrounding Mr. Ahmadinejad’s re-election would create new problems. “This is the worst result,” said Thomas R. Pickering, a former under secretary of state. “The U.S. will have to worry about being perceived as pandering to a president whose legitimacy is in question. It clearly makes the notion of providing incentives quite unappetizing.”

In Israel, which has hinted that it might launch a military strike on Iran to disable its nuclear capability, officials said Mr. Ahmadinejad’s victory underscored the threat from Tehran and the need for a tough response rather than patient diplomacy.Vice Prime Minister Silvan Shalom said in Tel Aviv that the victory “sends a clear message to the world” that Iran’s policies have broad internal support and will be continued. The results, he added, also “blow up in the faces of those” who thought Iran was ready for “a genuine dialogue with the free world on stopping its nuclear program.”

Many analysts and Middle East officials asserted that the outcome reinforced the reality that ultimate power resides not in the democratically elected president, but rather in Iran’s supreme religious leader, Ayatollah Ali Khamenei.“We should be clear about what we’re dealing with,” said Karim Sadjadpour, an Iran expert at the Carnegie Endowment for International Peace. “Just as we deal with Assad’s Syria and Mubarak’s Egypt, we now have to deal with Khamenei’s Iran,”

“It is easy to insult and confront and have Iran as a foe when Ahmadinejad is president,” said an Egyptian diplomat, speaking on condition of anonymity in keeping with diplomatic protocol. “A lot of people would have been inconvenienced if someone else had become president.”

Mr. Obama, officials said, has long said he was willing to negotiate with whoever would respond, including Ayatollah Khamenei. “The administration will deal with the situation we have, not what we wish it to be,” another senior official said.

For the United States, the larger problem is that while the election has frozen the dialogue, Iran’s nuclear program has speeded ahead. This month, the International Atomic Energy Agency reported that by May’s end, Iran had built and installed 7,200 centrifuges to enrich uranium and was quickly adding to its stock of nuclear fuel.

Now, the administration faces a vexing choice. It can continue to demand that Iran give up all of its enrichment capability — still the official position of the United States, but considered an all but impossible goal. Or it can tacitly accept that Iran is not going to stop enriching.

In a letter to Khamenei, published by the semi-official Mehr news agency, Rafsanjani said tens of millions of Iranians had witnessed "mis-statements and fabrications" during the debate."I am expecting you to resolve this position in order to extinguish the fire, whose smoke can be seen in the atmosphere, and to foil dangerous plots to take action," said Rafsanjani.

Meanwhile, central Tehran saw chaotic scenes for a second day when supporters of Mousavi – many of them young women – flocked in their tens of thousands to another demonstration, shouting anti-Ahmadinejad slogans and waving the green ribbons, banners and posters that have become the symbol of his campaign. A "human chain" rally on Monday night was likened by many to the events that shook Tehran before the 1979 Islamic revolution.

His comments were echoed by 14 high-ranking clerics from the holy city of Qom, who expressed "deep concern and regret" that Iran's image had been harmed in the debate."Accusing those who were not present at that debate and could not defend themselves is against our religion," they said in a statement also published by Mehr.

Previous Mousavi rallies had to be cancelled at the last minute because permission to use large venues was suddenly withdrawn by the authorities. On Sunday a rally at Karaj outside Tehran could not be held because the electricity supply to the public address system failed.

Last night, in the last of six televised debates, Ahmadinejad clashed over the economy with the other conservative candidate, a former Revolutionary Guards commander, Mohsen Rezaei.Ahmadinejad insisted that over the last four years he had slashed inflation to 15%, but Rezaei, an economist, said the true figure was 25%.

The fourth candidate, reformist cleric Mehdi Karoubi, dismissed as "psychological warfare" rumours that he might withdraw from the race to boost Mousavi's chances.

Ahmadinejad remained defiant towards the outside world, especially over the nuclear issue that has done so much to isolate Iran.At a campaign event in the Caspian Sea province of Mazenderan he said: "Let the world know that if the Iranian nation should re-elect this small servant, he would go forward in the world arena with the nation's authority and would not withdraw an iota from the nation's rights."

Two pro-reform figures, newspaper editor Saeed Laylaz and Hamid Reza Jalaipour, an activist and journalist, were arrested on Wednesday morning, reports said.

About 100 reformist figures were arrested on Sunday as opposition grew to the election results. Many have since been released.

Overnight, members of Iran's Basij volunteer militia reportedly raided university dormitories in several Iranian cities. The Basij stormed compounds, ransacking dormitories and beating up some students. Several arrests were made, our correspondent says, and the dean of the university in the city of Shiraz has resigned.

In the most high-profile incident, 120 lecturers at Tehran university resigned after a raid on that institution.

Ayatollah Khamenei has not appeared in public since the election results, but now seems to be deeply involved in the search for a solution to the stand-off. Meeting representatives of the four election candidates, he urged all parties not to agitate their supporters and stir up an already tense situation. He also repeated his offer of a partial vote recount, a proposal already rejected by the main opposition. "In the elections, voters had different tendencies, but they equally believe in the ruling system and support the Islamic Republic," the Associated Press reported him as saying. "Nobody should take any action that would create tension, and all have to explicitly say they are against tension and riots."

Witnesses said Tuesday's demonstrators walked in near silence towards state TV headquarters - apparently anxious not to be depicted as hooligans by authorities. Thousands of President Mahmoud Ahmadinejad's supporters staged a counter-rally in Vali Asr Square in central Tehran - some bussed in from the provinces, observers say.

As night fell, residents took to the roof-tops of their houses to shout protest messages across the city, a scene not witnessed since the final days of the Shah, our correspondent says.

its chairman, Ayatollah Mahdavi Kani, openly announced their support for Ahmandinejad.