Iran's supreme leader has said the nation "will not yield to pressure" over a disputed presidential election.

Sources close to reformist candidate Mir Hossein Moussavi and former Iranian President Mohamed Khatami have stated to Asharq Al-Awsat that Moussavi's team do not accept the election results or the statement issued on Monday by the Guardian Council and will therefore continue to address the election results and the "theft of the Iranian vote.

he leadership of the Reformist movement, Moussavi, [Mohamed] Khatami, and [Mehdi] Karrubi, along with Chairman of the Assembly of Experts, Hashemi Rafsanjani, are moving closer to the option of "open civil protests and the continuation of demonstrations" until "the removal of the illegitimate government."

Supreme Leader Ayatollah Ali Khamenei said on Wednesday Iran's establishment would not yield to pressure over the disputed presidential election as tension rose with the Islamic Republic considering a downgrade of ties with Britain and accusing the CIA of funding "rioters.

Iran's intelligence minister Gholamhossein Mohseni-Ejei said some people with British passports were involved in post-election violence, the semi-official Fars News Agency reported.

"Many of the rioters were in contact with America, CIA and the MKO and are being fed by their financial resources," he said. The MKO (Mujahideen Khalq Organisation) is an exiled Iranian opposition group.

"The United States and the international community have been appalled and outraged by the threats, beatings, and imprisonments of the last few days," he said. "I strongly condemn these unjust actions, and I join with the American people in mourning each and every innocent life that is lost."

Obama spoke of the "searing image" of the dying moments of Neda ­Soltan, a young female protester shot by a sniper and now an icon of the revolt. He said the demonstrators would ultimately be seen to have been "on the right side of history". The regime's accusations against foreigners were "an obvious attempt to distract people from what is truly taking place within Iran's borders".

He added: "This tired strategy of using old tensions to scapegoat other countries won't work any more in Iran."

One of the three defeated candidates, Mohsen Rezai, a conservative, has now withdrawn his complaint about the poll. Barack Obama has condemned the "unjust" violence used against protesters.

The US president's comments came as the UK expelled two Iranian diplomats in response to the expulsion of two of its own officials from Tehran.

The Iranian authorities have accused Britain and the US of trying to destabilise the country, something they have denied.

Barack Obama condemned for the first time the violence in Iran today saying he was appalled and outraged by Tehran's crackdown on protesters.

"The United States and the international community have been appalled and outraged by the threats, beatings, and imprisonments of the last few days. I strongly condemn these unjust actions, and I join with the American people in mourning each and every innocent life that is lost," he said.

The demonstrators would in the end be seen to be "on the right side of history".

Britain has ordered the expulsion of two Iranian diplomats, in a tit-for-tat response to the expulsion of two British diplomats from Tehran.

Barack Obama for the first time condemned the violence in Iran, saying the international community was "appalled and outraged" by Tehran's crackdown on protesters.Going well beyond his previous expressions of sympathy with the demonstrators, he said: "I strongly condemn these unjust actions, and I join with the American people in mourning each and every innocent life that is lost."

The Iranian government told Britain yesterday it was throwing out two UK diplomats, who have not been named, for "activities incompatible with their diplomatic status" – a claim Gordon Brown described as "unjustified".

"There are very interesting things that are taking place right now. Some of my sources in Iran have told me that Ayatollah Rafsanjani, who is the head of the Assembly of Experts -- the eighty-six member clerical body that decides who will be the next Supreme Leader, and is, by the way, the only group that is empowered to remove the Supreme Leader from power -- that they have issued an emergency meeting in Qom.

Estimates of police and Guards deployed range from 25,000 to 60,000 in Tehran alone. And the Basij were busy overnight, keeping the pressure on reformists by carrying off several high profile home invasions in richer neighborhoods while scouring hospitals for people injured during the clashes.

According to the source that asked to remain anonymous, during this meeting they recounted memories of the days of the Revolution. A reasonable purpose of these meetings, according to the source, is that Rafsanjani is looking for a majority to possibly call for Ahmadinejad's resignation.

Many of the Shiite clerics in Qom never embraced the idea of either a supreme leader or a central role for clerics in the new Islamic republic. Iran's revolution represented not just a political upheaval. It was also a revolution within Shiism, which for 14 centuries had prohibited a clerical role in politics. With clerics taking over government, many senior Shiite clerics feared that Islam would end up being tainted by the human flaws of the state.

According to a report by the now-banned website Rooyeh.com, Hashemi Rafsanjani, the head of the Assembly of Experts, had meetings in the city of Qom, with some of the high ranking clerics including the plenipotentiary representative of Grand Ayatollah Sistani. The dates of the meetings are not specified

According to this report, an anonymous source claimed that Rafsanjani had reminded the Ayatollahs of how Ayatollah Khomeini managed such crises in the early days of the Islamic revolution. The source also claimed that half of the Assembly of Experts were supporting the idea of declaring a “leadership counsel” (instead of a one person leadership)

Iran's legislative body, the Guardian Council, has said there were no major polling irregularities in the 12 June election and ruled out an annulment.

Guardian Council spokesman Abbas Ali Kadkhoda'i was quoted on state television as saying there was "no major fraud or breach in the election".

English-language Press TV reported the Guardian Council's rejecting an annulment on Tuesday. On Monday, it had conceded there had been voting irregularities in 50 districts, including local vote counts that exceeded the number of eligible voters. However, it said they were not enough to affect the overall result and incumbent Mahmoud Ahmadinejad had indeed won by a landslide.

Former prime minister Ehud Olmert offered Palestinian Authority Chairman Mahmoud Abbas that the Holy Basin area of Jerusalem would be under no sovereignty at all and administered by a joint committee of Saudis, Jordanians, Israelis, Palestinians and Americans, the former prime minister told Newsweek magazine in an interview in the current issue.

The proposal to internationalize the Holy Basin was intended to achieve a breakthrough in the negotiations around the issues of sovereignity over holy sites in Jerusalem, the issue which had reportedly caused the breakdown of the Camp David talks in July 2000.

Newsweek notes the offer was made in September 2008, when Olmert was heading a transition government and had already resigned from his post, rendering coalition considerations irrelevant.

Former Iranian President Ayatollah Akbar Hashemi Rafsanjani, who is considered to be the second most important figure in the country's regime, is looking into different ways to end the political crisis in Iran, and is mulling the possibility of setting up a new religious body, Al-Sharq al-Awsat newspaper reported on Monday.

According to the report, the former president and head of the cleric-run Assembly of Experts who is also one of defeated reformist candidate Mir-Hossein Mousavi's top supporters, has relocated from the flammable capital of Tehran, to the Shiite holy city of Qom, where the country's religious leaders sit.

Rafsanjani arrived in the city a few days ago and met with several religious leaders and members of the Assembly of Experts, which is responsible for monitoring Supreme Leader Ali Khamenei.  

The grand ayatollah widely expected to follow him, Hossein Ali Montazeri, lost his place by expressing revulsion at violence committed in the name of the revolution. if ( show_doubleclick_ad && ( adTemplate & INLINE_ARTICLE_AD ) == INLINE_ARTICLE_AD && inlineAdGraf ) { placeAd('ARTICLE',commercialNode,20,'inline=y;',true) ; } "I surely would follow you up to the entrance of hell," Montazeri wrote to his mentor, Khomeini, in 1988, when political prisoners were being hanged by the hundreds each day. "But I am not ready to follow you in."

"There's a question in my mind whether Khamenei is calling the shots or whether the Revolutionary Guards are calling the shots

"Whether true or not, Khamenei has long believed that the U.S. is bent on regime change in Tehran, not via force but via a soft or velvet revolution," said Karim Sadjadpour, an analyst at the Carnegie Endowment for International Peace. "For the last 20 years, I imagine he goes to sleep at night and wakes up every morning mistrusting both outside powers and his own population. In that type of atmosphere of fear and mistrust, he's relied on the intelligence, security and military forces much more than the clergy."

clerics like Montazeri believe that Supreme Leader Ayatollah Ali Khamenei and his protégé, President Mahmoud Ahmadinejad, use a distorted interpretation of Shiite theology for their own political ends. As a result, they believe Iran has become an un-Islamic, militarized state where Islamic militias repress the Iranian population in the name of God. There is another fact unknown to those unfamiliar with Iran: The youth are actually fond of some of the clerics, and shout their names at their demonstrations.

Khamenei's has, in turn, granted enormous power to the Islamic Revolutionary Guards Corps and the basij, the Islamic militias under their command

This is not to say that the majority of clerics oppose Ahmadinejad and Khamenei. It is likely that the clerics are split, and even those who do not support Khamenei and Ahmadinejad might be unwilling to say so in public for a variety of reasons, including the fact that clerics rely on the state to some degree to fund their seminaries

Although the president has the support of the Islamic Revolutionary Guards Corp (IRGC), the clerics still have considerable power over the country's charitable foundations (Bonyads). These multibillion dollar business organizations don't report their income or pay taxes. They report directly to Supreme Leader Ali Khamenei. Their participation in the economy is crucial. They could make life difficult for Ahmadinejad's presidency by increasing their business clout in areas where the IRGC is trying to muscle in. These industries include energy, construction and the import/export sector. Last year, these clerics scored a major victory. Bonyade Mostazafin (Charity foundation for the dispossessed) was allowed to buy and sell oil, allowing them to compete directly with Iran's National Oil Company. This raised the fury of Ahmadinejad's supporters. As means of checking Ahmadinejad's power, they could expand further into this sector, or compete in the lucrative construction sector. These companies also have huge financial assets. These can be used to finance new businesses which compete directly with the IRGC.

They could also side with Ayatollah Rafsanjani. It is an accepted fact that Rafsanjani financed part of Mousavi's campaign. This obviously dented Ahmadinejad's popularity. So much so, apparently, that Ayatollah Khamenei felt compelled to assist the president by allowing fraud. Rafsanjani is already a millionaire many times over. Should the clergy start helping him financially, using his political muscle in the Assembly of Experts and the Expediency Council, he could further challenge Ahmadinejad politically.

Declaring results that no one in their right mind can believe, and despite all the evidence of crafted results, and to counter people protestations, in front of the eyes of the same nation who carried the weight of a revolution and 8 years of war, in front of the eyes of local and foreign reporters, attacked the children of the people with astonishing violence. And now they are attempting a purge, arresting intellectuals, political opponents and Scientifics.

I ask the police and army personals not to “sell their religion”, and beware that receiving orders will not excuse them before god.

the accusations and the insults that Ahmadinejad directed at some of the most senior politicians such as Hashemi Rafsanjani, Mohammed Khatami and even Natiq Nouri – who is one of the most senior advisers to the Supreme Leader whose children Ahmadinejad accused of accumulating wealth illicitly – not only deepens divisions between different branches of the government but also brought these divisions into public view for the first time and in an unprecedented manner.

In the letter, Rafsanjani requested that Khamanei break his silence but what happened on Saturday morning, a few hours after the elections, and even before the final results were announced, was that Khamanei rushed to congratulate Ahmadinejad and endorsed the results. That was not normal at all because usually after elections the Council of Guardians and the Ministry of Interior await complaints that may be raised by parties taking part in the elections, expecting there to have been irregularities. Presidential candidates have the right to raise complaints before the results are verified but the Supreme Leader did not wait for this process to take place and he quickly congratulated Ahmadinejad who in turn called on his supporters to celebrate in Vali Asr in Tehran and Iranian state television began to broadcast messages of congratulations from various leaders and presidents to Ahmadinejad on his reelection.

if the results weren’t final and the candidates could raise their complaints how could the Supreme Leader declare his support for the results? The Supreme Leader’s behavior caused a lot of serious questions to be raised by the grand Ayatollahs in Iran and members of the Assembly of Experts headed by Rafsanjani, which has the right to dismiss the Supreme Leader according to the Constitution. It raised many questions about the Supreme Leader’s validity.

Iran's Guardian Council, the country's highest legislative body, has admitted some irregularities occurred in the disputed June 12 presidential election.

Abbas-Ali Kadkhodaei, a spokesman for the council, told state-funded broadcaster IRIB on Monday that up to three million votes were under scrutiny, after it was found that the number of votes exceeded the number of eligible voters in 50 cities.  However, he said it was a normal discrepancy because people are allowed to travel to other areas to vote, and that it was "yet to be determined whether the amount is decisive in the election results".

The government is blaming the crisis on what it calls "terrorists" influenced by the West, and has said it will clamp down on any violent action. "The first issue is security - no country will deal with other issues and then talk about security,"  Hassan Ghashghavi, a spokesman for Iran's foreign ministry said on Monday. "First, security must be there, and then you can talk about elections, freedom, human rights and democracy."

“I see the country’s political elite more divided than anytime in the Islamic Republic’s 30-year history,” said Karim Sadjadpour, a political analyst with the Carnegie Endowment for International Peace. “Rafsanjani, one of the republic’s founding fathers, the man who made Khameini Supreme Leader, is now in the opposition.”

“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 seems clear that the 75-year-old is at the center of a fight for the future of the Islamic Republic. Mr. Rafsanjani’s vision of the state, and his position in his nation’s history, is being challenged by a new political elite led by Mr. Ahmadinejad and younger radicals who fought Iraq during the eight-year war.