"We may yet bomb your country, but then we'll be best friends" is how one Iranian blogger viewed the words of George W Bush in his speech on 13 January 2008 in the United Arab Emirates. The United States president here called Iran "the leading state sponsor of terror", warned that "Iran's actions threaten the security of nations everywhere", and added: "The day will come when the people of Iran have a government that embraces liberty and justice, and Iran joins the community of free nations. When that day comes, Iran will have no better friend than the United States."

Nasrin Alavi is the author of We Are Iran: The Persian Blogs (Portobello Books, 2005). She spent her formative years in Iran, attended university in Britain and worked in London, and then returned to her birthplace to work for an NGO for a number of years.

Today she lives in Britain.

Also by Nasrin Alavi on openDemocracy:

"Mahmoud Ahmadinejad's fear" (1 November 2005)

"Inside Iran" (14 February 2006)

"Iran: the elite against the people" (22 May 2006)

"Tehran's red card to human rights" (23 June 2006)

"Iran: cracks in the façade" (11 December 2006)

"Iran's election backlash" (19 December 2006)

"Iran's attack blowback" (5 February 2007)

"Women in Iran: repression and resistance" (5 March 2007)

"Axis of Evil vs Great Satan: wrestling to normality" (2 May 2007)

"The Iran paradox" (11 October 2007)

"Iran's circle of power" (23 October 2007)

"Iran: the uses of intelligence" (6 December 2007)

If White House politicians ever wonder about the reactions of their target audience, they may care to glance at some of the online commentary by Iranians that such addresses produce. Two representative comments make the point (the first making reference to the Tehran regime's notorious instruments of torture):

* "Whenever you talk of justice I can't but think of Guantánamo and waterboarding, and whenever (Ayatollah) Khamenei mentions justice I remember Evin (prison) and the "hot eggs" and the "drink bottles" that they welcome the [imprisoned] students of Amir-Kabir (university) with. May God preserve humanity from the pair of you"

* "Most of us have problems with this regime. But what has it got anything to do with America and this deceitful cowboy..."

It may be important to add that up to about three years ago such hostile sentiment towards American foreign policy was largely marginal within the Iranian blogosphere. Iran is one of the few countries in the middle east where people don't attribute their hardships to their undemocratic United States-backed rulers.

The New York Times columnist Nicholas D Kristof's bemusement at encountering this reality after his trip to Iran in spring 2004 is typical. "Finally, I've found a pro-American country", he declared. Wherever he went, people had been "exceptionally friendly and fulsome in their praise for the United States, and often for President Bush as well." Kristof added that for Iranians, "being pro-American is a way to take a swipe at the Iranian regime" (see "Those Friendly Iranians", 5 May 2004).

Yet that finding is already almost four years old. A number of factors has since then been steadily eroding much of the goodwill felt (and cautiously expressed) in Iran towards Bush's America:

* the turbulent outcome of the post-9/11 regional conflicts in neighbouring Afghanistan and Iraq

* the sordid details of Abu Ghraib and Guantánamo

* the contrast between the American rhetoric of human rights and democracy alongside its perpetual support for Arab dictators

* the bombing of Lebanon and the misery of the people of Gaza.

One of the many ironies of these years is that the chief architects of the war on terror have been instrumental in reinforcing the Iranian revolutionary concept of the United States as the "great satan". The more-or-less open threats of regime change from Washington (and especially from neo-conservative or otherwise hawkish figures in or supportive of the administration) have not - as their authors presumably intended - undermined the confidence of Tehran's own hardliners; rather, they have only encouraged the Iranian authorities to act decisively to avert or crush (through systematic arrests and widespread intimidation) what the Revolutionary Guards commander-in-chief Mohammad Ali Jafari calls "internal threats" to the system.

The result is that today, George W Bush's America is seen at best as largely irrelevant to current Iranian political dilemmas, and at worst a nation led by recklessly hostile leaders who may send in the bombers.

The economy buckles

The disillusion with the United States among many Iranians has meant that the hopes and energies for change are increasingly grounded in the domestic troubles of the regime. The people's frustrations with the government's economic mismanagement are rising at a moment when an important electoral test - elections to the 290-seat majlis (parliament) on 14 March 2008 - is approaching.

In routine circumstances, the leadership of President Mahmoud Ahmadinejad and his supporters would at such a time seek to heighten the confrontational rhetoric against the US, mobilising nationalist sentiment against revolutionary Iran's number-one enemy. On this occasion, the tactic may be less effective, for two reasons.

First, the US's national intelligence estimate (NIE) published on 3 December 2007 controverted the White House's portrayal of the alleged Iranian nuclear peril, thus going a little way to defuse tension and undermine the portrayal by Iranian authorities (and in particular by Ahmadinejad himself) of an immediate threat from the US (see "Iran: the uses of intelligence", 6 December 2007). Second, most Iranian citizens are so hard-pressed by their daily circumstances that their concern is not with foreign policy or how their country's nuclear-energy programme is perceived, but with their economic condition and how to improve it.

Among openDemocracy's articles about Iran and the United States:

Dariush Zahedi & Omid Memarian, "Ahmadinejad, Iran and America" (15 January 2007)

Kamin Mohammadi, "Voices from Tehran" (31 January 2007)

Fred Halliday, "The matter with Iran" (1 March 2007)

Sanam Vakil, "Iran's hostage politics" (2 April 2007)

Nazenin Ansari, "Tehran's new political dynamic" (16 April 2007)

Rasool Nafisi, "Iran's cultural prison" (17 May 2007)

Omid Memarian, "Iran: prepared for the worst" (30 October 2007)

Jan De Pauw, "Iran, the United States and Europe: the nuclear complex" (5 December 2007)

This is bad news for the president. Ahmadinejad had campaigned for the presidency in June 2005 on an economic platform, and won power by tapping into the vein of popular anger against corruption and cronyism and promising to create jobs and security for Iran's poor and deprived. In the middle of his third year in office, the hopes he raised have largely dissipated: the government has introduced petrol rationing, and there has been disruption in gas supplies and more than sixty deaths amid a spell of severely cold weather - all this in the country that is the fourth-largest oil producer in the world, and has the second-largest natural-gas resources.

In addition, chronic unemployment remains widespread and inflation has continued to climb: the official rate is 19%, though the real figure may be even higher (the cost of housing and of foreign-made consumer and electronic goods has more than doubled in the last year alone). Ahmadinejad is justified in attributing much of the inflation to past policy errors, but he has compounded these by populist and yet wasteful inflationary handouts.

The recipients of these handouts appreciated them, but their euphoria proved short-lived. An illustration is provided by Ahmadinejad's decision at the outset of his presidency to double the price of saffron, which especially helped Iran's poorly-paid saffron-pickers in Khorasan province in eastern Iran; the instant doubling of their income meant that the president had kept his promise to bring some the fruits of Iran's oil wealth into their lives.

By August 2007, however, the picture looked very different. The artificial pricing policy and higher wages for the saffron-workers meant that the price of Iranian saffron had risen fivefold in a year, to $1,945 per kilo; by December, the head of the saffron exports promotion fund was reporting a 70% drop in exports in the first seven months of the Iranian year that started on 21 March 2007. In less than two years, the farmers of Khorasan - who used to cultivate nearly 90% of the world's saffron - have seen their market and (possibly) their long-term livelihoods damaged by a presidential whim.

Iran's sugar industry is also grappling with crisis. The level of domestic demand is around 1.9 million tons per year, but official figures estimate that over 3 million tons of cheap sugar that undercut local produce has been imported. Ahmadinejad often accuses his political rivals of intentionally sabotaging his economic policies. In this case at least, the charge rebounds: Ayatollah Mohammad-Taqi Mesbah-Yazdi - whose reputation in the west is for his role as Ahmadinejad's spiritual guide and adviser - is known to most Iranian people as a major importer of sugar whose companies have dominated the sector since the 1979 revolution. Today, thirty-four sugar factories are facing closure, while workers protesting at not being paid - like those at the Haft Tappeh company in Khuzestan province - have been met by riot police and threats of dismissal.

Iran's Arab neighbours - especially those in the Gulf states that were the principal audience of Bush's speech in Abu Dhabi on 13 January - are flushed with liquidity due to record oil prices; but they have responded by investing in long-term national projects and enhancing their governmental portfolios (including the emergent "sovereign wealth funds") by buying large shares in major international industries. Iran's oil infrastructure is in dire need of modernisation and investment yet the government's policy response to its troubles (including a potential budget deficit) has been to inject about $140 billion in 2007-08 into an already cash-addicted economy; this has had the effect of increasing prices still further.

The rising discontent amongst the very people who were Ahmadinejad's core supporters in 2005 - and whose lives he pledged to improve - may be an important political factor in the approach to the 14 March elections. Its reverberations have already been felt in establishment circles. When he came to power, Ahmadinejad was initially endorsed by many of Iran's senior conservatives, including - crucially - the supreme leader, Ayatollah Ali Khamenei. The policy failures of the protege in whom they had invested so much is generating strains at the heart of Iran's revolutionary elite. This is evident in Khamenei's rare intervention in a budgetary spat between the government and the majlis, when (in a letter made public on 21 January) he effectively admonished the president. Ahmadinejad is losing support from "above" as well as from "below".

The elite rethinks

The Iranian clerical-political elite's loss of faith in Mahmoud Ahmadinejad and his allies - does not mean that it is prepared to contemplate an embrace of political reformism. On the contrary: it views many other prominent political figures equally as liabilities. In this respect, the mass disqualification of many candidates for parliamentary elections in January 2008 - most of whom are reformists - indicates the establishment's firm desire to create a new governing order.

What might this look like? A careful glance both at the political leanings of the endorsed candidates in the March election and the surviving players in Iran's byzantine power-structure suggests clues to this new blueprint. The regime's inner circle is attempting the difficult task of opening and closing at the same time: offering the economic freedoms of a country like the UAE while maintaining the political restrictions of China (and thus becoming more exclusive in the process).

This "new Iran" will still need plausible figureheads. The current mayor of Tehran, Mohammad-Baqer Ghalibaf is one rising star who may be seen by the elite as a useful placeman in the presidential electios due in 2009; another is Iran's former chief nuclear negotiator Ali Larijani, described as a pragmatic conservative in the west. Ghalibaf is relatively untested (and the precedence of Tehran mayors becoming presidents is not auspicious), while Larijani - though gaining credit for his supposedly independent stance against Ahmadinejad and resignation in October 2007 - is an unlikely president and lacks popular support.

But such premature calculations carry the danger of missing the big picture: the ambitions of Iran's elite to entrench their power in new political order. The nature of Iranian society and the development of its citizens' minds and aspirations mean that such plans are not sustainable in the long-term. But in the short term? The upcoming elections will offer more of an indication of whether this grand scheme can succeed.