Khatami was head of the Islamic Center in Hamburg and a counselor for Iranian students in Germany in the 1970s and while there learned German and studied the thought of sociologist Jurgen Habermas. He later applied Frankfurt School critical theory to his analysis of the need for a more open society in Iran. He also called for a "dialogue of civilizations," and set in motion such dialogues under the auspices of the UN. He was influential with Shiite liberals in Iraq who supported democratic elections in that country.

Khatami served briefly as culture minister 1989-1992, and was popular among youth because he wanted to open up Iran's closed society. He was fired for trying to go too far. Then in 1997 he ran for president as a liberal dark horse and won 70% of the vote, with women and young people swinging behind him. He strengthened his hold on parliament in the 2001 elections. While he promised greater personal liberties, less censorship, and better relations with the US, he was unable effectively to deliver on any of these pledges. At every turn he and his reformists were blocked by conservatives in the clerical and juridical hierarchies, who just closed down liberal newspapers and ultimately forbade liberals to stand for election (candidates in Iran are vetted for ideological purity and commitment to the principles of Ruhollah Khomeini).

Khatami remains popular in opinion polls in Iran, and despite the failures of his previous 8 years in office, many Iranians are nostalgic even for his era of half-hearted reforms.

Since June of 2005, Iranians have suffered with Mahmoud Ahmadinejad, whose antics have made Iran a laughingstock on the world stage, and whose forceful rhetoric against Israel has given Iran's foes a pretext to call for attacking it and/or doing regime change. (Khatami upbraided Ahmadinejad for his Holocaust denial and says he is commited to a two-state solution of the Israel-Palestine conflict).

Ahmadinejad has been a poor steward of the economy, in which inflation reached nearly 30% last fall, and while it has fallen a bit from that high, it is still running 24 percent and will remain high for months, perhaps years. High inflation especially hurts persons on fixed incomes, such as students, salaried employees without a good pay-raise program, and pensioners. Remember that a high inflation rate in the United States in 1980 helped cost Jimmy Carter the election.

Ahmadinejad had a big oil income in 2008 and assiduously put the money into the economy. But increasing the money supply rapidly like that, without accompanying gains in productivity, causes inflation. Although Ahmadinejad has benefited the rural population through public works such as road and school building, his high-inflation policies have also hurt farmers, whose income is less dynamic than that of the urban sector. 

Khatami has criticized Ahmadinejad on the inflation issue, and pointed to much lower rates during his own era and to better economic progress then even though Iran's oil income was a fraction at that time of what it was in 2008.

Most Iranian politicians agree that social justice and taking care of the poor and improving the lot of the little people are an essential part of revolutionary Iran's ideology, and so Khatami argues that Ahmadinejad's inflationary excesses threaten a key pillar of Khomeinism, which is to do uplift for the "barefoot" masses.

Ahmadinejad's economic policies have been bad for the "bazaar,"the nexus of artisans, money-lenders, shopkeepers, import-export merchants, and Khomeinist industrialists that is close to the clerical rulers. Therefore, a lot of conservatives have distanced themselves from Ahmadinejad. 

Not only has the quirky president pumped too much money too suddenly into the economy, but his pugnacious attitude to Iran's civilian nuclear enrichment program and his stated conviction that Israel is on the verge of collapsing (which his enemies have been able to twist into a "threat" to "wipe Israel off the map," even though that is not what he said) have made Iran an international pariah and led to increasingly severe United Nations and US sanctions.

Those sanctions and the prospect of more have had a big impact on Iran's economic advancement, since by last May they had scared away Royal Dutch Shell and Total from helping develop Iran's vast gas fields. (Natural gas is a high-technology field and few have Shell's or Total's experience in developing and distributing it, so they are not easy for Iran to replace).

Ahmadinejad has brought relations with the United States to lows not seen since the 1980s. In contrast, Khatami had called, when he was in office, for people-to-people diplomacy between the publics of Iran and the US, which Roy Mottahedeh of Harvard likened to Sino-American ping-pong diplomacy in the 1970s. Likewise, under Khatami, Iran offered a wideranging alliance to the US in early 2003 against Saddam, which would have led to full diplomatic relations and even recognition of Israel. Cheney is said to shot down that initiative quicker than he could shoot a friend in the face.

In 2004, Khatami even agreed to a temporary suspension of nuclear enrichment activities, a step that could usefully be implemented once again to kickstart negotiations with the Obama administration.

The Iranian hard right is most of all afraid that Khatami, if he is reelected, will establish good relations with the US. Ahmad Jannati, a hardliner and chairman of the Council of Guardians (kind of a clerical Senate) told the reformist paper E'temad last week:
' "The people do not want a non-Islamic element to come to power in this country." He added: "The person who wants to become the next president should in the first place be Islamic, and enjoy the characteristics required for Islamic governance, namely orientation towards justice and devotion to serve the people. In addition, he should fight against corruption and (global) arrogance. Naturally, such a person cannot show a green light to America."

He went on say: "At the moment, with the change in the American administration, a number of members of grouplets (hostile opposition groups), who should really be in prisons, have been exploiting their freedom in the Islamic Republic, and have gone to America and have given its officials some hope about the restoration of relations (with Iran)." Jannati added: "If the pro-American tendencies come to power in Iran, then we have to say goodbye to everything. After all, anti-Americanism is among the main features of our Islamic state."

He then explained that supporting the underprivileged is another key feature of Islamic governance, and emphasized: "This revolution is the revolution of the underprivileged, and in view of that fact, the country's officials must always think about ways of remedying the problems of the underprivileged strata." '

(- "Iran top cleric slams reformists' 'pro-American' stance, "E'temad Online, Wednesday, February 4, 2009 trans. USG Open Source Center


But aside from extreme hard liners such as Jannati, most Iranian conservatives have come to dislike Ahmadinejad and to become more positive toward Khatami. Even conservatives such as Ali Larijani gradually broke with Ahmadinejad. Larijani had been Iran's negotiator with Europe on the nuclear enrichment program, but he resigned and became Speaker of the Iranian parliament. Conservatives generally are dismayed with the president, because of inflation, sanctions, and Ahmadinejad's heterodox belief that the Shiite messiah figure, the hidden Twelfth Imam, is about to reappear.

Khatami is a cleric whose father was close to the current Supreme Leader, Ayatollah Ali Khamenei, and although the Iranian hard right hates him, he is teflon in that regard and he might attract Larijani-supporters.

Lots of questions are yet to be resolved. It is possible that Mohammad-`Ali Qalibaf, the conservative former governor of Tehran, might run, and might split the conservative vote with Ahmadinejad, benefiting Khatami. At the moment,there is another liberal candidate, Mehdi Karrubi, who has said he will not step down to clear the path for Khatami. But Khatami says he is sure that the liberals can work something out to avoid splitting their vote. Hard liners may also make an attempt to disqualify Khatami on ideology, but few expect such an effort to be successful (the threat of it was broached last fall in an apparent attempt to scare Khatami off from running).

Khatami has many flaws. He is at base a Khomeinist and so supports a regime that has a poor record on human rights. He may have high principles himself, but so far he has been relatively ineffectual in getting them implemented. His unwillingness to risk a crisis by pushing hard liners too far may contribute to social peace, but it also gives the hard liners a veto on reform.

Still, a Khatami presidency would be a great improvement. If Ahmadinejad passes from the scene in June, to be succeeded by Khatami, that could avert a growing crisis between Washington and Tehran, or at least give the two sides breathing room in finding a way forward.