The prophets of Iranian regime split won't find it in the fury of the bazaar

On the lookout for "cracks in the regime", analysts of Iran had a thrill last month. The bazaars of Isfahan, Tehran, and several other cities went on strike for the first time in a generation.

In the labyrinth of vaulted passages the richest traders were always the jewellers. Their glittering windows are rarely without at least one mother and daughter glued to the glass. When one pair of black chadors goes in to buy or moves away, another takes its place. The hunt for the right wedding ring is constant and business never flags.

Except three weeks ago, when Isfahan's goldsmiths closed their doors, soon followed by jewellers elsewhere. Spice merchants and clothes stores joined in, and the heavy wooden doors of Isfahan's bazaar swung shut.

Police swooped on the homes of suspected strike leaders but it was not just repression that ended the protest a day or two later. The government caved in, releasing the detainees and announcing that plans to introduce value added tax, the cause of the anger, would be suspended for a year.

Outside Iran, the regime's critics excitedly recalled that the bazaaris have not struck since the months before the Shah's fall three decades ago. Traditionally anti-western, and with close ties to the clergy, they helped to produce the Islamic revolution in 1979. They still control a large chunk of Iran's wholesale trade and distribution networks. Their donations help to fund the mosques. If the bazaaris break ranks, something truly big is under way.

So goes the wishful thinking, but it is wrong. First, what infuriated the bazaaris was not the tax (a modest 3%) but the fact that it would require them to open their books for the first time. They were resisting President Mahmoud Ahmadinejad's cautious attempts at modernisation, not protesting against dictatorship. Second, the "cracks in the regime" theory assumes a brittle monolith. But neither my fleeting impressions from visiting seven Iranian cities nor the comments of Iranian pundits put the country anywhere close to this. On the contrary, calm and normality are what strike you. The western stereotype of a threatening and dangerous country is wide of the mark. People regularly greet foreigners with "Welcome to Iran", partly to practise their English but also to thank you for resisting panic and coming to see for yourself.

Such analysts as Bijan Khajehpour, who heads a strategic consulting firm in Tehran, see Iran becoming more homogeneous over time. The divide between big cities and smaller rural towns is shrinking, he says, as young people aspire to learn English and computer skills, follow global dress and music codes, and embrace consumerism. Saeed Leylaz, the editor of Sarmayeh, a financial daily, notes an opposite tendency at least in the economy - a widening of the income gap over the last three years. Ahmadinejad's highly publicised tours to small towns and villages, and the largesse he gives for local projects, have not increased equality. Galloping inflation, which has just reached 30% annually, hits the poorest hardest. "In the last year of Khatami [the previous president] the Gini coefficient for income inequality was 0.39. Now it's 0.43, not far below the 0.45 of the Shah's worst period," Leylaz says.

The fall in oil prices and the improbability of any early upturn are plunging Iran into a financial crisis as sharp and sudden as that of western economies. This threatens living standards far more than western sanctions. Experts calculate that Iran needs a price of at least $76 a barrel, compared to the current $60, to prevent a rise in the government's budget deficit as well as a trade deficit that will require a slash in imports. Yet the likelihood that Iran's crisis will lead to a political upheaval is as remote as the chance that the wreck of western neoliberalism will produce revolution in the US and Europe.

Iran's system is flexible and resilient. Media controls are strong but getting less so. State TV reported the bazaar strikes because most families, in the smaller towns as well as Tehran, watch foreign TV via satellite dishes installed through the black market. The government has to put its own spin on bad news rather than ignore it.

With presidential elections next June the political factions are filling the print media, as well as parliament, with heated arguments over domestic and foreign policy. If one test of democracy is having elections in which the result is unpredictable, Iran certainly passes it. "The key point," as Khajehpour puts it, "is that we don't have a dominant political faction or agenda nowadays. They are all minorities." As many as six credible candidates may contest the first round before a French-style run-off.

Ahmadinejad represents the conservatives. They prefer to call themselves "principle-ists" since they believe in the principles of Islam and a strong Iranian (that is, non-western) identity. But Ahmadinejad comes under frequent attack from "radical principle-ists" as well as other moderate conservatives like himself. Amir Mohebbian, an economic commentator for the conservative paper Resalat, criticises the president's poor choice of words before foreign audiences as well as aspects of his tax and welfare policies.

A parliamentary showdown is looming over Ali Kordan, the interior minister, who will be impeached this week for faking his university degrees. This could trigger a vote of no confidence in Ahmadinejad's government. Some commentators say his reformist opponents may not support it. "They don't want to make him a martyr. They think he will not be re-elected next year anyway," says one analyst who prefers to keep his name unpublished.

Foreign critics may claim that in spite of boisterous faction-fighting, Iranian politics are imprisoned within a narrow spectrum of ideas and therefore count as undemocratic. But don't European and US politics also display what the French call pensée unique? It is only when societies are already moving into instability that the political class begins to tolerate, or is forced to accept, a widening of the margins for debate.

Iran is becoming more secular. A group of mullahs in Shiraz concede that fewer people attend mosques than a decade ago "because more time has passed since the revolution". Ali Reza Manaei, a guide at Tehran's martyrs' museum and a member of the Basij, a group of revolutionary volunteers, complains that the values of social solidarity are ebbing while corruption is on the rise. "The government's behaviour has got worse, and so has people's behaviour towards one other," he says.

Even Ahmadinejad is a quasi-secularist. Formed politically by the eight-year war with Iraq, "he represents a kind of thinking that doesn't see a huge value in having the clergy in power," one commentator argues. Another points out that the president feels he has a direct link to the Hidden Imam (the Shia version of the returning messiah) and can dispense with the mediation of clerics.

In short, Iran is complex. Even to Iranians it seems unfathomable. For foreign governments the message is this: don't expect regime change in the near future. Above all, don't try to force it.

Jonathan Steele