Religious conservatives (backed by some 20 percent of the population) and moderates (backed by the rest, at least according to the results of the last elections) are still arguing over domestic and foreign policy. The latest flap is over US congressmen inviting Iranian legislators to visit their opposite numbers in Washington. The elected Iranian government is fine with this, but conservative religious officials are not. And so there will be another test of wills.
Religious conservatives, by virtue of the clergy led 1979 revolution against the Shah, have veto power over laws passed by the elected government. The religious party (basically the Islamic religious establishment of Iran) controls the military, police and courts. The population wants to be free of this veto, but is not enthusiastic about a fighting a civil war to achieve it. At least not yet. Meanwhile, the religious groups back Islamic terrorists like Hizbollah in Lebanon, and have long had hospitable relations with al Qaeda (although this has been played down since last September.) The Islamic groups also oppose any deals with Iraq, because the bloody 1980-88 war (that killed several hundred thousand Iranians) is what allowed the clerics to go from heavy influence over the post-Shah government to total domination. The conservative controlled military occasionally makes small attacks on Iraq, and many clerics would like to resume the war in order to oust Saddam Hussein. Iranians in general, and religious Iranians in particular, hate Saddam. After all, it was Iraq that attacked Iran, for no better reason than to grab some oil rich real estate (and because Iran's military seemed weakened by the anti-Shah revolution.) Without the religious conservatives, Iran would not be part of the terrorist "Axis of Evil."
The inability of the religious conservatives to maintain support from the majority of the population has a lot to do with several thousand years of relations between Arabs and Iranians. For most of that time, the Iranians were the major military power in the area. In the hundreds of wars involving Arabs and Iranians, the Arabs got the worst of it most of the time. For this reason, Arabs still fear Iran. The Iranians, on the other hand, have a more disdainful attitude towards the Arabs. This does not make for peaceful relations. The one time the Arabs beat up the Iranians, in the 7th century, the Arabs also imposed their religion, Islam. The Iranians had, for 1300 yeas before that, practiced their own monotheistic religion; Zoroastrianism. That religion never completely disappeared, much to the dismay of the Islamic clergy. For example, Iranians still celebrate their traditional new years at the beginning of Spring, in March; complete with the Festival of Fire (a Zoroastrian rite.) In the 1980s and 90s, the Islamic clergy suppressed this celebration (as has happened several times in the past.) But Iranians consider the celebration a tradition, and in the last few years the festival has returned. The Islamic conservatives avoided sparking civil unrest by not cracking down. Many other Zoroastrian customs persist, despite efforts by Moslems to stamp them out. The Iranians even have their own sect of Islam, Shiism, which is barely tolerated by mainstream Sunni (especially Arab) Moslems. Iran also produced another Islamic sects, Sufism, and Bahai, which considers itself a replacement for Islam (and is usually persecuted in Moslem nations.) Most Iranians consider themselves good Shia