Inside Iran: What life is really like in Tehran

"Sit long enough by the river and the corpse of your enemy will float by," says an old Middle Eastern proverb. For Iranian leaders, the truth of this saying has been proved this spring as the Arab Awakening unexpectedly overthrew or weakened their enemies across the region. As recently as January, the White House was satisfied that it was gradually tightening the noose around the neck of Iran as it imposed ever more severe sanctions on its old foe. But within three months, without Iran actually doing anything, American policy was in fragments. One stalwart of the anti-Iranian alliance, President Hosni Mubarak of Egypt, was in hospital under arrest – and another, King Abdullah of Saudi Arabia, had plenty to worry him close to home in Bahrain and Yemen; urging an aggressive policy towards Iran, the king had once advised Washington "to cut off the head of the snake", but as revolution sweeps the Arab world, the United States is losing whatever small appetite it had for a confrontation with Iran.

This doesn't mean that the US hasn't been thinking about how the present turmoil is affecting Iran. As the White House debates the extent of its military engagement in Libya, senior officials never forget that what happens to Colonel Muammar Gaddafi's regime is a sideshow compared with America's long-drawn-out struggle with Iran – one that stretches back to the overthrow of the Shah in 1979, the US embassy hostages and Ayatollah Khomeini. American support – or lack of it – for pro-democracy uprisings in the Arab world always takes account of how far this hurts – or benefits – its main enemy in Tehran. The brutal crushing of the majority Shia population in Bahrain by the Sunni monarchy, backed by Saudi troops, is winked at by the US and Britain because a democratic Bahrain might actually be more sympathetic to Shia Iran.

Some Western pundits suggest hopefully that the current revolutionary wave will spread to Iran – while Iranian opposition spokesmen, mostly operating from abroad, speak of thousands of baton-wielding riot police and militiamen confronting weekly street protests in cities across the country. So far, however, the reality has been much tamer. When I was in Tehran in February and early March there were few signs of demonstrators, though police were milling about in large numbers. The government had been surprised on 14 February when 30,000 supporters of the opposition Green movement, born at the time of the allegedly fixed presidential election of 2009, had taken to the streets. But the number of demonstrators has since dwindled. "Unfortunately, the outside world is making a mistake by exaggerating the importance of these protests," an Iranian journalist usually sympathetic to the Greens told me. "The problem is that the picture of what is happening in Iran these days comes largely from exiled Iranians and is often a product of wishful thinking or propaganda."

The severity of the repression shows that the regime is worried, but does not necessarily mean that it is under serious threat. The Iranian government invariably overreacts to any kind of dissent, denouncing the protesters in lurid terms as traitors and pawns of the US and Britain whose aim is the destruction of the Islamic Republic. Given that Ali Khamenei, the Supreme Leader and successor to Ayatollah Khomeini, is God's representative on Earth, it follows naturally that opposition to him and his policies is nothing less than an assault on Islam.

In reality, political developments are, for the moment, going in the opposite direction to those in much of the Arab world, where state power is crumbling or under threat. For, in Iran, the authority of the state is being concentrated and strengthened. President Mahmoud Ahmadinejad – the pious, populist, authoritarian Iranian leader first elected in 2005 – is seeking to create an imperial presidency by eliminating other centres of power. He adeptly used the mass demonstrations against his 2009 election "victory" to crush his opponents and rivals. The two embattled leaders of the Green movement and former presidential candidates Mir Hossein Mousavi and Mehdi Karroubi, already under house arrest, are now being ever more closely confined. They are prevented from communicating with the outside world by phone or the internet and their families can no longer meet them. But despite these privations, the regime appears to have decided to isolate rather than imprison them to avoid turning them into martyrs and provoking a reaction on the streets.

Power in the Islamic Republic has traditionally been fragmented, particularly since the death in 1989 of Ayatollah Khomeini, the fount of all authority in the first decade after the revolution. Rivalry between Iran's different political and religious elites has been continuous. Ali Khamenei has never had anything like Khomeini's uncontested authority. As a result, there has been a 20-year-long struggle between those demanding a more democratic and secular state and those wanting a more militarised and Islamic government. It is this battle which now seems to be coming to a conclusion – and the future is looking bleak for secular reformers.

The establishment had been split. Mousavi and Karroubi both represent the reformist trend, but neither was previously an out-and-out radical: Mousavi was Iran's prime minister from 1981 to 1989 before leaving politics to sculpt and paint, while Karroubi served two terms as speaker of the parliament. Now, however, the fragmentation of power between different centres and personalities is no longer tolerated. Important politicians who supported the Greens in 2009 are today being forced to denounce the renewed demonstrations of 14 February. Neutrality or silence is no longer an option.

Another important figure, Ayatollah Ali Akbar Hashemi Rafsanjani, for three decades one of the chief power-brokers of Iran, is coming under escalating attack from Ahmadinejad's supporters. He has been compelled to give up his post as head of the Council of Experts, the clerical body which chooses the Supreme Leader. Other signs of his influence being chipped away are the brief detention of his daughter, for taking part in protests, and the resignation of his son as head of the Tehran metro system.

Iran is often portrayed abroad as being controlled by the Shia clergy, but the truth is that though it may be a theocratic state, it is a very strange one. The president and his closest associates are not clerics. In elections, Ahmadinejad presents himself as the anti-establishment candidate, the friend of the urban and rural poor. His ideology is a blend of Shi'ism and Iranian nationalism that is frequently more hardline than that of the senior clergy. The son of a blacksmith, he is a former officer in the Iranian Revolutionary Guard Corps (IRGC) and of the generation whose attitudes were shaped by the 1980-1988 Iran-Iraq war, in which a million Iranians were killed and wounded. Reverence for the self-sacrificing religious and nationalist commitment of the men who fought in the trenches plays the same role in determining the mentality of many Iranians as it did in the 1930s in post-First World War Europe.

Ahmadinejad is better able to crush protests than Arab leaders because, unlike them, he has a core of fanatical supporters. This support is organised in powerful bodies such as the IRGC and the Basij militia, which may be a million strong. He has the backing of hardline mosques, though he is suspected by many clergy of subtly ignoring their views. Indeed, the greatest threat to his position comes not from the protesters but from Ali Khamenei and political leaders who backed him against the Greens but fear him monopolising power.

And the result of all this is that the Greens and the radical reformers look simply too weak to take on the forces of the regime. They have a reasonable claim to be the real winners of the election in 2009 and, when demonstrations were at their height, as many as three million people protested. But the number of militant reformers is far smaller than this. Many Iranians are discontented – but they do not necessarily hate the regime so much that they will risk the grim consequences of opposing it. And support for the reformers is becoming difficult to mobilise, because any media sympathetic to them has been taken over or closed down and information favourable to their cause can increasingly be found only via foreign-based militants or the BBC and Voice of America in Farsi.

At the same time, the desire for change is not going to go away. Iran remains a country deeply split by the revolution of 1979, just as the French Revolution divided France for 150 years. One of the main reasons why the regime is so edgy when confronted by even small demonstrations is that Iran is the one country in the Middle East where a seemingly all-powerful state machine was once overthrown by street protests. The former revolutionaries do not want the same thing to happen to them. One Iranian cleric compared the threat to the Islamic Republic from the reformist leaders to that facing the Soviet Union in its final years. He said that some of the Iranian reformist leaders are like Gorbachev and would, in his view, unintentionally undermine the Islamic ideology of the state if they were in power. But he compared others with Boris Yeltsin, who secretly schemed to destroy the whole system.

In Tehran in recent weeks there has been little sense of emergency. The regime sees no hypocrisy in lauding protesters abroad at the same time as it is driving them from the streets at home. The only visible sign of anything out of the ordinary when I was there was the groups of black-helmeted policemen standing as they waited for demonstrators who mostly failed to turn up. This might change, but so far there is no sign of it.

International sanctions in response to Iran's nuclear programme are having an impact, but their seriousness is limited compared with the United Nations sanctions against Iraq in the 1990s. The withdrawal of state funding for food and utilities, which had been costing the government $100bn a year, affects day-to-day life more than any embargo. Tehran traffic remains among the most terrifying in the world, as pedestrians weave expertly between speeding cars that often miss them by inches. But the streets are a little less congested than they used to be and the number of vehicles has shrunk because petrol – previously almost free – has gone up in price as subsidies have been removed. Cars can use the roads only on alternate days, so one day will be allocated to vehicles with their numbers ending in an even number and the next will be for odd numbers. "Tehran is short on entertainment," one resident told me, "and, when petrol was cheap, people liked to go joy-riding for lack of anything to do. But they do not do it any more because of the expense..."

Once one of the cheapest cities in the world, Tehran is now becoming much more costly. Prices have risen steeply as subsidies disappear for everything from electricity, gas and water to foodstuffs such as flour and cooking oil. People are shocked to find that their utility bills have quadrupled. It is a measure of the government's stability that so far this reform has been carried through without protest. A weakness of the Greens is that the movement, unlike its equivalents in Egypt and Tunisia, has remained largely confined to the educated and the middle-class. Demands for political liberty and civil rights from people in north Tehran have never combined with the economic demands of the urban poor in the south of the capital. When they do, the regime will truly have something to be frightened of.

I went to see the mausoleum of Ayatollah Khomeini in south Tehran and was surprised to find so few worshippers. The silver dome over his tomb rises amid minarets and cranes that stood out against the grey sky.

The mausoleum seems to be permanently under reconstruction and part of its interior is still being built more than 20 years after his death. The persistent but not very heavy rain on the day I was there had been too much for the roof of the shrine's entrance hall, where water was dripping into buckets and drums. Worshippers, who had already removed their socks, were trying gingerly to skirt the pools of water to get into the main part of the shrine.

Not far away is the vast cemetery of Behesht-e Zahra, where so many of the soldiers and barely trained militiamen killed in the Iran-Iraq war are buried. It is one of the saddest and most moving cemeteries in the world. Photographs of the young men who died stare out of large glass cases above each tombstone. Beside the pictures are mementos of the war – a few cartridges, perhaps, or a scarf. Bodies are still being found in the mountains, deserts and marshes of the Iran-Iraq frontier and are brought here to be reburied. Their remains provide a still-potent symbol of ideological purity – and taking advantage of this, Ahmadinejad had some of the bodies reburied in public places around Tehran, including dissident strongholds such as university campuses.

Sanctions are making life more difficult for Iranians and have increased their sense of isolation. Money is difficult to get in and out of the country, though this can still be done with time and effort. Elaborate arrangements have to be made by importers and exporters to route transactions through Dubai or other entrepôts. Petrol cannot be imported, so the shortfall is being made up by converting petro-chemical plants – but their product is low-grade and produces toxic fumes, adding to the clouds of smog that so often hide the mountains just to the north of the capital. "Why is the world so worried about us being able to make a nuclear bomb," asked one Iranian sarcastically, "when we cannot even build proper refineries to make petrol?"

Iran is a difficult country to know, because its recent historic experience is unique: no other country in the region has had a genuine popular uprising that overthrew a whole ruling class. Protesters in Tunisia and Egypt have got rid of unpopular leaders, but it is too early to know whether the uprisings will lead to real revolutions or simply a changing of personnel at the top. Ayatollah Khomeini's brand of militant and politicised Shia Islam was the main force which overthrew the Shah, but it was by no means the only one. The domination of his ideology has never been uncontested or fully accepted by all Iranians, producing a fascinating culture that is full of contrasts.

There is a deep chasm between the way people are meant to behave and the way they really live. For instance, premarital sex remains a taboo, but a recent opinion poll of 7,000 young men and women showed that 55 per cent admitted to having a boyfriend or girlfriend; the real figure is believed to be higher. In restaurants and cafés in central Tehran women wear headscarves, but are otherwise as smartly dressed as in any European capital. A majority of students at the universities are women and – according to one small businessman I spoke to – private companies prefer female employees. "They are likely to be better educated than men, work harder, and do not use opium," he told me.

If Iran is a country little understood by the outside world, this is partly the fault of its rulers. By excluding foreign media and tightly controlling Iranian journalists, they create a vacuum of information that is inevitably filled by hostile propaganda. The West has demonised Iran for so long that the country's international image differs little from that of the Taliban when they ruled Afghanistan. In addition, the political cultures of America and Israel require a ready supply of demons – and both countries portray Iran as a great and menacing power on the verge of developing a nuclear weapon. In practice, the best efforts of US intelligence have failed to find any evidence that Iran is developing a nuclear bomb.

The exaggeration of the Iranian threat by its enemies is not unwelcome to Iranian leaders, since it bolsters their picture of Iran as a world power. But this grandiose vision has usually been accompanied by a highly practical sense that Iran's ability to expand its influence on the ground is confined to states that have a Shia majority, such as Iraq, or a powerful Shia community, such as Lebanon. Even in Bahrain, which is 70 per cent Shia, there is no evidence of Iranian involvement in the uprising, despite self-interested and paranoid claims by the Sunni monarchy.

Iran may not be very strong, but its opponents have turned out to be weaker or stupider than anybody supposed. Some Iranian clerics argue that only divine intervention on the side of Iran can explain the recent developments in the region. Ten years ago, Iran faced enemies to the east and west in the shape of the Taliban in Afghanistan and Saddam Hussein in Iraq. The US conveniently overthrew both, but its intervention provoked such strong resistance that it ruled out US military action against Iran. Now, without Iranian leaders doing anything, Mubarak is gone and the Saudis are quaking at the uprisings all around them. The only bad news for Tehran is that Syria, Iran's long-term ally, is also under threat.

For all their blood-curdling rhetoric, the Iranian regime has not been doing much to spread the Islamic revolution. But why should it when, sitting by the river, its leaders have the satisfaction of watching the deceased remains of so many of its opponents drift by?

Patrick Cockburn writes about the Middle East for The Independent and The Independent on Sunday