Observers are not sure if this is a new season which would really bring about any fundamental changes.

The authority of the new president is very restricted with regards to foreign policy. Rafsanjani's farewell remarks made it clear that foreign policy is determined in the first step by Khamenei (the regime's leader) and only executed by President Khatami. This is a gloomy prospect for those groups of people who hoped to see fundamental changes in the Iranian strategy with Khatami's election. And what will happen to the hopes of the electorate?

One should probably not expect revolutionary changes in domestic policy either because, on the one hand, Khatami is from the ruling clique. On the other hand, the extremists will use all their efforts to prevent unwanted liberties... The new season Khatami is talking about is ominously similar to what has so far happened to the people...

Khatami's Economic Problems, BBC Radio, Farsi Service, August 2 

The new Iranian president faces three major problems in domestic economy. The first problem is that Khatami must prepare for a coherent economy... Drafting such a policy is very difficult because Khatami's forces do not share the same philosophy. They follow even contradictory policies on issues like economic liberalization, privatization, foreign investment, etc.

Khatami's second problem is his relationship with centers of power, formed around Khamenei, the Majlis and Rafsanjani. There remains one fundamental question: Would it be possible to implement a coherent economic plan in this kind of an atmosphere?

And finally, Khatami's third problem is his relation with Rafsanjani's legacy. Khatami will be very troubled in judging Rafsanjani's record. If he wants to discuss the economic problems, as they are, with the public, he will spoil his relation with Rafsanjani supporters. If he does not speak the truth, then people will blame all the problems on his government...

Internal Rift among Various Factions Widens, Reuter, August 6  

Iranian police have arrested two senior Tehran city officials on corruption charges, the latest in a series of arrests denounced by the capital's moderate mayor as a campaign by political opponents.

The daily Resalat said on Wednesday a special judicial unit fighting corruption among state employees held the two municipality officials, Kamal Aziminia and Noureddin Safinia, on charges of "receiving illegal sums of money" and unlawfully seizing land belonging to a government bank.

Tehran mayor Gholamhossein Karbaschi, who actively backed the election campaign of President Mohammad Khatami against his conservative rival, has blasted the earlier arrests of four senior officials at his municipality for alleged financial corruption as politically motivated.

Iranian police late in July seized the four, who include the security chief and the head of a Tehran district.

Some 100 parliamentarians have written to judiciary chief Ayatollah Mohammad Yazdi denouncing the arrests of the four….

Bonn Rejects Iran Demands on Return of EU Envoys, Reuter, August 4 

German Foreign Minister Klaus Kinkel said on Monday the European Union would not allow Tehran to dictate the terms of the return of EU ambassadors to Iran.

All EU states except Greece recalled their ambassadors from Tehran after a German court ruled in April that Iran's top leaders had ordered the 1992 assassination of four Iranian Kurdish dissidents in a Berlin restaurant….

U.S. Trigger for Iran Sanctions Now $20 Million, Reuter, August 6

The United States must now punish companies that spend $20 million or more a year in developing Iran's oil or gas fields, a decrease from the $40 million trigger required by law last year, the State Department said on Wednesday.

The Iran Libya Sanctions Act, which came into effect in 1996, required the United States to penalize non-U.S. firms that invested $40 million or more in any year in Iranian or Libyan oil and gas, and called for the Iran sanctions threshold to drop to $20 million if Washington failed to spur its allies to slap sanctions on Iran in the law's first year….

So far, European Union nations have only withdrawn their ambassadors from Tehran after a German court in April accused Iran's leaders of ordering the murder of Iranian dissidents in Berlin….

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