[Excerpts from an op-ed piece by Karen Elliott House, president, international, of Dow Jones. She won a Pulitzer Prize for international reporting.]

There's a naïve new Middles East plot line emanating from the U.S. foreign policy establishment and now beginning to be amplified in the media:

Iranian citizens, rejecting the radical fundamentalism of their mullahs, elected a "moderate" new president… This affords America a unique opportunity to nurture new Iranian moderation…

… Ironically, this applied more than a decade ago, when Oliver North took his now notorious chocolate cake to Tehran to meet Hashemi Rafsanjani, Mr. Khatami's predecessor, only to have security guards eat the cake…

In short, we are going to be hearing a lot more about new Iranian moderates in coming months, and much of it will be wishful thinking… The appearance of an occasional moderate somewhere in the ruling hierarchy of a radical regime doesn't portend a new era of moderation.

While some Americans are impressed that elections in Iran brought to power Mr. Khatami, who was not favored by the mullahs, it is important to remember that the Islamic Republic is still run by the imam, or chief religious leader, and his ruthless intelligence service… The U.S. remains the "great Satan" in the official theology of Iran's ayatollahs, and in their state support for terrorist bombings against America and her allies, especially Israel.

Indeed, Mr. Rafsanjani was also once hailed as a moderate. But despite offers by the Bush administration to "talk" and more recent direct dialogue between Saudi Arabia and Iran, Mr. Rafsanjani failed during his eight-year presidency to deliver any visible record of moderation on the central concerns of America and its Gulf allies. This includes Iran's support for terrorism and its active efforts (with Russian and Chinese help) to acquire nuclear weapons and missiles to deliver them long distances…

Iran's Battered Economy, Voice Of America, August 28

One of the challenges facing Iran's new president Mohamad Khatami is the country's battered economy -- high unemployment, rampant inflation, the government's dwindling economic power…

Economics professor Siamuk Shojaei of Manhattan College in New York says the list of economic challenges is long.

Shojaei: "There is a chronic shortage of consumer goods, capital goods, raw materials and spare parts for factories and plants in Iran. There is rampant corruption throughout the economy. The distribution system is old and corrupt. There is a huge budget deficit. My estimate for the current year is the budget deficit will be over 30 percent of the overall budget, perhaps close to 13 to15 percent of gross domestic product."…

Iran Stocks Hit as Speculators Bail Out, Reuter, August 28

TEHRAN - Tehran's nascent stock market has suffered a sustained and heavy bout of selling for almost a year after local short-term investors turned their back on the exchange…

Iran's inflation-ravaged economy has few real investment opportunities, prompting those with cash to quickly plough savings into the few areas able to beat inflation, running officially at around 20 percent a year. Some economists say inflation is actually higher…

Although allowed to hold up to 49 percent in Iranian firms, foreign investors are rare. Their investment accounts for less than four percent of the total because of a lack of guarantees over repatriation of earnings.

Threat From Iran, Reuter, August 28 

SEOUL - Israeli Prime Minister Benjamin Netanyahu on Thursday urged security cooperation with South Korea to counter a perceived missile threat from North Korea and Iran.

"This is a concern to both our countries, because each of us is threatened directly, one by Iran and the other by North Korea. If the two of them cooperate with each other, it's only natural that we should cooperate with one another," he said….

Mullahs' Film Depicting Hostage Mission Receives Cold Shoulders, Associated Press, August 27

TEHRAN - The movie "Sandstorm," an Iranian account of the failed 1980 U.S. mission to rescue 52 American hostages in Iran, opened in Tehran on Wednesday to a relatively small crowd.

Although newspapers and magazines printed full-page advertisements, the 400-seat Quds theater was only half full….

The movie opens with documentary footage showing angry Iranian students shouting "Death to America," in front of the embassy, followed by a scene at an air base used by the Americans…

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