President Mohammad Khatami's visit to Italy this week is an important moment in Iran's improving relations with European states. This is a central part of his political strategy, which is aimed at consolidating popular support against fundamentalist clerics and their allies throughout the bureaucracy, military and economy. He seeks to win support for his efforts to install accountable government and the rule of law, to open up a diplomatic dialogue with the Europeans, and to attract badly needed foreign investment.
Iran is highly distinctive among Middle East states in having effectively a system of dual power between the contending forces represented by Mr Khatami and the country's supreme leader, Ayatollah Ali Khamenei. Despite the phenomenal support Mr Khatami secured in presidential elections in August, 1997, when he gained some 70 per cent of the votes in a 90 per cent poll, this by no means ensured control over the most important centres of state and government. He and the reformers have now repeated that victory in local and municipal elections, securing the great majority of votes from younger people - women especially - in the major cities. Visitors to the country report a palpable expectation of change.
The division of powers between president, government, parliament and the conservative religious establishment, reflects tensions inherited from the great revolution against the shah's regime - whose twentieth anniversary is being marked this year. Ayatollah Khamenei, who took over from the revolutionary leader, Ayatollah Khomenei, controls defence and foreign policy, the judiciary and intelligence services - and also a whole swathe of the economy through corporate entities rather like the South Korean chaebols. The Majlis, Iran's parliament, is also controlled by those opposed to reforms, but observers expect this to change when elections are held next year. President Khatami himself stands again for election in 2001.
European countries have taken a very different approach towards Iran than has the United States, engaging in critical dialogue rather than hostile containment. Mr Khatami's visit to Italy is intended to widen this gap, and it must be recognised that he has chosen his timing and placing well. In messages clearly aimed at a wide European audience, he has pledged "to oppose all forms of violence, aggression, terrorism, racial and ethnic discrimination, as well as the proliferation of nuclear arms and weapons of mass destruction". His meeting with Pope John Paul yesterday, confirmed a willingness to pursue a dialogue between Muslim leaders and the Catholic Church.
European leaders must assess whether Mr Khatami can deliver on such undertakings, given the deep divisions within the Iranian regime. They must press home concerns on human rights and democratic accountability. They also, of course, have straightforward economic interests in doing so. Italy is one of Iran's principal trading and investment partners, as was confirmed in the announcement last week when ENI, the 37 per cent State-controlled Italian oil company, signed a $1 billion dollar deal with France's Elf-Aquitaine and the Iranian government on the development of an offshore oilfield.
It is surely correct that European states should do all they can to encourage the direction of change proposed by Mr Khatami by supporting the social and political forces he represents.