Iran's President digs in as leadership crisis deepens

A power struggle of titanic proportions has broken out between Iran's newly elected President Mahmoud Ahmadinejad and the country's parliament.

Now the President's domestic political agenda is in danger of collapse, after MPs refused to accept his choices for the top post of oil minister. And a new scandal in Tehran municipality tarnished his election promises to weed out corruption. The President's former parliamentary supporters say they have been alienated by his closed-door style of rule that has opened deep rifts in the ruling conservative faction.

An investigation into municipal spending has revealed Tehran's conservative council exhausted most of its £11.6m budget for cultural activities in the run-up to June's presidential election when Mr Ahmadinejad was city mayor. Officials have admitted there is little documentation for the spending, leading to speculation that it was used unofficially for the election campaign.

On Wednesday, parliamentarians from the President's own political wing cheered and congratulated each other after inflicting a stinging defeat on the President by rejecting his third choice of oil minister, the most important job in the cabinet. With oil prices soaring, the minister controls a sector worth a third of government revenue and has huge influence to support or block funding for the social engineering projects so beloved of the President.

Mr Ahmadinejad made a last-ditch appeal to the Majlis, the Iranian parliament, before the vote. "The government respects the Majlis, but unjustly accusing a brother on an unknown internet site ... is not fair," he said, attempting to swing the vote behind his choice. Mohsen Tasalloti had been accused of having a US residence permit.

Even Mr Ahmadinejad's reformist predecessor, Mohammed Khatami, managed to win support for his first cabinet from a Majlis dominated by conservatives who opposed his reformist ambitions. The failure to appoint an oil minister three months into a new administration is unprecedented and two top government watchdog committees have been tasked with finding a solution to the deadlock.

Majlis members quoted after the vote said they were angry they had not been consulted about the President's choice, which is part of a wider policy of replacing senior government officials with lesser-known ideologues. Political supporters have been brought in to manage the diplomatic service and cultural and economic organisations. This week the head of Tehran's stock exchange, which has lost a quarter of its value since the election, was replaced by a 27-year-old economics graduate.

"Ahmadinejad has a slogan of co-operation between parliament and government, but it would be better if he actually conferred with his lawmakers," said a Majlis deputy.

Reformists and technocrats talk of a purge, but the changes were not unexpected and fall within the rights of an incoming president. However, they have displeased political allies, who are concerned that these inexperienced young ideologues are not up to the job. Appointing a nonentity to the oil ministry post was seen as a step too far.

Last week Akbar Hashemi Rafsanjani, who despite his election defeat in June remains a leading figure in the regime, openly criticised Mr Ahmadinejad's supporters for ousting officials on the pretext of corruption. "They soil the reputation of our political and economic managers with abandon in the name of fighting corruption," said the former president, who has a foot in both the reformist and conservative camps.

Since his election, Mr Ahmadinejad has focused power in a small cabal of close supporters, infuriating powerful figures.