the former Iranian president Mohammed Khatami formally pulled out of crucial June presidential elections yesterday to avoid splitting reformist supporter votes.
The liberal cleric's decision, five weeks after he joined the race, was interpreted in some diplomatic circles as a boost for the hardline President Mahmoud Ahmadinejad, who has overseen a sharp deterioration in relations with the West since coming to power in 2005. Others however said Mr Khatami's tactical withdrawal would improve the chances of the other leading candidate in the reformist camp, Mirhossein Mousavi, an influential former Prime Minister who now has the full support of Mr Khatami.
President Ahmadinejad's popularity has slumped badly against a backdrop of chronic unemployment and double-digit inflation.
Reformists believe they now have an opportunity to unseat him. Many had placed their hopes in Mr Khatami, the most liberal president Iran has had since the 1979 Islamic Revolution. However, Supreme leader Ayatollah Ali Khameini remains the key figure in the Iranian hierarchy and his influence will sway many conservative voters.
Some observers say Mr Mousavi, who has appeal on both sides of the political divide, is closer to Ayatollah Khameini than Mr Khatami.
The June election comes at a critical time for Iran, with the Obama administration in the US signalling that it wants America to re-engage with the country for the first time since the revolution.