Leading article: Uncertainty in Iran upsets all calculations in the region

There is a hopeful scenario, but it would be wise to prepare for the worst

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Repression may have stifled the Tehran street protests, but – as was clear from Mirhossein Mousavi's statement yesterday – the opposition's challenge remains alive. And while this is a messy outcome to an election, it has many more ramifications. Turmoil in Iran could transform not only Iran's immediate future, but the geopolitics of the wider region.

A clear victory for either Mr Ahmadinejad or Mr Mousavi could have created the domestic political space for a positive response to President Obama's initiative, so paving the way for Iran's re-engagement with the outside world. A disputed result, producing a defensive leadership, makes any major diplomatic movement less likely. Whatever the eventual resolution, Iran's leaders will be watching their backs.

For outsiders, this presents a new situation, and it changes many calculations – or at least it could and should. Before the election there was a widespread assumption that Iran was the coming regional power. Its influence seemed to be spreading before our eyes, into eastern Iraq and western Afghanistan. Its tentacles extended, via proxies, into Lebanon and Gaza, and it was increasing its diplomatic clout with Russia and China, through the Shanghai Co-operation Council. Iran looked all the stronger in the light of its neighbours' weakness. Iraq was preoccupied with reconstruction and debilitated by its near descent into civil war, while shaky governments in Afghanistan and Pakistan were both ceding territory to a resurgent Taliban.

An unstable Iran, nervous and introverted, is the very last thing that this already volatile part of the world needs. In the worst case, the prospect looms of seething civil unrest, even as violence mounts around its borders. In Iraq, the incidence of bomb attacks has been increasing – including in Baghdad, Fallujah and Kirkuk – as US forces prepare to leave the cities. It remains to be seen whether this is by way of a last outburst of anti-US resistance or a sign of what is to come once the Americans leave.

In Pakistan, government troops have had more success in their belated drive into Taliban-held tribal areas than many expected. Whether this will continue, though, is another matter. In Afghanistan, the US is embarking on a fundamental change of tactics, intended to reduce civilian casualties and promote security, with a view to eventual disengagement. The US is also, sensibly, integrating its policies towards Afghanistan and Pakistan. But it is not at all certain whether the new course will manage to quell the escalating violence or even whether the government of Hamid Karzai can survive. In the worst case, we could be countenancing this vast region engulfed in violence.

There is a more optimistic scenario. According to this, President Ahmadinejad – assuming he remains in power – could find his rhetorical and diplomatic wings clipped. There might be less Iranian meddling elsewhere in the region. Some even interpret Iran's disputed election result as evidence that the high tide of Islamic extremism may be passing. They cite also the defeat of Hizbollah and its allies in the Lebanese elections earlier this month and recent setbacks for the Taliban in Pakistan.

From the perspective of today, such a benign result looks like so much wishful thinking. And as the world watches the next chapter of Iran's election play itself out, we can hope for the best, but must prepare for the worst. These are uncertain, and potentially threatening, times.

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