Ali Khamenei had ordered his deputies to start privatizing state-owned businesses: the telephone company, three banks and dozens of small oil and petrochemical enterprises.
Jealously guarding their own sources of power and patronage, however, his underlings all but ignored him.
Months passed. Then Khamenei gathered the country's elite for an extraordinary meeting. President Mahmoud Ahmadinejad and his Cabinet ministers were there, as were important clerics, the leader of parliament and provincial governors, and the heads of state broadcasting and the Iranian chamber of commerce.
With television cameras rolling, Khamenei told them to pass some laws, sell off some businesses -- and be quick about it. "Those who are hostile to these policies are the ones who are going to lose their interests and influence," he declared.
The system shrugged. By November, nine months after his public scolding and almost a year and a half after Khamenei had first issued his order, almost nothing had happened. According to the Middle East Economic Digest, only two out of 240 state-owned businesses Khamenei targeted had been sold off.
For years, Western analysts have struggled to understand the inner workings of Iran's leadership. To many, it is a government tightly controlled by the Shiite Muslim clergy. But the power of the clerics has steadily eroded. Increasingly, power is distributed among combative elites within a delicate system of checks and balances defined by religious as well as civil law, personal relations and the rhythm of bureaucracy.
Iran analysts struggle to discern which officials have authority and how much. And when Iranian officials make public pronouncements, it often is unclear whether they are expressing established policy or fighting among themselves -- speaking for their own faction or just themselves.
Concentric circles of influence and power that emanate from the supreme leader include the clergy, government and military officials -- and at their farthest fringes, militiamen and well-connected bazaar merchants -- altogether perhaps 15% of Iran's 70 million people.
Even the man regarded in Iran as the highest-ranking cleric in Shiite Islam finds himself constrained and challenged.
Those inside Iran's circle of power, says Ali Afshari, an analyst and former student activist now living in Washington, operate according to unique rules.
"It is not a democracy or an absolute totalitarian regime," he said. "Nor is it a communist system or monarchy or dictatorship. It is a mixture."
Those who matter
In the parlance of Iran's ruling elite, those who truly matter are referred to as khodi, Persian for "one of us."
Khodi accept that Khamenei has a God-given right to rule. At least outwardly, they adopt the values of the senior clerics. They even adhere to a dress code: The men wear white shirts buttoned up to the collar; gray, brown or black suits; and neatly trimmed beards -- the garb of the traditional merchant class. The women wear the single-piece black chadors covering all but their hands and faces.
"In our society there is a red line between khodi and non-khodi," said one political activist. "If you've never been on the right side of that divide, you're considered guilty until proven otherwise. If you're not khodi, you don't have the right to criticize."
Khamenei and his closest advisors are at the center of that power structure, overseeing grave matters of state, including the country's nuclear program and domestic policy, from a huge tree-shrouded compound in downtown Tehran. Each day, the Supreme National Security Council, Khamenei's main think tank, faxes his orders to newspapers, television stations and government officials. Clergy spread the word at homes and Friday prayer sessions.
Surrounding the supreme leader are several powerful committees consisting of dozens of clerics, each established to cement the central role of religion in Iranian politics. The Council of Experts chooses the supreme leader. The Guardian Council vets laws and candidates for public office. The Expediency Council mediates legal disputes.
Next are the leaders of the Revolutionary Guard and armed forces, who are appointed by Khamenei; the elected president; the Cabinet; parliament; senior military commanders selected by the supreme leader; and the senior clerics in the holy city Qom.