National Agenda : In Iran, Is Revolutionary Party Over? : Thirteen years after the Muslim revolt, ‘government by God’ is yielding to pragmatism.

In the walled compound known as the U.S. Espionage Den--formerly the American Embassy--a small bookstore stocks shelves of secret documents, evidence of America’s complicity with the deposed shah and the scheming Arab emirs on the other side of the Persian Gulf.

Not many people pass through the doors these days, though an occasional visitor still signs the guest book, affectionately recalling the days when Iranian students captured the embassy in 1979 and held its staff hostage for nearly 15 months. “Thank you for revealing the crimes of America and Israel,” says one greeting, and a group of students on a field trip penned: “We hope the students who took the embassy will be conquerors forever.”

More recently, there have been new messages in the well-fingered guest book. They are not signed with names. They say things like: “Why? In the name of the God of the poor and the powerless, why have they thanked you so much? Why?”

And another one writes: “History will judge that these students were like a dam in the way of progress.”

As those more recent jottings suggest, the Islamic revolution that shook the world when it swept through the 2,500-year-old monarchy of Iran in 1979 is, in many ways, over.

Though hard-line religious conservatives could still move to undercut President Hashemi Rafsanjani’s efforts to open the Islamic republic to the rest of the world, Iran is not the same place it was even three years ago, when millions agonized in the streets over the death of the revolution’s first imam, the Ayatollah Ruhollah Khomeini. Passions are increasingly being replaced by pragmatism, the “government of God” by temporal statecraft.

The death of the soulful, bearded imam has left the revolution without the fury that fueled its early years. Iran’s new generation of policy-makers is grappling with how to keep the world’s only theocracy alive in the midst of a war-tattered economy and a world of new global alliances that threatens to isolate anyone not prepared to join.

“This is the stage of de-imamization of the revolution!” mourned an angry Ali Akbar Mohteshemi, the leading spokesman for the religious hard-liners, to a group of supporters in a south Tehran mosque recently.

For the first time since the partisans of God overthrew Shah Mohammed Reza Pahlavi 13 years ago, Khomeini’s voice--at first in person, and taped after his death--was not heard this spring at the festivities celebrating the anniversary of the Islamic republic.

The Western hostages seized and held in Lebanon under Iran’s influence during the 1980s have been released, and funding for the militant Hezbollah organization, which presided over the hostage-holding era, has been drastically cut back.

Rafsanjani’s five-year economic plan is intended to lift the country out of the grip of crippling inflation and to repair an industrial and agricultural base demolished by the eight-year war with Iraq with the aid of $27 billion in foreign investment--much of it from Western countries once viewed as the enemies of the revolution.

“Rafsanjani’s government is built around one principle: reconstruction. Creating another Islamic republic, creating disturbances in foreign policy, is not on Rafsanjani’s agenda,” said a ranking Foreign Ministry official.

More and more, there are signs of a deliberate attempt to lay the Khomeini legacy gently to rest.

Iranian officials appear slightly embarrassed and perplexed about how to deal with the late imam’s death sentence against the British author Salman Rushdie--an order seemingly made irrevocable when the imam took it to his grave. The case has disrupted relations with London, and, according to Foreign Ministry officials here, the leadership is now trying to finesse a semantic compromise that would lift the sentence without contradicting the ayatollah.

As part of the package, Tehran has signed an accord with the European Community pledging to respect the rules of international law, especially the internal affairs of other countries.

Public debate is increasingly tolerated about the ravaged state of the economy, where inflation is officially pegged at 19% but is probably much higher, and the effects of the bloody war with Iraq, a war whose cease-fire agreement Khomeini equated with drinking a cup of hemlock.

“The danger for them is that the anti-war message is ultimately an anti-Khomeini message,” said one Western diplomat. “It was called an imposed war, but increasingly in the last few years it was imposed not by Iraq, but by Khomeini.”

Likewise, the current economic hardships threaten to undermine the whole notion that the revolution was an uprising on behalf of the oppressed against a class of wealthy businessmen coddled by the shah.

“One of the surprises that’s come to light is that the Islamic revolution was by no means an economic revolution,” said one political analyst. “In fact, quite the reverse. The situation is worse than it was. This is what’s frightening both sides: that continuing economic hard times will discredit the Islamic revolution and in fact discredit Islam. At risk is the whole notion of an Islamic republic.”

In the bazaars that have historically been the economic lifeblood of Iran (and the onetime financiers of the ayatollahs), merchants feel betrayed.

“I’ve been working here for 50 years, and I take 10- to 15% of what I sell. I’m a very humble man, so I can get by,” said Tagi, a purveyor of towels and aprons at the bazaar. “But it’s been very difficult lately. Two years after the revolution it was good, and after that, year by year, it has gotten harder and harder. Who knows what will happen next?”

In an adjoining alleyway, a man piles stacks of used slacks near the door of his shop and waits for the flock of customers that will assuredly be happy to buy them at up to $10 apiece.

“Two years ago, you never would have seen this,” he said. “You know where all this comes from? From England, Germany and Japan. They give this to the Pakistanis, who sell it to the Iranians.” He shook his head in disgust. “We have rivers, we have oil, we have everything in this country, and look what we have come to. The Pakistanis are selling us used clothes!”

A generation of young Iranians, growing up in a country where there are few public entertainments, almost no night life and severe repression for those who criticize the regime, find themselves growing increasingly dispossessed.

“The people fought the revolution with their own guns, and after it was all over, the clergy took the guns back and said, ‘OK, you’re tired, give us the guns, we’ll take care of you.’ But what happened was they turned the guns back on the people. And it took the people 10 years to realize it,” said one young Iranian man.

“You follow a clergyman. You say, ‘This is a good man, I’m going to follow him,’ ” he said. “All of a sudden you see that in spite of the fact that he’s preaching, you can’t eat. So you begin to doubt. You begin to be suspicious. You begin to ask, ‘Why are there no clergymen at the war front?’ ”

Said a young Iranian writer raised on illegally imported Michael Jackson cassette tapes: “I miss the movies. I miss the books. I miss simple things, like having a place where I can go and take a cup of coffee. Really, the boredom is killing sometimes.”

Both the hard-liners and the pragmatists claim to be following the line of the late imam. But in the post-revolutionary era, when a new religious leader, the Ayatollah Ali Khamenei, has taken on the mantle of imam, the line has become increasingly hazy.

Under the cloak of “the imam’s line,” the government since his death has moved to do things that would probably make Khomeini roll over in his grave: not only making peace with Iraq but also moving to develop a working relationship with the enemy; launching relations with Saudi Arabia and the other Arab oil emirates that the imam always regarded as corrupt regimes; talking, at least quietly, of one day restoring relations with the Great Satan, America.

“There will have to be at some point the equivalent of a de-Stalinization speech. Khomeini’s legacy will have to be dealt with. You can’t say you’re an Islamic republic dealing with the imam’s line and have full relations with the U.S. He has to be put to rest,” said one Western envoy.

Iran’s pragmatists are apt to say with irritation that the hard-liners are using Khomeini as an excuse to halt the course of progress.

“I believe the opposition groups are hiding their heads behind the imam without really demonstrating sincere commitment,” said Rajaie Khorassani, a leading moderate politician and former ambassador to the United Nations.

“Had Imam Khomeini been alive today, he would have agreed with what I say more than what Mr. Mohteshemi (the hard-liner spokesman) says. He was a great, wise person, and he would eagerly appreciate the changes in the priority of the state. To assume that what Mr. Mohteshemi says is what Imam Khomeini would have said is absolutely baseless. Who can claim that he understands the sayings of Imam Khomeini better than anybody else?”

Mohteshemi, a former interior minister and the mentor of Lebanon’s Hezbollah during his years as Iran’s ambassador to Syria, appeared destined to lose his seat in the Majlis (Parliament) during the first round of elections that are set to conclude this week.

He articulates the point of view that will remain Rafsanjani’s strongest challenge in the months ahead: the view that Iran doesn’t need the rest of the world to get back on its feet.

“In the first 10 years of the revolution, Iran went through a very historic and arduous experience: eight years of war, the economic blockade, military embargo, resisting missile attacks, withstanding air raids while our economic centers were destroyed,” Mohteshemi told supporters recently.

“Our military industry, our steel industry, our factories, all have been administered by ourselves since the revolution, and we didn’t need any help from foreigners.”

Likewise, Mohteshemi and his allies saw Rafsanjani’s pressure to release the Western hostages as a mistake.

“Nothing was achieved by the release of the hostages, except that the head of Hezbollah was assassinated,” Mohteshemi said in an interview, referring to the Israeli attack on a Hezbollah motorcade that killed former Hezbollah leader Sheik Abbas Moussawi and his family earlier this year, not long after the freeing of the last U.S. and British hostages.

“If the hostages would have been kept in the hands of the captors, Israel would never have dared make such an act. The release of the hostages should have been parallel and coincided with the release of the Lebanese nation,” he said. “Unconditionally they were released, but did the West release our assets? They didn’t even omit the name of Iran from the blacklist in the U.S. They are still calling us terrorists.”

Other hard-liners, while still opposing such steps as restoring relations with the United States, are beginning to say that the era of violence and hostage-holding is in the past.

Moussavi Khoeini, who was one of the leaders of the takeover of the U.S. Embassy in 1979 and who now acts as the key strategist for the hard-liners, said in an interview that the embassy takeover was “proportionate to those times” in the early stages of the revolution.

“We thought, and we still think, that it was the right thing to do,” he said. “But now, the Islamic regime is stabilized, it has firm pillars, and we don’t feel any threats from other countries to commit such acts.”

Iran’s evolution toward the outside world by no means signals a will to abandon the world’s only modern theocracy, or even to open inroads to a secular opposition.

Islam, the only major monotheistic religion that provides a set of rules by which to govern a state as well as a set of spiritual beliefs, is still the cornerstone of the system, and Rafsanjani wears the turban of a mullah. Yet at the conclusion this week of the final round of elections, Rafsanjani is likely to begin removing remaining revolutionary militants from key ministries in favor of secular and Western-educated technocrats--a move he has already begun in such key posts as the Economy Ministry, headed by UC Davis economist Mohsen Nourbaksh--analysts say.

“Rafsanjani is very different from Khomeini, who was a balancer between the factions. Rafsanjani has taken sides. And he pushes his way with cunning and sureness,” explained R. K. Ramazani, a U.S. expert on Iran.

More than anything else, Rafsanjani now has to deliver--and fairly quickly. No longer can the president with the Cheshire cat-like smile blame Iran’s failures on the war with Iraq, or on opposition within the Majlis. And the shock therapy that lies ahead for the economy--ending subsidies on key foodstuffs, stabilizing and floating the rial--promise to make the next two years more trying than the last two.

But revolutions throughout history have had a way of shedding their initial fervor in the face of the workaday business of governing countries. Slogans make bad economic policy. Marches do not feed armies. And the nation that was Persia appears destined to survive its modern-day Islamic transformation.

In his classic “Anatomy of a Revolution,” Crane Brinton wrote of the final stage of revolutions and said: “None of our revolutions quite ended in the death of civilization and culture. The network was stronger than the forces trying to destroy or alter it, and in all of our societies, the crisis period was followed by a convalescence, by a return to most of the simpler and more fundamental courses taken by interactions in the old network.

“More especially,” he said, “the religious lust for perfection, the crusade for the Republic of Virtue, died out, save among a tiny minority whose actions could no longer take place directly in politics.”

So far, it would seem, Iran’s revolution is right on course.

13 Years of Tumult PRECEDE: Iran has been a high-profile player on world stage since Muslim radicals took over the government in 1979. Some highlights: 1979 REVOLUTION Shah Mohammed Reza Pahlavi, who took throne in 1941, fled Iran in January, 1979, after a wave of Muslim protests. Ayatollah Ruhollah Khomeini returned from exile and formed Muslim theocracy. 1979-81 EMBASSY SEIZURE Iranian students seized U.S. Embassy and held scores of hostages for 15 months, urging that shah be returned for trial, among other demands. 1980-88 WAR Still reeling from revolution, Iran was plunged into a long, destructive war when neighboring Iraq invaded it over a border dispute. 1985-91 HOSTAGE CRISIS Iran heavily influenced Muslim radical groups, such as Hezbollah, that seized Western hostages in war-torn Lebanon, outraging the world. 1989- THE NEW DIPLOMACY Hashemi Rafsanjani, president since 1989, took a conciliatory tack toward the West, luring investment to help rebuild Iran’s shattered economy.