One million new 50,000-rial bills (each worth about $5) were issued last month in Iran. The major innovation here is the picture on the bill: On one side is the familiar symbol of electronic rings, which signify nuclear energy; on the other, as usual, the face of Ayatollah Khomeini. The new banknote was ostensibly designed to demonstrate Iran's indifference to the sanctions imposed on it at the end of March, one day after 15 British soldiers were arrested by the Revolutionary Guards in Shatt al-Arab. The money, together with the arrest of the soldiers, are two sides of one Iranian message: The Iranian agenda will be decided in Tehran rather than in Western capitals.

The announcement two days ago of the release of the soldiers as a unilateral Iranian gesture is the product of this position. Within moments the Revolutionary Guards managed to drag the region to the verge of confrontation, but also to demonstrate that an all-out military conflagration with Iran, even at low intensity, would not be such a simple matter. The choice of the diplomatic route taken by Great Britain and other countries in the region in the affair of the sailors illustrates the limitations of great powers when it comes to all-out war with Iran.

It is possible that the unfortunate Israeli experience of reacting by force to the kidnapping of soldiers in Lebanon has indeed been studied in depth. As in Lebanon, in Iran, too, the main question is who makes the decisions, and against whom is it possible - or to be more precise, impossible - to apply pressure. Ostensibly, spiritual leader Ali Khamenei is the supreme authority, but he is also forced every day to reexamine who is liable to subvert him and who may present him with a dangerous challenge. One of these potential challengers is the commander of the Revolutionary Guards, Yahya Rahim Safavi, who, although he is considered a loyal follower, is firmly opposed to conducting negotiations with European countries on the nuclear question.

Safavi, as opposed to Khamenei, was also directly affected by the sanctions imposed on Iran in December 2006. His name appears on the list of VIPs whose foreign bank accounts were frozen, and apparently we are talking about tens of millions of dollars, if not more. The source of these deposits is the ramified economic activity of the Revolutionary Guards inside Iran. For example, the guards "won" tenders for drilling and marketing oil, to the tune of about $7 billion - tenders that were transferred in exchange for considerable royalties to foreign companies.

The Khomeini Airport in Iran is also run by the Revolutionary Guards, who "expelled" a Turkish company and transferred its administration to a company working for them. Now the guards are also building the subway in Tehran, along with additional very expensive projects. The economic power of the guards, who number about 150,000 soldiers and officers, equipped with state-of-the-art weapons, also has strong political backing.

Internal crisis

President Mahmoud Ahmadinejad, who is also a former member of the Revolutionary Guards, is promoting many members of the organization in the political bureaucracy, although last year he failed in his attempt to appoint Sadeq Mahsouli, the former commander of the Guards in the Azerbaijan district, as oil minister. The leadership of the Revolutionary Guards also managed to bring about an internal crisis between the Iranian Interior Ministry and the National Security Council, and let the army understand that members of the Revolutionary Guards, whose salaries are much higher than those of army officers, are the ones who will dictate military policy.

The connection between Ahmadinejad and the Revolutionary Guards is a good reason for concern, not only in the West, but mainly in Iran itself and in the headquarters of spiritual leader Khamenei. Because when the economic-military power is in the hands of a man like Safavi, who is ambitious as well as a religious fanatic, the entire political system will find it difficult to confront him and to offer more moderate solutions to this crisis - and to future ones. All the more so when the U.S. administration is providing Safavi with effective tools for enlisting the Iranian public to his side, since they are really afraid of a military attack on their country.

The fears of an attack have led the Iranian political leadership to take several steps. Among the 290 members of the Majlis there have been serious disagreements concerning the wisdom of the president's policy. About 150 MPs signed a manifesto in which they demanded that Ahmadinejad appear in parliament to answer questions concerning matters of defense and the economy.

At the same time, Hashemi Rafsanjani, former president and chair of the Majlis, Mohammed Khatami, the president who preceded Ahmadinejad, and leading cleric Hussein Ali Montazeri, established a "crisis group" designed to moderate to some degree the verbal and political outbursts of the incumbent president. To what extent this group can really determine policy is hard to estimate, but apparently even Khamenei, the spiritual leader, is not entirely pleased with the style of Iranian policy that is being dictated by Ahmadinejad and the leaders of the Revolutionary Guards.

This style and the behavior of the Guards on the issue of the British military personel - an affair that is seen in Iran as revenge for the arrest of five Revolutionary Guard activists by the Americans in the Kurdish city of Arbil three months ago - also led Iran to nerve-racking psychological warfare. For example, in midweek there were reports to the effect that Britain and the U.S. were planning a carefully monitored bombing of several targets in western Iran, and expected Iran to launch missiles in response - which would make it easier to justify an all-out attack on it. At the same time, there were rumors that the attacks would actually come from the Azarbaijan region, and that citizens of Baku had already prepared bomb shelters in advance for the possibility of an Iranian military response.

The main fear

Such deterioration is the last thing Khamenei wants, since the main fear is not only of a military strike, but of ethnic outbursts within Iran, of Azeris, Balochis and Arabs in the Ahvaz district, who are liable to become a dangerous fifth column. The waves of arrests among Azeris and in that district testify to this fear.

That is the reason for the Iranian willingness to calm the crisis atmosphere down. It is possible that the diplomatic breakthrough achieved this week on the matter of the British soldiers is evidence of the fact that Khamenei can still navigate and draw red lines - even for the Revolutionary Guards, especially after Safavi has already demonstrated his ability to foment a crisis in Iran. At the same time, it also testifies to the fact that Britain, which wants to remove some of its forces from Iraq during the coming year, is not rushing into a genuine confrontation with Iran.

The final developments in the present crisis and the manner in which it ended do not affect internal Iranian considerations alone. To them we must add the event that is expected to take place this month on the issue of Iraq. This is the conference of the neighboring countries, which is supposed to take place toward the end of the month, as a continuation of the conference held in early March. Iran's status at this conference is even more important this time, in light of the abbreviated timetable the U.S. Congress has granted the president for withdrawal from Iraq.

This time period, a year and a half, necessitates not only the strengthening of internal Iraqi forces, but also the building of an alliance of countries that will agree to help Iraq continue on its own - or that at least will not interfere with it. In such a situation Britain understood that it was better to end the affair of the detainees without any superfluous muscle-flexing, in order to achieve the more important target: a swift and orderly exit from Iraq.