Mahmoud Ahmadinejad is challenged most effectively by reformist Mir-Hossein Mousavi Khameneh, but another reformist, Mehdi Karroubi, along with Mohsen Rezaei, a former commander in the Army of the Guardians of the Islamic Revolution (shortened usually to Revolutionary Guard, or Pasdaran when the Farsi form is used), are challenging him too. The Supreme Guardian, Ayatollah Khamenei, has solidly backed Ahmadinejad for reelection, and the day’s voting will likely include some dirty tricks to slant the vote his way.

Khamenei is always the factor to consider in Iran. When President Khatami was elected 12 years ago, Khamenei undermined many of his initiatives, and he is no more likely to support Mousavi. But while Khamenei is only 70, he has had periods of ill health in recent years, and may not be able to enforce his will in the same way as he did with Khatami. He, the military and the Revolutionary Guard, all know that young Iranians, especially young Iranians in cities, are anxious to loosen the strictures on their lives. Some of these have been held in abeyance during the pre-election season, but that fools no-one. If Ahmadinejad or, bizarrely, the unpopular Rezaei, were to take electoral office this time, the rules on dress and make-up, the ban on music in public places and a rash of other laws, would return overnight.

Assuming the stuffed ballot boxes and other gerrymandering cannot keep Mousavi out of power, he has a major job on his hands. I don’t mean his relations with Washington, which both he and the U.S. want to patch up, but his relations with the old man in Tehran and, more dangerously, his relations with the Revolutionary Guard. The Guard has been estimated to control perhaps one-third of the Iranian economy, and even if that’s an exaggeration (firm figures out of Iran are always hard to come by) it still has enormous clout, as well as maintaining a concomitant network of corrupt or corrupted officials and helpers of various kinds.

As this blog has suggested previously, the most likely future for Iran is as a military dictatorship with only a nominal theocratic presence at the top to rubber-stamp decisions, in the manner of a constitutional monarchy such as the U.K. or the Netherlands. The mass of the populace would oppose this fiercely, even supporting the continuation of the Islamic Republic over a military republic, but the outcome of such opposition would be hard to predict. The military-industrial complex in Iran has entrenched itself effectively, and not being subject to public scrutiny, has a lot of leeway.

Mousavi, the favourite to win right now, knows this. He was prime minister of Iran (not quite as significant a post as it sounds) in the 1980s, and a close adviser to President Khatami until 2005. But this former architect has taken quiet jobs since leaving public office, and was most recently head of Iran’s Academy of Arts. That was a more rough-and-tumble position than it might sound, given the opposition to artistic freedom under Ahmadinejad’s conservative administration, but the 68-year old Mousavi may still have a rough ride if he wins at the end of this week. The Guard has a lot of power, and it can lay claim to strong conservative principles, at least among its rank and file. It won’t go gentle into that good night – in fact, it won’t go anywhere at all.

Mousavi, then, who is reportedly more popular with Ayatollah Khamenei than President Khatami ever was, would have to form a coalition that could at least check the Guard and its various arms, which include the young zealots in the paramilitary Basiji (= ‘mobilised’) force. Like Obama trying to avoid stirring up Christian fundamentalists overmuch, he will have to play a clever game.

Ahmadinejad’s administration has been colossally inept, even if it has retained a lot of support outside of the cities. The income from the oil boom a year or so back was promptly squandered, and lower oil prices have just made things worse. The administration has exceeded its mandate in all directions, flouting the will of the legislature or Majlis, as well as creating huge diplomatic difficulties for itself with abrasive rhetoric. Those difficulties are greatly overstated in western media, as is Iran’s interest in testing a nuke any time soon, but they are not negligible in their effects. As an economic and political power, Iran is an SUV that wants to become a bus, and can’t.

It has been said, or at least whispered, that western governments actually prefer that Ahmadinejad wins. His ineptness regarding economics (or disbelief in the very idea of its relevance), his general ability to squander treasure and goodwill, and his persona as this century’s successor to Libya’s Moammar Ghadafi, all mean Iran can’t become what its people dream it should be.

Whereas, if Mousavi comes in, then there will be a diplomatic honeymoon, with the U.S. and Iran exchanging ambassadors by 2011, followed by some darker developments. If the money is managed better, the country’s military can train and equip itself more effectively, and the Guard will burnish its image as the quid pro quo for its survival. The regime might persecute music in public places a little less, or allow more forms of public expression and not lay as many charges about women’s dress violations . Whether media can recover from the newspaper and magazine closures of recent years, and the constitutional guarantees of basic freedom and dignity (yes, they do exist) are permitted, which would lead to a more substantive switch in Iranian society, is not so certain.