Western observers quickly attribute the electoral defeat to the rejection of his hard-line foreign policy and the absence of a strong domestic agenda or economic program. They point to these results and a parallel election of 86-member body of Assembly of Experts—a body of clerics elected to monitor the supreme Islamic leader and nominate his successor. In this election also, there was a visible change in sentiment and votes were more in favor of Hashemi Rafsanjani who lost to Ahmadinejad in 2005. However, the truth is most likely the lack of a domestic economic agenda than the foreign policy that is driving Iranians away from Ahmadinejad. Iranians, proud of their ancestry and heritage, generally scorn (sometimes to a fault) Western prescriptions to reform or conform. In fact the Islamic revolution under Ayatollah Khomeini was a reaction to unbridled Westernization under the former Shah.

Most of the electoral fights highlighted high unemployment (which is at 11%), lack of economic progress, un-kept electoral promises, and failed poverty alleviation programs. Significantly, Ahmadinejad had pledged to share nation’s oil revenues to alleviate poverty and this has not happened even though crude oil prices are at an all time high. Many of his domestic critics charge him of populist promises and short on implementation. Reformists seem to be closer to Western conclusions that his hard-line foreign policy is to be blamed for electoral losses saying that his policy is “against Iran's national interests and security.”

Meanwhile the UN Security Council unanimously voted over the weekend imposing non-military sanctions on Tehran's nuclear work after Bush had a last minute phone conversation with Russian President Vladimir Putin. The sanctions are punishment for Iran’s refusal to comply with August 31 UN resolution with a deadline to suspend uranium enrichment work. Russia is building a USD 800 million light-water nuclear reactor for Iran ensured that military aspects of the sanction regime remained whittled down but voted to ask Iran to stop all enrichment programs, research, and facilities. The sanctions also ban imports and exports of dangerous materials and technologies relating to uranium enrichment, reprocessing, heavy-water reactors, and ballistic missiles and delivery systems. It also freezes assets and activities of 11 individuals and 12 organizations in Iran associated with the nuclear programs. Characteristically, Tehran said that it will reconsider its relationship with the IAEA which could mean anything from a formal pull-out from the NPT to curbs on IAEA inspections.

In some sense, the sanctions are more symbolic than really binding. For instance, with the names of individuals and organizations listed in the sanctions, Tehran can easily change the personnel or names of organizations therefore making it nearly impossible for the UNSC to revalidate the names and vote to freeze the activities. Besides, if Iran decides on a hard-line action such as withdrawal from the NPT, there is very little that the UNSC can do except to ban trade, interaction, financial transactions, travel restrictions, etc. But none of these would essentially hit Iran critically. In fact, the resulting poverty and hardship will only unify the Iranians under a hard-liner such as Ahmadinejad and focus their anger against the West and particularly the US. Additionally, it would starve Iranians of critically important drugs and medicines and create a situation as in Iraq prior to the invasion where more than ½ million babies died prematurely.

Iran was also in other news negatively accusing it of ordering the death of two writers of an article that seems to have negatively portrayed Islam in an obscure newspaper in Azerbaijan prompting 40 prominent Azeri intellectuals to issue a notice to Iran asking it to stop meddling in their nation and to withdraw the fatwa and the meddling of policy from Tehran has become a topic of intense public debate. Iran and Azerbaijan have had a rocky relationship since the collapse of the Soviet Union. Nestled on the Caspian Sea between Iran and Russia, although Shiite like Iran, Azerbaijan is an emerging oil nation and often at odds with Iran over oil interests and the militant notion of Islam that Azeris object to. Azerbaijan is suspicious of Iran’s motivations in the social assistance policies because of the similarity to the ones in Lebanon. Tehran hands out lavish social assistance programs in Azerbaijan, especially in the bleak countryside, in the form of gifts, money, books, and even furniture to young couples. Azeri intellectuals say that Iran is spending a lot of money to produce religious fanaticism in younger people and they swear that Iran does not want Azerbaijan to be successful. They complain that Iran’s idea of intellectualism is oriented in religion but the Azeri concept is based on science, Western-style education, and democracy.

Iran has an Azeri population of 33%, mostly in the North and closer to Azerbaijan, who frequently protest for more rights and cultural autonomy. Tehran is worried that the minority may aspire for secular and prospective aspects of Azerbaijan in Iran. A cartoon published in a Tehran newspaper ridiculing ethnic Azeri sparked protests in northern Iran earlier in the year.