Iran's Guardian Council, the powerful vetting and oversight committee of the Islamic republic, announced Tuesday its

list of eight approved candidates for the June 14 Iranian presidential election. A total of 686 presidential hopefuls had submitted their names for approval, though in recent days dozens of politicians and clerics had withdrawn their candidacies in support of better-known figures. Chief among them were former president Ayatollah Ali Akbar Hashemi Rafsanjani and outgoing president Mahmoud Ahmadinejad's right-hand man, Esfandiar Rahim Mashaei.

The Iranian Interior Ministry on Tuesday also confirmed rumors that had swirled for 36 hours that Rafsanjani had been dismissed due to his advanced age. Mashaei, long a subject of derision by the conservative clerical and political establishment (despite having the support of many of the members of Ahmadinejad's Cabinet and who would have enjoyed the backing of the president's considerable political machine and populist connections to Iran's rural and urban poor), also was dismissed.

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Rafsanjani and Mashaei can appeal the Guardian Council's decision. Iran's Supreme Leader, Ayatollah Ali Khamenei, could also decide to intervene on their behalf and help have their candidacies approved. Khamenei recently renewed Rafsanjani's position as chairman of the Expediency Council (a powerful governmental oversight body Khamenei headed before he became supreme leader). Ahmadinejad meanwhile has threatened to release damaging information regarding corruption implicating family members of the Supreme Leader himself, a threat Ahmadinejad has used to defend himself from accusations in recent months. It is unclear if the supreme leader would be willing to be seen as bending to this.

The June 14 elections will mark a significant shift in the political history of Iran. Since becoming supreme leader of the Islamic republic in 1989, Ayatollah Ali Khamenei has overseen a series of elections that have carefully balanced the competing interests of pragmatic conservatives like Rafsanjani or reformists like former president Hojjat-ol-Eslam Mohammad Khatami. Ahmadinejad is the first non-clerical president in nearly a quarter century to serve in the country's highest popularly elected office. He has come under fire from conservatives in the establishment for his attempts to transform the office of the Iranian presidency into one with executive authority in competition with the supreme leader.

Ahmadinejad's populist policies and pursuit of independent executive authority have upset the largely pro-clerical balance of power that has been in place since the founding of the republic under Ayatollah Ruhollah Khomeini. By disqualifying the main moderate (albeit the one with overt reformist backing) and populist candidates, the Guardian's Council has left former Islamic Revolutionary Guard Air Force Commander and current Mayor of Tehran Mohammad Bagher Qalibaf without meaningful competition barring his path to the presidency.

Intense infighting among clerical and political camps has resulted in a situation where Iran's conservative leadership is facing a rapidly shrinking body of appropriate political candidates. Should Khamenei decide not to encourage Iran's Guardian Council to reverse its decision on Rafsanjani or Mashaei, the country's conservative political elite risk alienating two powerful political bases within the Islamic republic.

Iran's clerical regime can ill afford domestic political isolation at a time when domestic economic pressures and regional Sunni Arab pushback against the republic are rising. By reducing Iran's ability to maneuver politically, the country's conservatives have become increasingly reliant on integrating former members of the Islamic Revolutionary Guard Corps into civilian and political society. In the past, political infighting in Iran has also impeded Western attempts at foreign policy outreach to that country.

Whatever decisions are made between now and June 14, one thing remains clear: Iran's next president -- whether or not Qalibaf wins -- will have to manage the same challenges of a divided domestic political arena, growing economic pressures and an increasingly hostile regional sectarian landscape

Read more: The Challenges for Iran's Next President | Stratfor

The Foreign Policy Impact of Iran's Presidential Election Read more: The Foreign Policy Impact of Iran's Presidential Election | Stratfor Follow us: @stratfor on Twitter | Stratfor on Facebook

By Michael Nayebi-Oskoui and Kamran Bokhari

Iranians went to the polls Friday to elect outgoing President Mahmoud Ahmadinejad's successor. Candidates reported few serious problems with the process, and the losers sent congratulations to the eventual winner, Hassan Rouhani.

Compared to the political instability that followed Ahmadinejad's 2009 re-election, this process was relatively boring. But however the news media felt about the election, Iran needs domestic stability if it is going to change its foreign policy in a very challenging geopolitical environment.

Domestic Stability
Domestic stability has been the first goal for any regime that would project power from Iran's central highlands. The Persian Empire first emerged only after a central power subjugated the various groups of Indo-Iranian, Turkic and Semitic peoples within its borders. The suppression of 2009's Green Movement is only a recent example of a strong state apparatus quelling internal dissent. For millennia, various Persian regimes have sought to keep such domestic pressures at bay while foreign powers have sought to exacerbate these tensions to distract Iran or make it vulnerable to invasion.

In today's Iran, structural economic stresses that have persisted under decades of sanctions are coming to a head while sectarian competition in the region has halted the expansion of Tehran's regional influence. The clerical regime that currently rules the Iranian mountain fortress understands the threats from beyond its borders, but like its predecessors, it must make peace at home before it can address external challenges.

Much of the Western, and especially U.S., coverage of the Iranian elections centered on Rouhani, a figure known to many in the West. He took part in the Islamic Revolution and had ties to Ayatollah Ruholla Khomeini, the founder of the Islamic republic. He also has ties to Ayatollah Ali Akbar Hashemi Rafsanjani, Iran's second clerical president, and is a representative of the current supreme leader, Ali Khamenei, on the Supreme National Security Council. Rouhani served as secretary of Iran's Supreme National Security Council for 16 years. As an extension of this position, he was Iran's chief nuclear negotiator from 2003 to 2005. It was during this period when Rouhani's foreign policy credentials became best known in the United States and Europe. It was also during this period when Western and Iranian nuclear negotiators came closest to reaching a deal.

Paradoxically, Rouhani combines conservative and reformist tendencies. As a cleric, he does not seek fundamental changes in Iran's power structure of the sort Ahmadinejad sought, but he also advocates cooperation with, and outreach to, other branches of Iran's power structure such as the military and civilian politicians. While defending Iran's nuclear program and regional agenda, he understands that simply issuing ultimatums to the West and escalating tensions rather than striking compromises will not win relief from sanctions. In this regard, he resembles the reformist former President Mohammed Khatami, under whom Rouhani served as chief nuclear negotiator. Rouhani can be expected to adopt a less incendiary tone in foreign policy than Ahmadinejad and to cooperate with other domestic power centers, like those of the supreme leader and the military and security forces.

Iran's domestic woes give it an incentive to pursue the kind of pragmatic engagement and dialogue with the West Rouhani was known for, especially on issues such as Iran's nuclear program and Tehran's interests in the Levant, Iraq and Afghanistan. This means Friday's election represents a relative success for the Islamic republic, though it denied the West's desire for a disruptive election that would see Iran's clerical regime fall.

Ahead of any meaningful traction on its foreign policy agenda, the Iranian government had to re-engage its electorate, something it has accomplished with this election. Tellingly, aside from current nuclear negotiator Saeed Jalili, seven of the eight candidates approved to run in this election campaigned on moderate or even reformist platforms, in stark contrast to the nationalist rhetoric of the firebrand Ahmadinejad.

Although largely unaffected by the regional unrest in 2011, the clerical regime needed to demonstrate both to its citizens and foreign capitals that the Iranian people could still bring about change at the ballot box, not just through the streets. Given the choice, the Iranian people chose pragmatism in relatively free and fair elections.

Though the Islamic republic cannot be changed overnight -- long-term structural changes are needed to revive the Iranian economy -Rouhani's campaign and election have provided a relatively immediate, low-cost way to lessen some of the domestic pressures on the regime. Large-scale demonstrations in support of the president-elect following the announcement of his victory took place in Tehran and throughout many of Iran's urban centers, without the involvement of state security forces. For now at least, this suggests Iran's large and increasingly frustrated electorate seems to have been appeased.

While it is, of course, too early to know how his presidency will play out, the Rouhani administration at the very least will not begin its tenure plagued with doubts regarding its legitimacy of the sort that greeted Ahmadinejad's second term. Also unlike Ahmadinejad, the presidentelect has the opportunity to bridge deep divisions within the clerical elite. With clerical authority and the supreme leader no longer under attack from the presidency, and with convincing electoral support behind him, Rouhani has already overcome the largest hurdles to amending Iranian policy at home and abroad.

Foreign Policy Shifts

It is in this framework that the West hopes to eventually re-engage Rouhani and Iran. Fiery rhetoric aside, Ahmadinejad also sought a strategic dialogue with the West, especially as his competition with the supreme leader prompted him to seek foreign policy wins. But the infighting that resulted from Ahmadinejad's attempts to undermine the pro-clerical structure of the republic impeded any progress in this arena.

If Rouhani can get the clerics behind him and accommodate the interests of Iran's military and security forces and the broader electorate, his chances of reaching a dialogue or negotiated settlement with the West will be much improved.

Guiding much of this will not be just the change in personalities but Iran's shifting geopolitical environment. Since it is no longer on the regional offensive, Tehran's previous defiant rejection of American interests is now incompatible with long-term Iranian goals in the region.

There is still much work to be done at home before Iran can switch gears, and Iran's president-elect still faces considerable challenges to enacting any major shifts in policy. Rouhani must still convince many of the stakeholders within the regime that he can be trusted. He must protect the economic interests of the powerful Islamic Revolutionary Guard Corps while building a relationship with Iran's larger and often overlooked regular army. He must also manage his relationships with Rafsanjani, his most influential political backer, and with the supreme leader. Rafsanjani and Khamenei are competitors, and although the approval and eventual success of Rouhani's candidacy may hint at a broader clerical rapprochement, the supreme leader will not take kindly to attempts by Rafsanjani to rule through Rouhani. Rafsanjani, however, is unlikely to stop trying to capitalize on the successes of his protege.

Against a backdrop of domestic political reconfiguration, gradual diplomatic outreach to and from Iran can be expected. Parliamentary elections in 2015 will provide greater insight into how much change Rouhani can attempt, and it is along this timeline we should expect to see Iran seriously re-engage in negotiations with the West. In the meantime, little substantive change will occur beyond more careful rhetoric regarding both Iran's nuclear program and Tehran's support for the embattled Syrian regime. While challenges to both Iran's domestic policy realignment and outreach to the United States thus remain, Western and regional hopes for such change endure.

Read more: The Foreign Policy Impact of Iran's Presidential Election | Stratfor Follow us: @stratfor on Twitter | Stratfor on Facebook