When George W. Bush rails about the supposed threat of Islamofascism, Iran and its President Mahmoud Ahmadinejad are at the top of his list.

The reality, however, is that Iran is far more open politically than, for example, the U.S. government’s main client in the Arab world, Egypt -- where a police state runs phony elections and regularly crushes dissent.

In Iran, by contrast, presidents and other top politicians have to go through rough-and-tumble election campaigns, a system that’s a good deal closer to democracy than the Shah’s monarchy overthrown in the 1979 Iranian Revolution. Factional conflict in the Iranian ruling class chronically compels one group or another to appeal for popular support to advance its program.

This has periodically created the space for liberal reformers, student protests and even strike waves, though independent unions are banned, and the state often censors the media. In his eight years in office, former President Mohammad Khatami clashed with conservatives over issues of democracy and pro-market economic reform.

None of this give-and-take would be remotely conceivable under true fascist regimes, like Hitler’s Nazi Germany or Mussolini’s Italy.

If any comparison is helpful in understanding Iranian politics and society, it is with the nationalist regimes that took power in colonized and imperialist-dominated countries following the Second World War.

The 1979 revolution against the regime of the Shah, a key U.S. ally, was propelled by mass popular protests and strikes by workers in the crucial oil sector. A left-nationalist regime -- or workers’ power -- seemed to be on the horizon.

But Iran’s “Islamic fundamentalists,” or Islamists, led by Ayatollah Ruhollah Khomeini, were able to hijack the struggle. Khomeini used his religious authority and political clout as an exile to maneuver himself to the head of movement -- and then smashed the left and unions through counterrevolutionary repression.

The Islamists’ social base was in the bazaar -- the lower middle class and local Shia Islamic clergy, the ulama, who in turn appealed to the more conservative rural population. These strata became a battering ram against workers in the service of smaller employers, who had chafed at the Shah’s dominance of the economy. Though these business owners may have personally disliked Khomeini’s Islamism, it was preferable to the specter of workers’ revolution.

The subsequent Iran-Iraq war -- launched by Saddam Hussein with the encouragement of the U.S. -- allowed Khomeini and the Islamists to tighten their grip on power. Much of the businesses owned and controlled by the Shah and his family were nationalized.

“By 1989, the state accounted for 80 percent of the Iranian economy, relegating the private sector to small-scale economic activities,” writes Nikki Keddie, the leading historian of Iran in the U.S. “The expansion of the state’s control of the economy in time served the revolution’s political needs as distribution of jobs forged patronage ties.” Workers, she wrote, were bought into the political system through “corporatism” -- organizations and institutions that kept workers in line but also kept the regime apprised of discontent. At the same time, key businesses were turned over to Shiite religious foundations -- nominally charities, but in reality social service organizations and quasi-state companies that served as a social ladder for the clerics.

Ali Rafsanjani, a cleric and member of Khomeini’s inner circle, epitomized this process. He became known as the “millionaire mullah,” thanks to his family’s control of a major pistachio exporting company. As speaker of the majlis, or parliament, he was a pragmatist who negotiated with Washington in the secret arms-for-hostages deal that became known as Contragate.

The contradictions of clerical rule in Iran came to the surface soon after Khomeini’s death in 1989. He had earlier sidelined a more authoritative cleric, Ayatollah Hossein Ali Montazeri, with house arrest.

Instead, Khomeini chose Ayatollah Ali Khameini to be his successor as supreme religious leader, the man who essentially has veto power over government policy through the clerics’ Guardian Council. Meanwhile, Rafsanjani was elected president for two terms in 1989, gradually creating a bipolar system of political authority in Iran.

Rafsanjani took halting steps toward reintegrating Iran into the world economy, a move seen as threatening to the conservative clerical establishment that relied on the patronage networks of machine politics, which was increasingly corrupt. Simultaneously, a revived Islamist left began to assert its own ideas, particularly on college campuses.

In response, conservatives relied on networks of former Revolutionary Guards and armed forces veterans known as the Basij, a kind of paramilitary organization intertwined with, and funded by, conservative business interests.

The Basij were given state sanction by the majlis in 1992 and were later charged with enforcing religious laws known as Propagation of Virtue and Prohibition of Vice. “Essentially, this meant ‘unleashing’ the Basijis as the moral soldiers of the Islamic Republic, more specifically the conservative right factions,” wrote historian and author Mehdi Moslem.

The Basij thereby became a viable career path for middle-class elements who had been Islamist student revolutionaries in the 1970s and fighters in the Revolutionary Guard during the Iran-Iraq War. One of them was Mahmoud Ahmadinejad, whose political connections got him promoted from governor of a small province to mayor of Tehran, where he used the Basij to build a political machine.

The conservatives, however, were set back by the election of Khatami in 1997. Although he is a prominent cleric, Khatami appealed to the secular middle class by promising to ease enforcement of religious laws, open up the media and reform the economy -- which, he argued, would also reduce poverty. Although Khatami was re-elected in 2001, it was out of fear of the right rather than any hope for the left. Khatami had refused to challenge the conservatives’ censorship of the reformist press, and stood by as the Basij and police viciously attacked student protests in 2003.

Moreover, Khatami’s privatization agenda, carried out under the tutelage of European capital, only increased Iran’s problems of inequality and poor employment prospects for Iran’s burgeoning youth population. Khatami’s failure is even more striking in light of the 7 percent annual economic growth rates -- propelled by rising oil prices -- of his final two years in office.

The impasse under Khatami made Iran’s 2005 election the most unpredictable yet. On the left was Mehdi Karoubi, another cleric, who linked Khatami’s calls for political liberalization with pro-working-class politics. Also running was Rafsanjani, who courted Khatami’s base among college students and the middle class with a campaign that was barely religious and featured rap music.

Karoubi should have been pitted against Rafsanjani in a runoff -- but the Basij and allied government officials awarded a higher vote total to Ahmadinejad, who went on to trounce Rafsanjani.

Ahmadinejad won by combining a populist appeal to the poor and unemployed with Islamist ideals. “Ahmadinejad has been propelled into the presidency by a substantial rural and urban working-class constituency that wants to take its rulers and the middle classes into account,” analyst Mahan Abedin wrote then.

Ahmadinejad initially overplayed his hand, trying to install top allies in key cabinet posts, but he was rebuffed by the clerical establishment in the majlis. He also called for women to be allowed to attend soccer matches in stadiums -- hardly the act of an “Islamofascist.” While press censorship has been heightened, his government hasn’t aggressively pushed enforcement of religious laws.

Even Ahmadinejad’s widely cited statement supposedly calling for the destruction of Israel was misquoted, according to Middle East expert Juan Cole. “Ahmadinejad strikes me as less a messianic madman and more a radical populist, an Iranian Huey Long,” wrote Newsweek’s Fareed Zakaria, hardly an apologist for Iran.

For now, Ahmadinejad has been able to consolidate his administration on a nationalist basis, thanks to imperialist pressure from the U.S. over Iran’s nuclear program. And with Iranian unemployment estimated at 11 to 12 percent and a poverty rate of 40 percent, Ahmadinejad keeps promising anti-poverty programs.

But his government, like its core supporters among the Basij, ultimately serve the wealthy and powerful. A strike by Tehran’s bus drivers in 2005, crushed by government repression, made this clear.

Far from a totalitarian fascist state, Iranian society is simmering with political and class conflicts that will erupt again in the future.

Lee Sustar writes regularly for Socialist Worker, where this article first appeared. He can be contacted at: lsustar@ameritech.net. Thanks to Alan Maass.