It is often hard to read the signals coming out of Iran. Unless you have long experience in deciphering the twists and turns of that complex country, it tends to look as if it is run by fanatics. But that is too simple a view.

President Mahmoud Ahmadinejad sounds like a cross between a dangerous madman and a weird zealot, with his call for the State of Israel to be wiped off the map and his vision of a halo hovering above his head. But he is not a religious nut. He is a populist politician who knew how to win an election by promising the poor a chicken in every pot and pandering to the public's anti-Semitism.

Ayatollah Rafsanjani

Two years ago, Ahmadinejad beat former President Akbar Hashemi Rafsanjani in a hard fought presidential election that looked like a triumph for Iran's hardliners. But since then, he has shown that he does not know how to run the country. Despite Iran's soaring oil revenues, Ahmadinejad's economic mismanagement has made the lives of the poor more miserable. His incompetence and xenophobia have frightened off much needed foreign investors, and recently the heads of Iran's oil and economic ministries resigned in disgust.

Ahmadinejad is in trouble, and no one could be happier about that than his rival, Rafsanjani. As Ahmadinejad's star has fallen, Rafsanjani's has risen. This week, the white-turbaned religious moderate was elected to head Iran's Assembly of Experts. That is no honorary post. The 86 members of the Assembly of Experts elect, supervise, and can remove the Supreme Leader, the religious official who sits at the pinnacle of the complex web of government bodies that run Iran.

Rafsanjani's election to this powerful post was a triumph for Iran's moderates in the continuing tug-of-war between moderates and hardliners that has characterized the country since the Islamic Revolution of 1979. Experts now see Rafsanjani as the country's new kingmaker, the man who will name the replacement for the current Supreme Leader, 67-year-old Ayatollah Khamenei, who is rumoured to have cancer. Khamenei himself is believed to have favored the election of Rafsanjani to head the Assembly of Experts as a means of curbing the power of Ahmadinejad. Some say Rafsanjani is positioning himself to become the next Supreme Leader.

So what does Rafsanjani stand for, and how could his rising influence affect the future of Iran? A roly-poly, somewhat fatherly, figure, he holds the title of ayatollah (a high ranking Shia cleric) but has amassed a personal fortune through a number of business ventures. He is a moderate who believes Iran needs foreign investment and who stuck his neck out in the last presidential election by suggesting that Iran and the United States renew the diplomatic relations that were broken in 1979. In a recently published memoir, he noted that Ayatollah Khomeini, the founder of the Islamic Republic, supported plans during the Iran-Iraq war to drop the slogan “Death to America”. (Ahmadinejad this week ordered copies of the book removed from bookstores.)

Rafsanjani admires the Chinese model of government, favoring free enterprise and opening the economy to foreign trade, while ensuring the survival of the regime through continued political control. He is, above all, a pragmatist. As such, he favors a dialogue with the West, but would be unlikely to renounce Iran's nuclear research program, which is the leading bone of contention with the United States.

In short, he is a man that the United States might be able to do business with, but it would do well to remember that the Persians took up the game of chess in the Sixth Century. Their descendants, the Iranians, are masters of strategy and diplomacy and have been cleverly positioning themselves to take advantage of the mess the United States has made in Iraq. Iran under the leadership of Rafsanjani could be a possible partner for dialogue and cooperation, but no pushover.