DUBAI (Reuters) - Anti-Western hardliners are set to sweep Iran’s parliamentary elections and appear favorites to clinch the presidency next year, but an economic crisis could force them to engage with the United States despite their tightening grip on power.

Tehran has ruled out any talks with Washington unless it lifts crippling sanctions reimposed on Iran after U.S. President Donald Trump exited a 2015 multinational nuclear pact with Iran and demanded a broader deal.

But growing discontent over economic hardship, which led many Iranians to abstain from Friday’s vote, could force the Islamic Republic’s clerical rulers to choose diplomacy over the kind of confrontation that almost led to all-out war in January.

Some insiders said Supreme Leader Ayatollah Ali Khamenei may have to drink “the cup of poison”, citing a phrase used by his predecessor Ayatollah Ruhollah Khomeini when he agreed to a U.N.-mediated truce that ended the 1980-88 Iran-Iraq war.

Iran’s fragile economy, weakened by a U.S. “maximum pressure” campaign that has choked vital oil exports and by corruption and mismanagement alienating many Iranians, leaves the Iranian authorities with few options.

The killing of Iran’s most prominent commander Qassem Soleimani in a U.S. drone attack in Baghdad and Tehran’s retaliation by launching missile attacks on U.S. targets in Iraq brought the arch foes to the brink of war in January.

“Iran is just one systemic crisis away from the breaking point,” Michael Tanchum, senior fellow at the Austrian Institute for European and Security Policy (AIES), told Reuters.

“To avoiding this breaking point, Iran’s hardliners may offer the U.S. concessions for the sake of the regime’s survival.”

A host of disputes divide the two old foes.

Iran decries the U.S. military role in the Gulf. Washington objects to Iran’s regional paramilitary alliances, its missile program and its nuclear work, which Tehran says is peaceful but Washington worries may be aimed at building a bomb.

Yet while the issues may be very difficult to resolve, simply starting direct talks on any of these questions would represent a diplomatic sea-change.

Poll workers empty full ballot boxes after the parliamentary election voting time ended in Tehran, Iran February 22, 2020. Nazanin Tabatabaee/ WANA (West Asia News Agency)/Nazanin Tabatabaee via REUTERS

Iran’s hardliners, long favored by Khamenei and ever more dominant after Friday’s election, may now have the political space to engage with Washington if they judge it is necessary.

The advances by hardliners in parliamentary polls followed the disqualification of thousands of moderates and leading conservative candidates by a hardline vetting body, the Guardian Council that reports directly to Khamenei.

Iran’s dual system of clerical and republican rule places decisive power in the hands of a hardline establishment, which has in the past tightened its grip on the apparatus of control when faced with external and internal threats.

Although parliament has no major influence on foreign affairs or nuclear policy, which is determined by Khamenei, a victory in Friday’s election could shape Iran’s politics for years to come by handing hardliners a bigger prize — a stronger platform to campaign in the 2021 presidential contest.

“Hardliners are eyeing the presidency,” said a senior Iranian official, who like others contacted by Reuters for this story asked not to be named because of political sensitivities.

“A victory by hardliners in the presidential election, combined with growing economic hardship, might open a new chapter between Iran and America,” the official said.

There is precedent for economic pain producing engagement.

Iran’s sanctions-damaged economy forced Khamenei to give tentative backing to the nuclear pact engineered by pragmatist President Hassan Rouhani, which ended the country’s economic and political isolation until Trump quit the deal in 2018.

“Remaining in power is the main concern for Iran’s top leader. Securing the existence of the Islamic Republic mainly depends on improving the economy,” said another senior official, close to the hardline camp. “For the leader, the priority is to secure the interests of the Islamic Republic.”

INCREASING ANGER

Conservatives, who like hardliners support the theocracy but favor a less confrontational foreign policy, would back detente.

The struggle of ordinary Iranians to make ends meet has become harder since reimposition of the U.S. sanctions, which combined with the rising inflation, growing unemployment, a slump in the rial has caused Iran’s economy to deteriorate.

The establishment’s core support comes from lower-income Iranians, who joined anti-government protests in November over a sudden hike in fuel prices. The unrest turned political with protesters demanding a “regime change”.

The elite Revolutionary Guards responded with a harsh crackdown that saw hundreds killed and thousands jailed, but the unrest rattled clerical rulers by reminding them how vulnerable they are to popular anger over economic hardship.

Candidates affiliated with the Guards made a strong showing in parliamentary elections, leading the race in the capital Tehran and across Iran.

“In this ongoing process, the Guards will become an increasingly powerful force, extending its dominance in the military, intelligence and economic spheres onto the political one,” said Ali Fathollah-Nejad, visiting Fellow at Brookings Doha Centre.

Demands by many pro-reform Iranians for social and political freedoms, however, are unlikely to be met. Hardliners, entrenched in institutions Khamenei controls such as the judiciary, are determined to prevent domestic liberalization.