The Iranian Islamic regime is in the throes of the most serious legitimacy crisis since its establishment 30 years ago.

Its handling of the crisis will not only test its ability in ensuring its continuity, it will also determine whether Iran will take a conservative modernist or liberalist modernist Islamist path of change and development or somewhere in between.

The result of the presidential election, whether rigged or not, is now less important than what it has triggered: an intensified factional power struggle within the ruling Islamist elite about the direction that Iran should take.

The conservative Islamist camp, backed by Iran's powerful Supreme Leader, Aytollah Khamanei, and spearheaded by Ahmadenijad and an array of political, military and security forces, has a vested interested in maintaining their domination of Iran and a traditionalist path of transformation.

This camp essentially ascribes to the Jihadi or revolutionary dimension of the legacy of Ayatollah Khomeini, the founder of the Islamic regime following the overthrow of the Shah's pro-Western regime in the revolution of 1978/79.

It wants Iran to be a self-reliant and self-contained modern, powerful Islamic state under a pervasive and cautious Shi¹ite Islamist guardianship. Hence its authoritarian approach to governance, perennially conservative attitude towards domestic change, and distrust of outside powers, especially the United States and some of its allies. From their perspective, the Shah's regime had forged close ties with the West in violation of Iran's sovereignty and religious distinctiveness.

On the other hand, the reformist/internationalist camp, led by Ahmadenijad's key challenger in the election, Mir Hossein Mousavi, and aided by the former liberal Islamist President Mohammad Khatami (1997-2005) and now by the former pragmatist President Hashemi Rafsanjani, also wants an Islamist transformation of Iran.

But their vision puts less emphasis on political and social control and more stress on market economy and openness to the outside world, especially the United States. It considers these as significant for improving the living conditions of the Iranian people, meeting some of their political demands for which they instigated the 1978/79 revolution in the first place.

Essentially, the difference between the two camps is over power, approach and style, rather than goals. Both profess dedication to Khomeini's Islamic legacy, and want the preservation of the Islamic regime and construction of an Iran with influence in regional and world affairs. Their leaders and most of their operatives come from a similar religious and social background.

They have jointly played a critical role during and after Khomeini, who died in 1989, in shaping Iran to become what it is today. True, if it were not for the dominance of the conservative camp the reformists may have been able to open up the space for a wider application of what Khatami has called 'Islamic civil society' and 'Islamic democracy', with the 'dialogue of civilisations' underpinning the conduct of Iran's foreign relations.

But beyond this, the reformist camp could not be expected to be much more forthcoming than its conservative counterpart on any issue, including Iran's nuclear program, which could possibly thwart Iran's growth as a strong Islamic state.

Within this framework, both camps have managed to build up strong popular bases of support to the extent that today a majority of Iran's 72 million population is highly polarised.

Whilst the conservative camp has secured a substantial base amongst the urban poor and rural population, the reformist camp has become popular mainly among the educated urban youth, who form more than 50 percent of Iran's population, and the middle class in general.

The current struggle is basically an in-house one. If it is not contained it could ultimately threaten the very existence of the Islamic regime and therefore the entire governing Islamist elite. This may well prompt the leaders of both sides, with Khamanei acting as the final adjudicator and arbitrator, to reach some understanding sooner rather than later.

They have compromised before; there is no reason that they cannot do it again. One outcome could be a deal under which the reformists will have a greater say, but the conservatives would wield enough power not to let the reformists 'have their cake and eat it too'.