An increasingly isolated Iran seems just as divided within

Even Al Qaeda seems to have grown tired of the Iranian president, one more piece of evidence that Mahmoud Ahmadinejad has lost more than his swagger.

The Iranian President Mahmoud Ahmadinejad is not much of a student of American history. It might be useful, however, if he heeds the words of the late American Vice President Hubert Humphrey, who once said: "Propaganda, to be effective, must be believed. To be believed, it must be credible. To be credible, it must be true."

President Ahmadinejad is a prolific propagandist. In his world, Iran is on the march; the Western world is in decline; his administration is "the most pure and uncorrupted" in history; protesters are "dirt and dust" or "CIA spies"; the United States killed its own people on September 11, 2001; the Iranian economy is among the strongest in the world; there are no political prisoners in Iran; and the people love him.

Meanwhile, back in the real world, Mr Ahmadinejad's inner circle are embroiled in the biggest banking scandal in Iranian history, a $3 billion (Dh11 billion) embezzlement scheme that has led to the sacking of several bank managers and prompted one to flee to Canada. Mr Ahmadinejad often flaunts his humble origins and modest home, but many of his top advisors seem to prefer the lavish life of first-class travel and multi-million dollar villas purchased by shady privatisation deals.

The bank scandal has exacerbated the increasingly ferocious attacks on the president by his former hard-line foes and an increasingly restive parliament, chomping at the bit to launch impeachment proceedings but held back by Supreme Leader Ayatollah Ali Khamenei (who has his own problems with Mr Ahmadinejad, but has chosen not to give the green light to impeachment). Mr Ahmadinejad has been under sustained fire from the conservative and hard-line camp for six months.

The origins of the conflict lie in a dispute over the Intelligence Minister, Heydar Moslehi. Mr Ahmadinejad sacked him. The Supreme Leader ordered him to be re-instated. Mr Ahmadinejad refused, sulked for 11 days, and refused his government duties.

But the Supreme Leader's power is, well, supreme, and Mr Ahmadinejad relented. But the damage had been done: Mr Ahmadinejad had defied the Supreme Leader publicly. Many who had problems with the president on a whole range of issues, from accusations of corruption to his disregard for the parliament, seized on his insubordination to launch wide-ranging attacks.

Some two dozen of Mr Ahmadinejad's top aides have been arrested, accused of being part of "a deviant current". In fact, over the past week, rumours swirled that the head of this so-called "deviant current", a top aide and relative, Rahim Mashaei, had chosen to stay on in New York after the United Nations meetings, rather than face troubles at home. Mr Mashaei was reportedly sighted in Tehran, where he will be faced with the prospect of reading more hard-line attacks on him in the media, including calls for his jailing or execution.

On the economy, Mr Ahmadinejad's mismanagement combined with Iran's crony capitalism and sanctions has further stifled the country's growth, rattled the private sector, and undermined efforts to reduce high unemployment. The leading Iranian economist Bijan Khajehpour noted recently that some $25 billion of cheques have bounced in the last few months - a troubling sign for the private sector. Meanwhile, inflation and unemployment are ticking upward.

The oil sector continues to suffer from sanctions and politicisation. Chinese companies remain Iran's only hope of achieving its production targets of 5 million barrels a day, a far cry from the sputtering 3.7 million barrels of estimated production today. Those companies, however, are dragging their feet, worried about the economic and political risks, according to a recent report. With 80 per cent of hard currency earnings and some 50 per cent of fiscal revenues coming from oil, Iran can hardly afford a slowdown.

Economic mismanagement and sanctions are not new, but Iran's dramatic fall in regional standing is. Not long ago, the Islamic Republic won plaudits from Arabs for their open defiance of Israel and the United States. Polls indicated that Iran was well-received in the region. However, over the past five years, polls have indicated a steady decline in Iran's appeal. Iran's post-2009 election unrest, with images of government thugs beating banner-waving students, jolted the "Iran romantics" - those in the Middle East who romanticised Iran because they admired Tehran's foreign policy stances.

The Arab Spring also opened up Iran to charges of hypocrisy. While cheering revolts in Egypt and elsewhere, Iran's leaders called Syrian protesters "Western spies." Syria is Iran's only major Arab ally and a key piece of the Iran-Hizbollah-Syria triangle. But the most recent polls indicate a dramatic decline in Arab attitudes toward Iran.

Amid this backdrop of domestic crisis at home and external weakening abroad, Mr Ahmadinejad's usual bluster at the United Nations seemed even hollower than usual.

Meanwhile, the Islamic Republic has demonstrated none of the geopolitical dexterity of, say, Turkey. Ankara quickly pivoted away from Libya and Syria, and Prime Minister Recep Tayyip Erdogan was given a hero's welcome in his recent tour of the Arab world. Mr Ahmadinejad must be burning with envy.

To make matters worse, even Al Qaeda seems to have grown tired of the Iranian president. The organisation lashed out at him for invoking September 11, 2001 conspiracy theories, demanding their authorship of that terrible deed be validated.

To be sure, Iran is not on the verge of implosion or near-term collapse, but the past six months have accelerated the long, steady decline of a country that was, in the ancient world, a tolerant superpower, but is now ruled by an increasingly bitter, divided, out-of-touch, corrupt elite that are turning on each other.

Afshin Molavi is a senior fellow at the New America Foundation and a senior adviser at Oxford Analytica. Following him on Twitter at @afshinmolavi