Can Rouhani bring Iran in from the cold?

The time has come for Iran's new president to start delivering on promises to end the country's isolation, improve its sanctions-crippled economy and improve citizens' freedoms.

Iran's supreme leader Ayatollah Ali Khamenei, centre, officially endorses Hassan Rowhani, right, as the new country's president in Tehran. Mr Rouhani takes over from Mahmoud Ahmadinejad, left. khameneShow more

Iran's cyber-savvy new president, Hassan Rouhani, proudly tweeted this week that his public inauguration today would set a precedent, being the first time since the Islamic Revolution in 1979 that foreign leaders have been invited.

These are usually low-key affairs in Iran, with none of the razzmatazz or hoopla associated with their Washington equivalent.

But Mr Rouhani, a moderate imam who unexpectedly trounced hardline candidates in June's election, is using today's occasion to signal his determination to bring Iran in from the cold and highlight the end of the turbulent Mahmoud Ahmadinejad era.

He shoulders the burden of great expectations while facing monumental challenges.

At home, Mr Rouhani, 64, has pledged that his "government of hope and experience" will repair Iran's failing economy and provide greater individual rights, including for women and minorities.

Abroad, there are hopes he will help break the deadlock in high-stakes nuclear talks with six world powers, including the United States. A new round of negotiations is expected in October.

He has also pledged to improve relations with Arabian Gulf states, in particular Saudi Arabia.

All the while, Mr Rouhani will have to outflank the conservatives he defeated, but who still dominate parliament and are deeply rooted within the state. Moreover, it is the supreme leader, Ayatollah Ali Khamenei, who has the last word on the nuclear dispute and strategic policy.

For Mr Rouhani, Iran's economic problems are inextricably linked to the decade-long nuclear impasse. "It is good to have centrifuges running, provided people's lives and livelihoods are also running," he memorably said in June. A combination of international sanctions and mismanagement by Mr Ahmadinejad has battered Iran's economy. Oil exports are less than half what they were two years ago and Iran's currency has lost about half its value since last year.

Inflation is running at 42 per cent, according to Mr Rouhani's team. And at least one in four young Iranians is unemployed, many of them university graduates.

Mr Rouhani, dubbed the "diplomatic sheikh", was known for his nuanced, moderate and courteous approach when he was Iran's chief nuclear negotiator a decade ago.

He is a robust defender of Iran's right to a peaceful nuclear programme and a home-grown fuel cycle. But he argues that a less confrontational approach would allow Tehran to advance its atomic activities while easing western concerns and allowing sanctions to be rolled back. Iran insists its nuclear programme ispeaceful, rejecting western suspicions that it is an attempt to achieve a weapons capability.

Mr Rouhani's task of persuading Mr Khamenei that interaction with Washington and its allies could pay dividends suffered an ill-timed blow this week when the US House of Representatives overwhelmingly passed a bill to tighten sanctions on Iran. White House officials had warned against the move.

But Mr Rouhani should receive a boost from today's high-profile inauguration, a day after he officially took office and was endorsed by Mr Khamenei in a smaller ceremony.

There will be 11 presidents, two prime ministers and seven parliamentary speakers at his inauguration. The presidents are from Afghanistan, Kazakhstan, Pakistan, Lebanon, Armenia, North Korea, Tajikistan, Turkmenistan, Sudan, Sri Lanka and Togo. The UAE will be represented by the speaker of the Federal National Council.

Reportedly, two notable western dignitaries will attend. They are Javier Solana, the European Union's former foreign policy chief, and Jan Eliasson, the deputy general secretary of the United Nations.

European countries are maintaining a distance. In keeping with tradition, they will be represented by resident diplomats in Tehran, with the exception of Britain, which does not have a functioning embassy. However, Britain's foreign minister, William Hague, this week expressed an interest in improving relations with Iran "on a step-by-step and reciprocal basis".

The US and Israel were not invited.

Mr Rouhani, however, has tacitly reached out to the US and is reportedly ready for direct talks with what Iranian hardliners still denounce as the "Great Satan" or "global arrogance".

In an olive branch to Washington this week, Mr Rouhani reportedly picked a US-educated former ambassador to the United Nations as his foreign minister. Mohammad Javad Zarif has been at the centre of several back-channel negotiations to try to overcome more than three decades of estrangement between Washington and Tehran.

He is well regarded by western officials and academics who have met him.

"His appointment, if it happens, is probably the most visible signifier of Rouhani's attempt to fulfil his campaign promise of appointing the best and brightest the Islamic Republic has produced," said Farideh Farhi, an Iran expert at the University of Hawaii.

Mr Rouhani has two weeks to name a cabinet but Iranian media believe he will reveal his ministerial line-up today.

Several of his putative team were educated in the US or Britain. The president himself has a doctorate from Glasgow Caledonian University.

Colleagues say Mr Rouhani is a workaholic who puts in 10-hour days at the office. In his spare time, he hikes and loves Iranian cinema, traditional Persian art and singing.

Politically, Mr Rouhani is a consummate regime insider, with high-level connections right across Iran's fractious political spectrum, and prides himself on maintaining good relations with the supreme leader.

That places him in a strong position to convince Mr Khamenei that it is time to shift direction on some matters for the sake of the country. The ayatollah, while viscerally mistrustful of the US, is seemingly willing to give Mr Rouhani some leeway.

But, Iran experts insist, Washington must convince Tehran it is willing to negotiate seriously on all issues that will make up a solution, including sanctions relief.

"Iran will not surrender to dictated terms. And without US clarity on what Iran's nuclear programme should look like long-term, and on reciprocation for Iranian concessions, the crisis will get worse," said Richard Dalton, a British former ambassador in Tehran.

For now, Mr Dalton said, each side believes the ball is in the other's court. "Still, alarms over Iran's view of Israel and the possible US extra sanctions aside, the mood is better."