By Parisa Hafezi
TEHRAN (Reuters) - Iran's reformist opposition has watched with admiration as revolutions have toppled three Arab leaders, but despite divisions in the ruling elite it looks incapable for now of taking its protest movement back out onto the streets.
Mass protests against the 2009 re-election of President Mahmoud Ahmadinejad marked the worst unrest since the Islamic Revolution three decades earlier, but were quelled with lethal force by the state's security apparatus, headed by the elite Revolutionary Guards.
While Supreme Leader Ayatollah Ali Khamenei swiftly endorsed the election result, splits emerged in the ruling establishment as some, including lawmakers, criticized the government for mishandling the protests and using force to silence the 'Green' opposition.
Attempts to revive street protests have fizzled. The opposition, which says its fight for a freer Iran will continue, is following the Arab uprisings with a mixture of envy and regret for its own failure, analysts and moderate former officials say.
"The opposition is leaderless and lacks any strategy. The opposition leaders are under house arrest. Dozens of prominent reformists are jailed. Their supporters have no choice but to wait and see," said a close ally of opposition leader Mirhossein Mousavi, who asked not to be named.
Mousavi, a former prime minister, and Mehdi Karoubi, a cleric and a former parliament speaker who also stood against Ahmadinejad, have been placed under house arrest since February and denied any contact with the outside world.
The authorities, who deny the election was rigged, have jailed many senior pro-reform politicians, closed a dozen reformist publications and banned at least two moderate parties since the vote.
The government is permitting less and less political dissent by banning media coverage of the opposition, according to journalists working for local newspapers. The opposition continues to communicate over the Internet despite a web-filtering system designed by the authorities to curb its online activity.
The main question is whether the lack of anti-government protests shows the pro-democracy movement is a spent force, or whether it can remain alive despite the fierce state crackdown.
"The core supporters of the regime are ready to sacrifice their lives for the regime. They consider killing or dying for the regime as their religious duty," said a pro-reform politician, who was sentenced to two years jail after the 2009 vote on charges of "acting against national security."
"Confronting the establishment has been made very costly to intimidate the opposition supporters."
Unlike the Arab countries, Iran's opposition leaders are limited in their ambitions: they remain committed to the Islamic Revolution and the principles of its leader, the late Ayatollah Ruhollah Khomeini, but they want to reform the establishment within that framework.
"The Green opposition is not questioning the foundation of the system as happened in the Arab world," said Dubai-based political analyst Hamid Sedghi. "It makes it difficult for the authorities to uproot the opposition, but also it prevents any regime change."
The chances of witnessing the kind of uprising that swept veteran Tunisian, Egyptian and Libyan rulers from power seem remote in Iran in the near term, since the leadership and opposition are united in defending the establishment, analysts say.
"It's a Catch-22," said political analyst Hamid Farahvashi. "The opposition leaders are also among the founders of this system, who want an evolution, not toppling the establishment."
Iran's hardline rulers have put a positive spin on the Arab Spring, saying it will spell the end of U.S.-backed governments in the region. Khamenei has called it the "Islamic Awakening" and said it was inspired by Iran's 1979 revolution, which replaced the U.S-backed Shah with a Muslim theocracy.
But the cleric-led elite is concerned about any spillover effect of popular uprisings against dictatorial leaders in the Arab world.
Analysts say two factors may help sustain the opposition despite its current weakness: the weakness of the economy, and a widening political rift among the hardline elite.
Ahmadinejad's honeymoon with clerics and the Revolutionary Guards has ended because of his bucking of Khamenei's authority, analysts say. Khamenei clipped the president's wings by reinstating his sacked intelligence minister in April.
Chants of "death to opponents of the Supreme Leader" have been heard at parliament and Friday prayers.
"The leader is a clever politician ...Considering the Arab Spring and Iran's international isolation, he plans to form a new group of politicians," said a relative of Khamenei, who asked not to be named.
"This group will emerge before the 2012 parliamentary elections ... They will carry out Khamenei-style reforms in the country to preserve the establishment."
With mounting international pressure over Iran's disputed nuclear program, rising prices, long queues of jobless and investors keeping a tight hold on their purses, analysts say the establishment ultimately needs to give limited freedoms.
"The high oil price is helping the establishment," said economist Reza Hazegh. "But the government, dependent on petrodollars to run the country, may face domestic tension in the long term if the price of oil drops."
The rulers have allowed ordinary people to enjoy themselves. Luxury shops are loaded with Western designer brands. Coffee shops and restaurants are crowded with young people.
"Whatever keeps young people off the streets is tolerated by the system ... It is a reward for staying clear of politics that could endanger the system," said political analyst Mansour Marvi.
But some young people who lack hope for the future have chosen to leave the country and Iranian media say the country has the highest "brain drain" in the Middle East.
"Unlike young Arabs, many young Iranians are leaving the country instead of confronting the establishment," said a senior western diplomat in Tehran. "They believe resistance is too costly."
(Editing by Mark Trevelyan)