The majles elections led to the first major realignment of Iranian politics under Khamenei’s Supreme Leadership. Following its resounding defeat through largely anti-democratic means, the left’s focus turned toward reforming the Islamic Revolutionary system, emphasizing democracy, greater transparency in government, and respect for human and civil rights. In the foreign policy realm, the left partially abandoned its dogged anti-Americanism and anti-imperialism in favor of alignment with the ascendant Western-led liberal world order. In the wake of the collapse of the Soviet Union, whose statist, heavily centralized economic program the left had championed, the left saw that greater foreign policy openness and the embrace of some European and Western political and economic values were needed to drive political liberalization and guarantee its continued competitive participation in Iranian politics. While temporarily shut out of the political sphere, the Islamic Left, now known as the moderates and reformists, sought to cultivate intellectual and cultural influence, propagating their ideology through their outsized roles in academia, journalism, and the arts. Iran’s rapidly shifting demographics bolstered them; the population was becoming younger, more urban, and increasingly secular.

With the moderates and reformists vanquished from the political scene for the time being, the ideological and temperamental differences between Khamenei and Rafsanjani rose to the fore, and their henceforth cooperative relationship developed into a rivalry. Khamenei feared Rafsanjani’s expanding power as a threat to his own, and the time came for him to take back the upper hand. Khamenei benefitted in this respect from the perception that the president was responsible for the day-to-day administrative affairs of the country. Although he had signed off on Rafsanjani’s plans to liberalize the economy, Rafsanjani’s economic agenda failed to deliver the promised results, hamstrung by corruption, inflation, low oil prices, and the imposition of U.S. sanctions on Iran’s energy sector, which limited oil exports.

The hardliners in the majles, who drew much of their support from the mercantilist bazaaris, a constituency opposed to Rafsanjani’s economic agenda, moved to obstruct the five-year program with Khamenei’s backing, forcing Rafsanjani to pursue much narrower economic reforms. The majles hardliners proved useful in checking Rafsanjani’s powers, drawing them closer to Khamenei and, in turn, hardening Khamenei’s ideological outlook. Rafsanjani had reestablished trade and diplomatic ties with much of the Arab world and Europe, but Khamenei and the hardliners remained steadfastly opposed to his proposed olive branch to Washington. Khamenei and his hardline backers, who came to be called the principlists, framed their mounting opposition to Rafsanjani’s pragmatism as a fight to uphold the principles of the Islamic Revolution, especially the notion of velayat-e faqih, which made Iran’s government the sole outpost for true Islam. They argued that greater political and economic openness would lead to importing Western cultural values and imperil revolutionary steadfastness.  A conservative backlash to Rafsanjani’s social and economic liberalization ensued, with the morality police giving carte blanche to crack down on dress code violations and illegal satellite dishes.

With control of the majles in principlist hands, Khamenei sought to increasingly encroach on executive affairs previously left to Rafsanjani’s sole purview. Working in tandem, the majles and Supreme Leader Khamenei forced out a number of Rafsanjani’s appointees to key ministries and replaced them with Khamenei loyalists. Most notably, Rafsanjani’s reformist interior minister was ousted in favor of a principlist, increasing Khamenei’s control over the Iranian security apparatus. Minister of Culture and Islamic Guidance Mohammad Khatami was compelled to resign over the backlash Khamenei engineered in response to the social and press freedoms he had overseen. Khamenei initially installed one of his loyalists, Ali Larijani, to the post instead of placing him in charge of the state-controlled Islamic Republic of Iran Broadcasting, where he ousted Rafsanjani’s brother, a direct affront to the sitting president. Khamenei also placed his allies in the judiciary and intelligence ministries, buttressing his ability to go after his rivals.