With his major foreign policy goal of outreach to the U.S. stalled and his program of social liberalization imperiled by a reactionary backlash, Rafsanjani feared the balance of power in Iran shifting too far in favor of the hardline principlist conservatives. On the eve of the 1996 majles elections, Rafsanjani announced the creation of a new political organization, the Executives of Construction, which advocated for entrepreneurship and economic liberalization over revolutionary zeal. The creation of this organization presaged Rafsanjani’s abandoning his faltering alliance with the principlists in favor of one of the reformists. Despite the Guardian Council again disqualifying many candidates from the left and some more radical leftists boycotting the proceedings, the pragmatist-reformist axis made significant gains, preventing the principlists from winning an outright majority of seats, although they did win a plurality. The left’s strong showing was an early warning that the country’s increasingly urban and secular population resented the efforts of Khamenei and the hardliners to enforce strict social controls and revolutionary steadfastness. 

The principlists grew increasingly antagonistic toward the pragmatists, who, along with the reformists, they accused of being “liberals” seeking to undermine the Islamic Revolution. According to Afshon Ostovar, “Conservatives and hardliners charged “liberals” (or the modern-right and reformists) with leading a Western-backed conspiracy to destroy the revolution. Liberals, conservatives argued, were actively working to discredit Islam by openly questioning the validity of the guardianship and by promoting Western social mores and political practices such as democracy. Conservatives feared liberals were striving for a détente with the United States and were thus leading Iran back toward foreign control. These themes were summed up in the central conservative claim that liberals were at the head of a Western “cultural invasion,” undermining the revolution’s Islamic character. Warning against the “cultural invasion” of Western values became a rallying cry for anti-reform activism.”

The hardliners turned to vigilante violence to combat the rising scourge of “liberalism” with Khamenei’s blessing. Powerful bazaar leaders and hardline clerics backed the formation of a gang known as ansar-e hezbollah, a group without official IRGC ties whose rank and file were drawn from socially conservative IRGC veterans and local basij units. Ansar-e hezbollah and other similar organizations acted as pressure groups, harassing and beating up liberal political opponents and engaging in attacks on student activists, newspapers, and other entities deemed as deviant, even setting fire to a Tehran cinema for showing a film considered “un-Islamic.” Khamenei’s tacit approval of ansar-e hezbollah’s extralegal violence showed the lengths he was willing to go to ensure principlist hegemony over Iran’s political and cultural spheres.

By the end of Rafsanjani’s presidency, Khamenei had settled into the Supreme Leader role and established himself as the more powerful member of the leadership diarchy. He had gained the loyalty of the clerical and IRGC elites, who relied on the Office of the Supreme Leader’s largesse for their own economic and political power. Still, Khamenei’s authority was not yet absolute. Rafsanjani remained a powerful figure in his own right, however, largely through his economic empire that he sat atop. Iran's increasingly young and cosmopolitan population and its elected officials also served as a check on Khamenei, setting the stage for the main ideological battle that Iran continues to face until the present day. While Khamenei has sought to politicize the judiciary and security and intelligence services to rig the war in his favor, he never fully extinguished the movement of those who sought to reform the Islamic Republican system.