I have been in Iran for two weeks talking with a wide variety of people here, many of whom say they believe that President Ahmadinejad would really like to have relations with the United States.  They say that he has sent out signals to that effect, and Washington has either not picked up them on or it is something Bush simply chooses to ignore.

But then the Iranian President talks about “Satanic camps and powers which are stained with corruption.”  One of the country’s important ayatollahs piled it on, saying: “We are very happy that America’s economy is in jeopardy and they are paying the price for their bad deeds. God is punishing them.”  It would appear Tehran’s relationship to America remains as it has been over the past 30 years, confrontational.

Due to U.S. imposed sanctions, Iran’s economy has pretty much been insulated from financial shockwaves that have been felt worldwide.  Despite the fact that Iran cannot do transactions in dollars anymore, it’s the currency they deal in — unofficially.  It is also the currency oil is priced at, and as that benchmark, Iranians worry its value will fall during this time of financial turmoil.

Iran’s economy is dependent upon oil which has just hit a year low at $83 per barrel.  One economist I spoke to here said Iran will be in trouble if it goes below $75.

Despite the tensions between governments, average Iranians do not appear to be taking pleasure in America’s financial woes. The Iranians I have met here over my seven trips are really fond of Americans and would like to see the two countries work things out.  Some express disdain for Washington’s foreign policy.  Some don’t.  Some are critical of their own president and system.  Others aren’t.

But one thing is certain — Iranians have their own financial problems which are separate to America’s.  Many here say it mainly has to do with internal economic mismanagement, government’s handouts  — which have injected a lot of liquidity into the system — and inflation, which officially, is at 28%,  though it may be higher. Government supporters now just blame Iran’s problems on the global economic crisis and U.S. sanctions for their own woes.

And like Americans, Iranians talk about the price of some foods doubling in recent weeks and utilities bills rising steeply.

But unlike Americas, Iranians aren’t worried about their retirement plans because its stock market — reported to be doing fine –  is not linked in with the global markets.

Politics are never certain in Iran, and, as I see it, Iranians often approach and analyze politics differently than Americans do anyway. Their thought process is often quite complex and they always come up with theories I haven’t heard before.

For example, when it comes to the U.S. elections, someone in Tehran told me he thought Barack Obama would be worse for Iran than John McCain, because Obama would likely be more able to build international consensus than his Republican rival. And Obama might use that skill to do things not favorable for Iran.

But in terms of Iranian politics, my Iranian friends tell me it is impossible to guess what will happen in their 2009 election. The supreme leader had so far backed Ahmadinejad. But presumably that could change.

In terms of the people, you hear that Ahmadinejad is popular with Iranians in smaller villages and remote regions of Iran. He’s promised to put the oil wealth on their tables. Ahmadinejad has doled out lots of handouts and loans, but some say that hasn’t really boosted the quality of life of poorer and even average Iranians because inflation is so high. Ahmadinejad supporters claim the whole world’s economy is in dire straits so Iran’s leader shouldn’t be blamed. His detractors say he has mismanaged the economy. Official inflation figures are 28%.

There are those in Iran who do not like the style of this man who rails against global arrogance and Zionism. There are Iranians who would prefer a more conciliatory tone vis a vis the rest of the world, and better relations with the west particularly.

But there are lots of Iranians who are proud of the man who has stood up so outspokenly against the west. They like his revolutionary style and believe he will keep the regimes values alive. They like that he is pious and lives a simple life.

There are plenty of presidential contenders but only two that observers can see being able to pull off a resounding victory — Ahmadinejad and former president Mohammad Khatami. Khatami was a reformist and while some in Iran believe he didn’t carry reforms far enough, his supporters liked what he stood for and believed he was good for the image of the country.

It is far from certain that Khatami will run again—and if he doesn’t, which reformist candidates will be allowed to run.

The whole issue of U.S.-Iran relations hangs in the air here as never before. That is possibly because of rumors that the u.s. might at some point in the not too distant future open a U.S. interests section in Iran after 30 years of not having diplomatic relations with the Islamic republic. I had heard anecdotes of Iranians literally dancing when they heard the Americans might be back here. But when I arrived, and went to the old U.S. embassy in downtown Tehran, i was chased away by some men who seemed to be in charge of the place when i tried to take pictures. They said the message was this place belongs to Iran. Hardly the sort of encounter that gives one hope that American diplomats could be back in Tehran soon. But also a good illustration of the paradoxes in this society.

People here say President Ahmadinejad would like more than any other president to start negotiations with and possibly re-establish relations with the United States, and that he has sent numerous signs to that effect, but that they have all fallen on deaf ears. That may be the case, as Iranian signals are sometimes hard for westerners to read. Or it may just be that whatever message he’s sending is not well received for reasons I won’t go into here. But which you can probably guess. In any event, these are interesting times, and my sense on the ground here is that most Iranians would like to see their country doing business and having relations with the United States.

They milled about, intermingling in the pardo palace, a former Franco residence, but also simply now an imposing Spanish monument, on a hot July day just outside Madrid.

Monks in saffron robes, Armenian and Coptic men of the cloth in regal dress and hats, Saudis in their crisp white thobes, and red and white head-scarves, and an assortment of rabbis in suits and yarmulkes. This, just to name a few of the men and women of faith who had answered the Saudi King’s call to talk. Tony Blair and Jesse Jackson were a couple of the most recognizable in the group that was quite stunning in its diversity.

The aim of the world conference on dialogue was to focus on common ground, as opposed to differences between people, to find ways to try to get everyone closer, and ultimately work together, to seek solutions to some of the problems facing humanity at this particular moment in time.

That the event was called by the King Abdullah bin Abdulaziz al Saud, custodian of the two holiest mosques, was what made it so significant.

You can’t practice religions other than Islam publicly in Saudi Arabia, and there are hard line elements in the kingdom who have no interest in interfacing with Christians or Jews. In spite of some domestic resistance, King Abdullah went ahead with his vision.

The Saudi king is seen as someone who wants to soften the image of Saudi, to reform his own society, to reconcile the different factions that exist in the birthplace of Wahabism.

I asked one of the New York rabbis there, given that 15 of the 19 9/11 hijackers came from Saudi Arabia, and given some of the anti-semitic rhetoric that has come from parts of the kingdom, did his congregation have issues with him coming to the Saudi sponsored gathering. Were they suspicious, or uncomfortable with it? He said he did face some concern, but his feeling was this. “If the king of Saudi Arabia has extended his hand then we have the responsibility minimally to listen to what he has to say and hopefully we’ll translate that into accord and not conflict.”

Intentions appeared to be good and game faces dominated … but it was not all harmony.

The first moment of public discord at the event was when one of the Arabs said there could only be dialogue with Judaism as a religion and not Zionism. That offended the Jews in the room.

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