In Tehran drivers dutifully wear their seatbelts but think nothing of racing through a red light. Women must cover their faces and bodies under strict Islamic laws, but young women stretch the rules to reveal designer clothes, dyed hair, heavy make-up and prominently displayed bandages from recent cosmetic surgery.

The state-controlled media fill the papers and air waves with a solid diet of prayers, documentaries about the Iran-Iraq war and speeches from the country's leaders. In the privacy of their homes, most Tehranis watch illicit satellite television channels beaming Persian music videos from California and uncensored news bulletins or just read foreign websites.

The very same Iranian who would chant “Death to Britain” at the end of Friday prayers would also regard English football as his second religion. Steven Gerrard and Wayne Rooney are household names and the visa queue at the British Embassy stretches around the block. Iranians are hospitable to a fault. But the same generous host can just as easily lapse into paranoid conspiracy theories about how British spies run the country and the Jews rule the world.

Welcome to Iran, now marking 30 tumultuous years since the Islamic revolution and facing an identity crisis as it ponders middle age. True, the country is young and energetic and has a strong sense of its culture and heritage. It is also endowed with huge energy resources. But power still resides in the grey-haired clerics whose policies have provoked international sanctions and pariah status in the West. Many Iranians still struggle to find work and feed their families in the face of double-digit inflation.

As it battles between preserving the ideals of the revolution and navigating its way in a complicated modern world, one figure looms large. The late Ayatollah Khomeini, the father of the Islamic revolution, may have died 20 years ago but he still looks down on his people with a stern gaze from every office wall and billboard. His legacy continues to cast a powerful shadow.

Now two serious problems have converged at the same time to confront Iran with some difficult decisions. One is Barack Hussein Obama, the first US President who broke the mould of previous leaders of the “Great Satan” by proposing to end 30 years of hostility. His address to the Iranian people last month knocked the regime off balance. This is not what American presidents are meant to do.

The Iranian leadership is desperately looking for a way out. One confided to me this week that the proposal was a “mask” that concealed a new plot against Iran. The ailing Supreme Leader, Ayatollah Khamenei, conceded that Mr Obama had reached out a “velvet glove” but warned his people that it concealed a hand of steel. Another aide told me he regretted the passing of George W. Bush who, he said wistfully, was at least “honest”.

Anti-Americanism is a central pillar of Iranian revolutionary dogma. Iran has watched with alarm the handshake between Hugo Chávez and Mr Obama last week and the rapprochement with Cuba. Removing America as the bloodthirsty foe would not only mean redecorating the walls of many Tehran buildings covered in anti-US propaganda but it would also remove a central tenet of Khomeini's ideology. If that went, what would be next? Would American culture again swamp the country as it did during the Shah's reign? Would the millions of Iranian expatriates in America flock back and turn Tehran into the Los Angeles of the Middle East?

The other big challenge facing Iran is the nuclear programme. Its conventional military may be obsolete but it has invested heavily in long-range missiles and acquiring the technology and hardware to build an atomic bomb, some believe within the coming months. This sets Iran on a collision course with the West, the Arab world and Israel, which has repeatedly stated that it will prevent Iran building a nuclear weapon, by force if necessary.

Iran is an imperfect democracy. Any candidates outside the mainstream of politics are banned. Critical journalists and human rights workers are regularly arrested or intimidated. But every four years it still holds presidential elections that do express the will of most of the 46 million eligible voters.

On June 12 President Mahmoud Ahmadinejad is expected to seek re-election that would give him another four-year mandate to pursue his hardline policies. At home this means strengthening the security apparatus that keeps the regime in place and cracking down on dissent. Abroad it will mean greater support for militant Islamic groups such as Hamas and Hezbollah. He will again seek to challenge the West on the international stage, as he did with such effect in Geneva this week at the United Nations conference on racism, when his tirade against Israel led to 30 countries walking out of the event. Above all, it will mean that Iran will pursue its nuclear programme with renewed vigour and risk a new war in the Middle East.

Lined up against Mr Ahmadinejad are two reformist candidates, the strongest being Mir-Hossein Mousavi, a soft-spoken former Prime Minister, best known for his leadership during the Iran-Iraq war. Although called out of semi-retirement, Mr Mousavi appears to have brought together the fractious reformist groups. Certainly, his campaign headquarters appears well funded and well staffed by young Iranian volunteers. He told me this week that he would seek to improve relations abroad and change Iran's image, and that he hoped one day to shake the hand held out by Mr Obama.

Few Iranians are prepared to give up their nuclear programme, which was begun by the Shah, but there is a sense that a victorious reformist candidate could take the poison out of the dispute by co-operating with the international community and turning down the bellicose rhetoric. Mr Ahmadinejad is on the record as denying that six million Jews died in the Holocaust. He has also called for Israel to be “removed from the pages of time” - a comment many regard as advocating wiping the Jewish state off the map

Mr Mousavi's biggest problem is people like Mehsohrabi, a spiky-haired youth with nothing but contempt for the entire political Establishment. Like almost half the electorate, he does not intend to vote, something Mr Ahmadinejad's well-organised hardline supporters are counting on to win.

But if the country's modern history is anything to go by, the teenager might do well to reconsider. Who leads Iran after the elections could decide which path the country will take, a move with great consequences not only for Iran and the region, but also the rest of the world.

Richard Beeston is foreign editor of The Times

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