Hojatoleslam Ali Akbar Hashemi Rafsanjani, 70, who left the presidency eight years ago, announced last night that he had joined the field for the election on June 17.

“I am proud to be a candidate,” he said in a three-page statement. The new President, he added, would need to tackle “unemployment, social security, poverty, corruption, discrimination”, and “meet the challenge of a young society”, particularly women “more determined to participate in the development of the country”.

The decision came as little surprise. Hojatoleslam Rafsanjani is one of the most powerful and ambitious figures in Iran and has rarely strayed far from the centre of power since he helped Ayatollah Khomeini to overthrow the Shah in a revolution 25 years ago.

Although he will be challenged by younger and more hardline candidates loyal to Ayatollah Ali Khamenei, he is regarded as the favourite at this early stage of the contest.

Iran’s future president will inherit heavy responsibilities from Mohammad Khatami, a reformer whose attempts at modernising Iran and improving relations with the West failed in the face of resistance from religious ideologues.

The new leader will have to fend off a looming showdown with the international community over Iran’s nuclear programme. He must also decide whether the country still wants to promote Islamic revolution in the Middle East at a time when the trend is moving from bullets towards ballots.

Hojatoleslam Rafsanjani’s features may have grown a little heavier and his hair turned whiter and thinner, but those who know him insist that his mind is just as sharp as it was when he was last President. In more than 30 years at the heart of the Iranian regime he has proved himself to be ruthless but flexible, a war leader and a peacemaker — and above all a pragmatist prepared to cut deals with anyone when it suits his interests.

His nickname is Kusheh, which in Persian means “Shark”, a reference to his smooth features and ruthless reputation. A self-made millionaire, with ties to everything from pistachio exports to heavy industry, the shrewd tactician emerged from the chaos of the Iranian revolution as the most powerful figure in the country after Ayatollah Khomeini. It was often Hojatoleslam Rafsanjani, Kalashnikov rifle clutched in his hand, who delivered the famous Friday sermons at Tehran University, where the regime’s anti-Western tirades would be greeted by chants of “Death to America”.

During the eight-year war with Iraq, he often took day-to-day responsibility for operations at the front, where hundreds of thousands died in the trenches.

Hojatoleslam Rafsanjani was directly involved in what became known as “Irangate” — the secret negotiations with the Reagan Administration in 1985 for the trade of Western hostages held in Lebanon in return for arms shipments to Iran. He is also credited with persuading Khomeini to bring the Iran-Iraq war to an end. Under his leadership, diplomatic efforts were also made to restore relations with Britain, formerly the “Little Satan” to America’s “Great Satan”.

He is thought to favour a Chinese model of reform that would liberalise Iran’s economy and grant greater personal freedoms to the public but keep the Islamic regime firmly in control.

His pragmatism is encouraging hopes in the West that he may also resolve the 26-year conflict with America. President Bush included Iran in his infamous “axis of evil” trio, and Washington is expected to renew efforts to isolate Tehran if the Iranians persist with their nuclear programme.

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