The Economist has a very well written look at the internal problems in Iran.
[A]t the heart of Iran’s strange semi-democracy lies an impossible contradiction. Although Iranian leaders like to claim that the Islamic Republic’s legitimacy derives from its famously lively elections, everyone knows that the real influence lies in the hands of men, mostly clerics, who never have to face the voters.
Receiving little worldwide notice (outside the blogosphere) is the sit-in by Iranian parliamentarians who are bend on reform.
Mr Khatami and parliament, supported by a few newspapers, are all that prevent conservative institutions from taking an even stronger grip on the country. This is why the sit-in in Tehran, viewed with indifference by most Iranians, is so important.