Iran typically marks the Feb. 11 anniversary of the 1979 overthrow of the U.S.-backed Shah with massive official parades, rousing anti-American speeches and often the unveiling of some new piece of military or aerospace hardware. This year could be different, as the regime and the opposition Green Movement lock horns in a contest for ownership of the legacy of the revolution. Opposition activists plan to use the day to continue the protests they have maintained since the disputed presidential election in June, seeing themselves as latter-day inheritors of the struggle against dictatorship. But Supreme Leader Ayatullah Ali Khamenei has warned protesters not to disrupt the official ceremonies. “The area of tolerance is over,” said police general Ismail Ahmadi Moghaddam. “Anyone attending [opposition] rallies will be crushed.”

Despite the looming confrontation, behind the scenes, Iran’s opposition appears to be exploring the possibility of a compromise. Much of the speculation has centered on the possibility that former President Akbar Hashemei Rafsanjani — a wily power broker who’s managed to hold the ever narrowing middle ground between the two camps — might mediate between the opposition and Khamenei. At least one opposition leader, former presidential candidate Mehdi Karroubi, has openly mooted the possibility, though another, former president Mohammad Khatami, publicly denied having sent a letter to that effect to the Supreme Leader. But all three of the highest-profile opposition leaders — Karroubi, Khatami and Mir-Hossein Mousavi, the candidate who opposition supporters believe actually won the disputed election — have publicly recognized Mahmoud Ahmadinejad as President while reiterating their belief that his re-election involved widespread irregularities. They have also distanced themselves from calls among demonstrators for the overthrow of Khamenei and clerical rule. Observers believe these gestures have opened the way for more-pragmatic conservatives within the regime to press for reconciliation with the opposition.

So far, there has been no response from Khamenei, though right-wing hard-liners have heaped scorn on the proposal. But there are some signs that the state may be open to a deal, or at least to giving some breathing room to the opposition. In the past two weeks, state television ran a series of programs that allowed critics of President Ahmadinejad to openly air their views. In January, a parliamentary panel accused former Tehran prosecutor Saeed Mortazavi, a hard-line former judge, of being responsible for the violent deaths of three jailed opposition dissenters after antigovernment protests in July.

For the leaders of the opposition, a compromise has obvious attractions. Resilient as the protesters may be, it’s not clear that the Green Movement can continue indefinitely in the face of the state’s overwhelmingly superior force — nor is there any visible prospect of the regime’s losing control of the streets. Iconic leaders such as Karroubi, Khatami and Mousavi are perhaps less dangerous to the government free than they would be if imprisoned, because their movement’s activities are so curtailed and many of their aides and allies are in jail. Moreover, the longer the protests have continued in the face of harsh repression, the more demonstrations have turned violent and seen their ire directed not just at the current government but toward the Islamic system itself. Not only does this make it easier for the state to delegitimize the protesters as agents of foreign powers; overturning the Islamic system would also deprive the opposition leaders — mostly clerics and former government officials — of their base of authority and legitimacy. The more radical the protest movement becomes, the smaller its chances of winning the backing of those unhappy with the status quo but not willing to commit to the opposition camp.

There may be incentives for Khamenei to negotiate as well. The Supreme Leader’s authority has traditionally rested on holding himself above day-to-day political decision making and infighting. But in the June election, Khamenei pre-emptively declared Ahmadinejad the winner before challenges to the vote count could be heard and declared that the incumbent was his preferred candidate. By so clearly taking sides, the Supreme Leader diminished his authority and ability to resolve disputes in the country’s political system, making his own role a target of protests.

But the difficulty is that any compromise would almost certainly have to involve Khamenei moving against Ahmadinejad, initiating a process within the political system that would involve the incumbent either being ousted or having his power considerably diluted. The leaders of the opposition risk losing the backing of their supporters in the streets if they are too willing to reconcile themselves with Ahmadinejad, given all the blood that has been spilled over the past six months.

Has Ahmadinejad become enough of a liability for Khamenei and his allies to move against him? The President faces a difficult term ahead, even without the unresolved question of his legitimacy. Critics of his government say it squandered billions during his first term on expensive social programs intended to buy political support. Now faced with increasing sanctions and lower oil revenues, the government is about to launch a new program to wean the economy from unsustainable subsidies, especially on energy — a move that is almost certainly going to be unpopular.

But much depends on just where the center of gravity in Iran’s regime lies in the postelection political landscape. Ahmadinejad spent much of his first term filling positions with allies from the Revolutionary Guard, the élite military force, and they returned the favor by orchestrating the postelection crackdown. It’s not clear now just who calls the shots. Also, concerned with the danger posed to the regime’s survival by internal strife, hard-liners may be tempted to pick a fight with the West to create a pretext for cracking down harder at home.

There’s no doubt, though, that all sides are looking for a way out of the stalemate that has produced Iran’s longest period of domestic political instability since the 1979 revolution. One state broadcaster recently suggested that much of the postelection protest was the result of sexual frustration on the part of young people and that the best way to resolve political crisis would be to marry them off. As pleasant as that might be for all involved, Iranians are unlikely to kiss and make up any time soon, and there may yet be months of turmoil ahead before the political matchmaking behind the scenes shows any results.

Like the knee-jerk decision to dismantle the Iraqi army, the U.S. decision in 2003 to ban members of the former ruling Baath Party from joining the new Iraqi government was one of the biggest blunders of the early American occupation of post–Saddam Hussein Iraq. It instantly alienated an entire spectrum of civil servants and politicians, many of whom didn’t have much loyalty to the old regime and could have been enlisted in the construction of a new government. And because many of them were Sunni, it helped widen the sectarian split in Iraqi society that eventually led to civil war.

Though U.S. policy subsequently shifted, and the Iraqi parliament has nominally watered down de-Baathification laws, the early effort to purge the old regime still haunts Iraqi politics. Last week, the Accountability and Justice Commission, the remnant of a de-Baathification committee set up by the Americans, banned 499 Iraqi politicians from running in the national parliamentary election on March 6. Not only does the move damage the fragile reconciliation process between Sunni and Shi’ite factions, but it also throws the country’s democratic process into disarray just as a landmark election is scheduled to take place a few weeks from now.

Because several top Sunni leaders — including Saleh al-Mutlaq, head of a secular coalition that includes former Prime Minister Ayad Allawi — are among those now banned from running in the election, the move is being widely perceived by the country’s Sunnis as an attempt by the Shi’ite-dominated government to limit the expected gains by Sunni parties in the coming contest. And it also appears that the targets of the commission are more than just Sunni politicians but also rivals of President Nouri al-Maliki and his supporters on the Accountability and Justice Commission (including its co-chair Ahmed Chalabi, the formerly exiled anti-Saddam activist who fell out with his allies in the Bush Pentagon and realigned himself with local Shi’ite politicians). The full list of banned politicians has yet to be published — the commission says that more names will soon be added — but leaks to the press have led to speculation that many firm fixtures in Iraqi politics, like the country’s well-regarded Defense Minister Abdul-Kader Jassem al-Obeidi, will now be banned.

Most Sunnis boycotted the last election, only to find themselves shut out of the country’s subsequent political process while politicians with ties to Shi’ite militant groups took important posts. Civil war ensued after Shi’ite hard-liners sought payback for the years of oppression under Saddam’s Sunni-dominated regime, while Sunni hard-liners took up arms against the new government. Luring Sunni parties back into politics was one of the cornerstones of the successful realignment of American policy toward Iraq, one that was reinforced by the surge of American forces in Baghdad. It led to a steady return of relative peace and security.

Despite the lull in violence, infighting has become par for the course among Iraqi politicians. A dispute between Arab and Kurdish legislators over voting lists in the disputed northern city of Kirkuk this past autumn nearly derailed plans for the entire national election, which had to be moved from its original date in January to March. That dispute was only settled with the direct intervention of U.S. Vice President Joe Biden, who made personal phone calls to top Kurdish leaders while the American ambassador rounded up votes in Baghdad.

Now American officials are heading back into the breach, and Biden back to the phones, hoping to find a compromise before the confrontation escalates and endangers the election itself. The U.S. — which has promised to withdraw all its combat troops from Iraq by Aug. 31 and all remaining soldiers by 2011 — has tied the timing and pace of withdrawal to the successful completion of this election. Though it is unlikely that Sunni parties will again boycott the election or return to violent tactics, the parliament’s sleight of hand could be a warning that however much the White House and the American public would like to close the tragic book on Operation Iraqi Freedom, a stable and democratic Iraq is far from mission accomplished.