Among the latest efforts is the creation earlier this month of the Iran Enterprise Institute, a privately funded nonprofit drawing not just its name but inspiration and moral support from leading figures associated with the American Enterprise Institute. The Iran Enterprise Institute is directed by a newly arrived Iranian dissident whose cause has recently been championed by AEI fellow and former Pentagon advisor Richard Perle. Amir Abbas Fakhravar, 31, served time in Iran's notorious Evin prison before arriving in Washington in May, with Perle's help. Fakhravar, who advocates U.S. intervention to promote secular democracy in Iran, now seeks Washington's backing to lead an organization that would unite Iranian student dissidents. (I profile Fakhravar in this month's Mother Jones). Some other Iranian activists and journalists say Fakhravar and his supporters exaggerate his importance as a dissident leader in Iran. "Student circles and journalistic circles don't recognize him as a student leader,” says Najmeh Bozorgmehr, the Financial Times' Tehran correspondent who closely followed the 1999 pro-democracy Tehran student uprisings.

Incorporation papers received last week by the Washington, D.C., corporate registration office indicate that among those on the Iran Enterprise Institute's initial board of director are Fakhravar; Bijan Karimi, a professor of engineering at the University of New Haven; and Farzad Farahani, the Los Angeles-based half-brother of the U.S. leader of the exile Iranian political party, the Constitutionalist Party, which is closely tied with Fakhravar.

The Institute was created after a three-day meeting in Washington last month. According to one of the Iranians who participated in the meetings and who asked that his name not be used, among those in attendance were Fakhravar; Reza Pahlavi, son of the ousted shah of Iran; former Reagan era official and AEI scholar Michael Ledeen; a Dallas-based Iranian rug dealer who has funded anti-Tehran dissidents; and several other young Iranian oppositionists. According to sources, the group's initial funding will come primarily from Iranian exiles. Perle's office did not immediately respond to an inquiry to his office about the new group.

According to Iranian sources, the shah's son, Pahlavi, announced at the meeting that the group should right then and there form a new leadership council for the Iran opposition movement, consisting mostly of the younger people present at the meeting rather than the aging cadre of monarchist supporters who have debated how to overthrow the mullahs for 25 years.

The incorporation of the Iran Enterprise Institute, which is now seeking office space in Washington, D.C., comes as the State Department is finalizing decisions on what individuals and organizations will receive some of the $75 million in U.S. government funds set aside to promote democracy in Iran. Some $50 million of that is expected to go to U.S.-government Farsi language broadcasting, and several million to U.S.-based NGOs with experience in democracy promotion. But included among the grant applications received by the State Department, according to a source, were applications by Fakhravar for three projects totaling $3 million. The State Department will not say who is receiving the grant money, in order to protect the recipients.

Even as the grant decisions are being made, U.S. government sources indicate that democracy promotion in the Middle East, including Iran, has diminshed as a foreign policy priority in the Bush administration, for a number of reasons. Chief among them is that U.S. policymakers are humbled by their experience trying to cope with the situation in Iraq. They have also been forced to turn to autocratic regimes for help in isolating Iran, as well as Hezbollah in Lebanon. “[The administration] has gotten a large dose of realism,” one U.S. official told the Prospect. “You saw [that] with the Secretary of State Rice's last visit to the region -- the idea to create a group of like-minded states to work together on a variety of issues, to oppose Iranian subversion. Democracy and democratic reform are still there. But it's much less salient and much less prominent.”

Laura Rozen is a Prospect senior correspondent.

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