Iran is a country where the struggle between advocates of change and the entrenched forces of the hardliners has been an almost daily feature of life over the past year.

The country's moderate president, Mohammad Khatami, has faced numerous setbacks in his attempts to push forward with social and political reforms.

Progress has been slow, but the factors driving the demand for change are powerful.

Jim Muir looks back at Iran's year.

Iranian society is on the move. The middle classes enjoy skiing in the mountains at Shamshak and the country as a whole has gone football crazy.

The sport has emerged as one of the undoubted vehicles for social change, stirring the masses and arousing passions all around the country, unlike any other sport.

Football frenzy: Success over the US in the World Cup

For the first time since the Islamic revolution in 1979, the Iranian national team qualified for the world cup finals in France.

They went on to beat the USA in the process - and then won gold at the Asian Games.

Football is breaking taboos which have been in force since the revolution. Women, normally banned from attending matches, have begun to attend in small numbers. Meanwhile, outside the stadium, female fans are as vocal and excited as their counterparts anywhere in the west.

Young girls pursue their football heroes around town, hoping to snatch a photo or an autograph - unseemly scenes, as far as the frowning ayatollahs are concerned. But the explosion of Iran's youth simply cannot be ignored. With some 60% of the country's population growing up since the revolution, sheer demographics are a driving force for change.

Riding the wave of change

President Mohammad Khatami is the man riding that wave of change.

His commitment to personal freedom and to the creation of a civil society struck a resounding chord. More than 20 million Iranians - many of them women and young people - voted for him in 1987, hoping for change.

That change was felt first and foremost in the burgeoning of the Iranian press - hundreds of new publications were licensed, exercising an unusual degree of freedom.

President Khatami: Tough year of opposition

Michael von der Schulenburg, a United Nations Coordinator, says Iran increasingly looks outward.

"It's a much more open country today," he said. "We see, for outsiders, a surprisingly open debate about all things concerning government, concerning economic policies. You see a country that is very interested in relations with other countries."

But despite much talk about sporting diplomacy, that is about as far as the warming process could go.

Hardliners retain their grip on much of the real power, despite President Khatami's massive popularity. There is little prospect for an early breakthrough in political relations with the US.

Action on sanctions

The American administration has not made things easier, keeping in place a regime of sanctions and other measures against Iran, which make it impossible for President Khatami and the moderates to risk offering an olive branch.

"We have not seen any genuine interest in practice on the part of the United States, to understand the realities," says Javad Zarif, Deputy Foreign Minister.

"We have seen some changes in approach, we have seen some changes in tone - but we have not seen any genuine change in policy represented in actions."

The murder of a group of Iranian diplomats by the fundamentalist Taleban militia in neighbouring Afghanistan was a disaster for Iran's foreign policy. There was bitter public anger at the killings; around the country, hundreds of thousands of Iranian troops were mobilized and sent to the Afghan border.

Although it later died down, the war fever played into the hands of the hardliners, providing cover for a clampdown on parts of the liberal press.

The arrest and conviction of the mayor of Tehran by the conservative judiciary was another blow to the moderate camp. President Khatami lost a second key ally when his Interior Minister was impeached by a parliament dominated by hardliners.

The right-wing counter-attack made itself felt on the ground too.

Time and again, legitimate demonstrations or rallies mounted by the moderates, were broken up after provocations staged by hardline agitators.

UK relations improve

Britain and Iran decided to upgrade their relations to ambassadorial level after making some progress on the issue of British author Salman Rushdie. But this only prompted a further hardline backlash.

Hardliners are looking for US sanctions to be lifted

Britain has just spent $2m refurbishing their embassy residence in the heart of Tehran following years of neglect after the Islamic revolution.

Britain and other European countries are eager to do more business in Iran and with the obstacle of the Salman Rushdie affair out of the way, they are hoping for cautious progress towards better relations.

The vast majority of ordinary Iranians have had enough of revolution, upheaval and war. Although the dominant images coming out of Iran are of angry radicals, most people are much more concerned with trying to make as good a living as they can, in a country hard hit by the collapse in the price of oil, its main export.

In February, it will be 20 years since the Islamic revolution which Ayatollah Khomeini led.

He is still widely revered - his modest house in north Tehran is a place of pilgrimage.

But in a changing world, his legacy is now being disputed.