Our man in Tehran

It was 1386 when I arrived, and it's 1387 now. Eight million people celebrate the new year here with anti-Islamist gusto, jumping over bonfires and dressing up in red conical hats. For 3,000 years, regimes have tried to kill off the pagan rituals. The ubiquitous Persian table setting of seven symbolic objects beginning with the sound "s" now has a book beginning with a "q" on it - the Qu'ran. The brown rock foundation of my apartment block is from the Alborz mountain range, which contains the highest peak of the Middle East, Damavand. This is where Zoroaster, after visiting the flaming tarpits of Baku in Azerbaijan, saw the dangerous, spectral light of monotheism. The people of the book - Jews, Christians and Muslims - can all be trace the origins of their faiths to these peaks. It isn't really 1387, more like 3008. But the Islamists are in power now and they like to think north Tehran will one day be pious. Before the revolution, north Tehran was the place for CIA-backed Savak security personnel to down jeroboams of champagne even as they tortured. Now the merchant class that forged the bases of revolutionary, clerical power drinks Absolut vodka and ignores the screams from the notorious Evin prison located in their midst.

This year the new year, timed according to the most accurate calendar on earth (it only misses a day every 141,000 years) coincided with parliamentary elections. Moaning about politics is a pastime as broad-based as it in London or Paris but the key here is that demographic power rests with the poor in the provinces. They vote for the party that sponsors nationalised industry and public works - Ahmadinejad's party. It's too simple to blame the arbitrary disqualification of reformist candidates for the resurgence of the fundamentalists. Khomeini's grandson was disbarred following smears that he owned a BMW and a whirlpool bath. Memories of the decadence of the previous tranche of reformists, who quickly became as corrupt as their forebears, are still clear. The pendulum swings according to supreme leader Khamenei, who follows a policy of divide and rule in his dealings with the powerless President Ahmadinejad and those who want to liberalise the economy. Turnout is high because employers check IDs for the stamp that demonstrates someone has voted.

A delight in posh hotels is mandatory for any classy foreign correspondent. In Tehran, there is the Laleh, which proudly proclaims that it threw off the shackles of Intercontinental Hotels' management. Each one is run by a different arm of government and the Laleh is overseen by the security services. Like the Rashid in Baghdad, some 400 miles away, it is where foreign journalists covered the terrible war between Islamist Iran and a US-backed Saddam Hussein. They covered the revolution here, too. It was a safe distance from which to record Khomeini's commands. At the time he was asking Iranian teenagers to clear minefields on the Iraqi border by walking into them. In return, they got celestial bliss.

Sitting up in the Chinese restaurant with a spectacular view of Tehran fringed by the snowy flashes of the Alborz is a sad affair. The naughtiest thing one can do in the restaurant is to defy the smoking ban. Unlike in the US, you can buy and smoke a Cohiba cigar, though. Anti-imperialist rhetoric creates odd bedfellows and there was confusion here when Che Guevara's daughter had to contradict an overkeen government acolyte who claimed that Che's beard showed he and his men had converted to Islam in Cuba's Sierra Maestra. There's a lot of confusion about Iran's alliance with fellow oil-superpower, Venezuela, as well. But as for the foreigners in the Laleh, they're not impressed by carpets and cigars. They're just here to do business and get the hell out. In any case all the good Safavid rugs were stolen for homes in Beverly Hills in 1978.

It's much the same, further north, at the Esteghlal, created by Paris Hilton's ancestor. Unchanged Hilton bathroom fittings carry the American Standard insignia. Poor cisterns are meant to act as propaganda against imperialism. In the backyard, the disused swimming pool sits idle. This is where the glitzy upper classes partied under the US-backed Pahlavi regime. In the large reception area, a few Iranians whisper excitedly when a pianist on a grand plays a banned, if saccharine, pre-revolution melody. There is a yellowy light that pervades the rooms and the bars will mix you Nescafé but not martinis.

There is a lot of sex in Tehran. In the south, there's drugged-up prostitution courtesy of the de-Talibanised Afghans who export heroin. In the north, it's still difficult to get Bordeaux but the young - and this is a very young population - can buy bulk quantity condoms. Men seem to do the best out of things in Iran. Women complain of a lack of commitment but then again, they don't have to do two years national service for a passport. The rich hate their hijabs and the supermarket aisles are awash with prevention remedies for alopecia.

Before, people prayed in private and partied in public. Now, it is the other way around. In a government office, a man can't shake hands with a woman. The secret worship of cosmetic surgery is revealed only by the sight of rhinoplasty bandages on boys and girls driving in the polluted, sprawling streets. At a private north Tehran party, the sexes can touch and discuss the worship of artifice and glamour. In the south, there is the full chador. And the economic power that comes from oil and the import-export businesses tied to banking in Dubai rests with the south. A tiny minority are very rich but the distribution of wealth isn't bad. Most have to work more than one job which keeps them too busy for political dissent and statist subsidies make for fewer beggars than in European capitals.

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