The victory of the Islamic Participation Front in Iran's general election is the best news to come out of the Middle East for a long time. Candidates calling themselves reformers have won 86 per cent of the votes counted so far. Only 72 of the 290 seats in parliament remain to be decided, but the reformers' majority is now unassailable.
The poll has proved that a Middle Eastern Muslim country can change the nature of its regime peacefully and democratically. It has given a surge of hope to a people beaten down by two decades of isolation, economic hardship and strict control of the most intimate aspects of their lives.
A westernised Tehran businessman, most of whose friends and relatives moved abroad years ago, told me ebulliently how he waited for two hours in the cold to vote for the reformers. "Things are much better since Khatami came to power [in May 1997]," he said. "The newspapers are free now. I am no longer hassled at Mehrabad Airport. You can bring in all the videos you want from Dubai. They even let men and women sit together on the chairlifts at the ski slopes."
These small changes were enough to win the businessman's vote. But far more "radical" ideas are discussed these days in Tehran, if still in whispers: the possibility of nudging the clergy out of government; the possibility of making hijab or the wearing of Islamic cover optional for women.
US and European leaders have been quick to praise Iran's democratic achievement, but the leaders of the Arab world are silent. No Arab country has held presidential and parliamentary elections as free and fair as Iran's. Potentates from the Atlantic to the Persian Gulf must be praying their own populations will not notice.
Islamic fundamentalists fighting Arab regimes cannot be too thrilled about it either. They want to establish theocracies ruled by shari'a: how do they explain to their followers that the first country to do so is steadily moving towards a more open, modern and democratic system?
The democratisation and liberalisation of Iran also put the US and Europeans in an awkward position. For two decades Iran has been a bogyman whose existence justified transforming the Persian Gulf into a giant US aircraft carrier, and Bahrain and Saudi Arabia into US naval and air bases.
If Iran normalises its relations with the rest of the world, how will Washington explain its presence? And what about the tens of billions of dollars in weapons that the US, France and Britain flog to oil-rich Gulf sheikhdoms every year? Why should the Arabs keep buying?
The Israeli Prime Minister, Mr Ehud Barak, responded cautiously to the reformers' win in Iran, noting that Iran still encouraged terrorism and sought a nuclear capacity. By "terrorism" Mr Barak means that Iran supports the Hizbullah fighting to drive Israeli occupation troops out of southern Lebanon.
A recent CIA assessment quoted by the New York Times said the US intelligence agency was not sure whether Iran had nuclear weapons and it was unable to track reported Iranian efforts to acquire nuclear technology.
Mr Barak's enemies in Hizbullah are also worried about the changes in Tehran. Mr Khatami has so far continued to support Hizbullah, but the Lebanese guerrillas wonder if this won't be affected by his improving relations with Europe. Fortunately for Hizbullah, Syria is there to fall back on.
After two decades of supporting Islamic revolution in the Middle East and justice for the Palestinians, "aid fatigue" seems to be setting in here. "I don't see why we should send money to the Arabs," an Iranian woman told me. "Iraq invaded us [in 1980] and for eight years all the Arabs supported Saddam Hussein while we died."
A few cautionary notes are in order amid the euphoria over the reformers' victory. First, remember Rafsanjani. In the early 1990s, President Ali Akbar Hashemi Rafsanjani was viewed as a moderate who was going to open up his country. The optimism was not commensurate with that inspired by Mr Khatami, but it was enough to draw some foreign investment, much of which went into the pockets of corrupt officials.
Women in Tehran told me they had counted on Mr Rafsanjani to give them more freedom, yet his eight years in office now seems a dark period, and he failed to win a seat in the first election round.
There are other reasons for caution. Although Mr Khatami repeats that he is merely a representative of the people, a sort of personality cult is rising around him. His supporters insist that the democratic system is now fortified, that it could survive without him.
But what if - heaven forbid - someone should assassinate Mr Khatami? Does his entourage have the expertise and determination to make Iran function better? How do you improve life for the man in the street with unemployment approaching 30 per cent and a $22 billion debt?
There is also a danger that the 18 political parties which participated in the election (many under the reformist banner) will bicker once they enter the new Majlis in May.
And despite their drubbing at the ballot box, Iranian conservatives still control a web of institutions they contrived for exactly this sort of eventuality. Under the constitution the Supreme Leader and Guide, Ayatollah Ali Khamenei, holds the power to dismiss the president and declare war or peace. The conservative-run Council of Guardians can override parliament.
All radio and television broadcasting is under Mr Khamenei's purview. The conservatives have 40,000 mosques, and 1,000 important businesses owned by the Foundation of the Disinherited.
In the past, conservative clergy have used "force groups" to terrorise intellectuals, opponents and anyone deemed insufficiently Islamic. A violent backlash at their loss of power is not impossible.
The Guide and the conservatives now have a chance to regain a measure of their lost credibility. By condemning extremist violence wherever it crops up - something they have failed to do in the past - they can stop it. If they do not, their electoral defeat will be surpassed by their people's anger.