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Iranian police stand guard Tuesday outside the British Embassy in Tehran during a protest.

Christiane Amanpour | BIO
CNN International Correspondent

Despite his threat of "bloodshed," and the subsequent beatings and shooting deaths by government agents, the open protests on Iran's streets by hundreds of thousands of people have dented the shield of invincibility of Iran's Supreme religious Leader, Ayatollah Ali Khamenei, say sources in Iran. Chants of "Death to Khamenei" broke a state-imposed and self-imposed absolute prohibition on criticizing a leader believed to be wielding the wisdom and authority of God himself.

Right now, the massive network of Iran's intelligence agents, Revolutionary Guard, paramilitary Basij, and police of all sorts, are cracking down. Sources say they are also going house to house, through email accounts and web postings, through cell phone calls and SMS text messages (when the system is allowed to stay up) and even to taxi agencies whose drivers hoisted Moussavi posters during the election campaign. They are rounding people up and, as it was chillingly put to me, in Iran's prisons "we have room for all of them."

And alleged protestors are being paraded "confessing and repenting" on Iranian State TV. The government also claims to be arresting "foreign agents" accused of stirring up the protests.

Sources say the Iranian Revolutionary Guard, aligned with Ayatollah Khamenei, plucked Mahmoud Ahmadinejad from total obscurity as presidential candidate in 2005, in order to hold the line against "reform" in the country, after eight years of the reformist President Mohammad Khatami.

Sources in the Iranian government and well-placed analysts inside the country SAY the IRGC has taken up influential positions in many major sectors of Iranian society, such as the oil industry, finance, transport, construction and politics. Iran has been "increasingly radicalized over the last four years," one told me.

There are divisions within the clerical establishment and in Parliament, sources tell me that for now that does not threaten the ruling establishment.

I was told the weekend arrests of former President Hashemi Rafsanjani's daughter and other relatives, and their swift release, were a warning to Rafsanjani, who backed Mir Hossein Moussavi in the election. So far the powerful mullahs, monitoring it all from the holy city of Qom, are mostly quiet.

And finally, for now, while Moussavi has startled the system with his willingness to press the election case, he is also considered, at this moment, no Ayatollah Khomeini. Nowhere near as charismatic and powerful as the leader of the successful revolution in 1979.

Sources say Moussavi is not formally arrested or under house arrest. However his movements and words are "controlled" by security and intelligence officials. So in effect there is no visible leader for the street protesters today - unlike 1979, when Khomeini led from exile.

Sources say all this could change if mass demonstrations hit the streets and simply remain there all over the country, if the security forces refuse to expand the crack down, or if people go on nationwide strike, like they did in 1978-79.

As long as the streets and squares remain blanketed by security, they are mostly clear of protesters.

Right now chants of Allah-Akbar still resound from the rooftops at night. Although residents say they seem to be dying down in some neighborhoods. Even the honking horns and flashing headlights are fading from the traffic.

At this moment, however, it is impossible to know how this contest of wills - and powers - will play out.

Christiane Amanpour | BIO
CNN International Correspondent

Iran's supreme leader delivered an impassioned defense of the Islamic Republic on Friday, insisting a majority of Iranians had faith in the existing establishment and issuing a "religious ultimatum" to protesters to end days of street demonstrations triggered by last week's presidential election.

Addressing a large crowd at Tehran University, Ayatollah Ali Khamenei said the historic voter turnout of 85 percent legitimized the Islamic system and had been a clear demonstration of the Iranian people's trust in the regime.

He rejected suggestions that fraud or cheating had been involved in President Mahmoud Ahmadinejad's re-election, pointing out that the 11-million vote difference between Ahmadinejad and his principal opponent, Mir Hossein Moussavi, was too large to have been manipulated by vote-rigging.

Khamenei then directly addressed the people on the streets, telling them it was time to end their protests and pursue their grievances through the Guardian Council, which has already said it will recount some of the votes.

Christiane Amanpour makes an historic visit to one of the world's most closed societies. Tune in for the full report tonight at 11 p.m. ET.

Program Note: Tune in to hear more from Christiane Amanpour on the challenges facing President Obama tonight on an AC360° special, "Extreme Challenges: The Next 100 days," at 10 p.m. ET.

Villagers sit near the graves of victims of airstrikes in Garni, in western Farah province in Afghanistan.

Christiane Amanpour
CNN Chief International Correspondent

President Obama’s biggest challenge will be Afghanistan and Pakistan. He wants to beat back the militants, but all the U.S. commanders and officers I have talked to say that cannot be done by bombs and bullets alone. It must happen in tandem with development and promise of a decent life for ordinary Afghans. The most recent Gallup poll from Afghanistan shows people put their economic woes above all others, including security.

The new U.S. commander in Afghanistan must find a way to battle militants without causing the massive civilian casualties that are dangerously draining support for the U.S. mission and the U.S.-backed Afghan government. The latest poll shows only 1 percent support for the Taliban in Afghanistan. The U.S. needs to take advantage of that low figure and win hearts and minds.

Across the border, one possible positive side-effect of Pakistan’s offensive against the Taliban and other militant groups, is that it keeps them from pouring over into Afghanistan.

I wish I could persuade others of the vital necessity of nation-building. For some inexplicable reason most American journalists and politicians consider it a dirty word. And yet, wherever you look, successful counterinsurgencies come with successful development strategies.

Take Colombia, the big-bad insurgent narco-state of Latin America. It has practically been transformed over the past few years, by a two-pronged strategy of fighting and clearing the FARC anti-government rebels, followed by building roads, schools, and providing health care for the population. To get rid of the cocaine, they did not just tear up the coca bushes and leave, they provided alternative crops. In other words, the government is trying to provide the people with an alternative economy.

People complain that the U.S. has been in Afghanistan for eight years with little to show. The truth is the U.S. effort has been haphazard and incoherent during most of that time. It is now time to get serious, knowing that a stable and secure Afghanistan in the middle of that volatile region is vital.

Check out a preview of the AC360° Special "Extreme Challenges: the Next 100 Days." The full special airs this Thursday at 11p.m. ET.

CNN's Christiane Amanpour asks Joint Chiefs Chairman Admiral Mike Mullen about the Taliban in Pakistan.

CNN's Christiane Amanpour asks Joint Chiefs Chairman Admiral Mike Mullen about pirates in Somalia.

Program Note: Tune in to hear more from Christiane Amanpour tonight on AC360° at 10 p.m. ET and watch an excerpt from the interview here.

Christiane Amanpour
CNN Chief International Correspondent

I talked with Admiral Mike Mullen, 17th Chairman of the Joint Chiefs of Staff, about how to handle the pirates off the coast of Somalia, how to handle an unstable nuclear Pakistan, and much more.

But what he said about Afghanistan intrigued me most. It wasn’t about the war. It was about quality of life.

As we talked at the Pentagon, Chairman Mullen told me, the terribly deep problems fracturing Afghanistan, and indeed Pakistan, won't be solved by the military alone.

You have to give people some reason to hope, and to take the risk of rejecting the militants. You have to give them a chance at a decent life - not a grand life, but a decent life – and an economic alternative.

And that means you have to give them an opportunity for development – of their communities, businesses, schools – some stability.

The military can help, Chairman Mullen told me, but the military can't do it alone.

That sounds like nation-building. People don't like the sound of that. Nor the cost. Nor how long that could take.

But to solve a problem that has spread into the U.S. - costing the lives of troops and billions of dollars already - the U.S. government and people may have to listen to advice from its most senior military official.

Picture released by North Korean state news agency shows Kim Jong Il, center, with staff from the rocket team.

Christiane Amanpour
CNN Chief International Correspondent

After a three-hour emergency session Sunday, the United Nations Security Council failed to come to any agreement on how to deal with North Korea's rocket launch over the weekend. Deliberations will continue Monday.

Sources say China, Russia Libya and Vietnam are blocking any resolution or punitive measures. They call for caution and restraint while the U.S. is calling for a strong and unified response. Officials believe the most that could happen would be a Security Council presidential statement condemning the launch and a possible attempt to reaffirm existing U.N. sanctions on Pyongyang. They do not expect new sanctions to be imposed.

U.S. Northern Command and other intelligence sources are portraying North Korea's launch of what they say was a Taepodong-2 missile as a failure. "Stage one of the missile fell into the Sea of Japan. The remaining stages along with the payload itself landed in the Pacific Ocean. No object entered orbit and no debris fell on Japan," according to a statement from the North American Aerospace Defense Command (NORAD) and the Northern Command.

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