Britain's ouster of Iranian diplomats, the closing of its embassy in Tehran and the recall of several other European envoys has dramatically deepened the rift between Iran and the West.
But the incident that sparked the latest escalation – the violent ransacking of the British embassy in Tehran – has exposed even deeper divisions within Iran that will be crucial to future dealings with the Islamic republic.
Monday's attack represents another example of how the simmering feud between Iranian President Mahmoud Ahmadinejad and the county's Supreme Leader, Ayatollah Ali Khamenei, is increasingly being eclipsed by the emerging power of the Revolutionary Guards as an influential force within Iran's ruling structures, which are ever more opaque.
British Foreign Secretary William Hague placed the blame for the embassy attack that led to the evacuation of the country's diplomats on "Iranian authorities."
"The idea that the Iranian authorities could not have protected our embassy, or that this assault could have taken place without some degree of regime consent, is fanciful," Mr. Hague told Parliament.
But analysts say it's increasingly unclear where the real authority in Iran lies. At the same time, understanding how that uncertainty is playing out in Iran is key to determining whether traditional diplomatic levers, such as economic sanctions or severing diplomatic ties, will work against the regime.
"It's not really clear who the real power is and who you are actually negotiating with," said Isobel Coleman, senior fellow at the Council on Foreign Relations.
The consensus is that the people who attacked the British embassy were members of the Basij, a paramilitary volunteer militia mostly made up of young people who take their orders from the Revolutionary Guards, a branch of Iran's military that is ostensibly loyal to the Ayatollah, who appoints its commander (currently Major-General Mohammad Ali Jafari).
But some observers say there is mounting evidence that the Guards, founded after the 1979 revolution, are acting more autonomously.
"The Revolutionary Guards in Iran increasingly resemble the Pakistani military. It has become a state within a state pursuing its own interests," said Ali Alfoneh, a fellow at the American Enterprise Institute, a conservative Washington think tank.
The force, with roughly 125,000 fighters, has indisputably upped its political and economic clout in recent years.
The Quds Force, its paramilitary expeditionary force, is active in Syria, Iraq and Afghanistan, with an official mandate to protect the revolution. In reality, that means exporting the revolution's goals to other parts of the Islamic world.
Inside Iran, the Guards' sway is even more apparent. A number of former Guards entered politics after 2005 during the first term of Mr. Ahmedinejad, himself a former Guard.
Others were appointed by the Supreme Leader to key posts on the Broadcasting, National Security and Expediency Councils.
In 2007, Gen. Jafari brought the Basij under his direct command, further bolstering the Guards' power. In the aftermath of the disputed presidential elections of 2009, members of the Basij allegedly beat and killed demonstrators in Tehran and other cities.
The Guards have also become a major economic player, with ties to more than 100 companies that control an estimated $12-billion (U.S.). Some reports suggest the Guards have been granted contracts worth a staggering $25-billion (U.S.) from Iran's Oil Ministry, as though it were a private company rather than an arm of the military.
Taken together, all of this has placed the Revolutionary Guards in a position where they rival Iran's all-powerful clergy.
Even the tensions between Ayatollah Khamenei and Mr. Ahmedinijad have only bolstered the Guards' influence, forcing the Ayatollah to reach out to them as a stabilizing force.
Analysts say the Guards benefit from the kind of chaos sparked by the latest diplomatic row with the West.
"When a country is in a permanent state of crisis, it typically benefits the armed forces," Mr. Alfoneh points out.
Robin Wright, a fellow at the Brookings Institution's Saban Center, argues that the shifting political sands inside Iran mean its is all but impossible for the West to have productive negotiations with Tehran, while the effect of sanctions is unclear.
"This regime, which is poised for two elections in the next two years, is not capable of resolving its differences with the international community," she said. "Internal political divisions make that difficult."
According to Ms. Coleman, "the ongoing Khamenei-Ahmadinejad feud and the role of the Revolutionary Guards and where they fall is not totally clear."
But the big question, she points out, "is not who was behind this attack, but why."