1.

Middle East & Africa

IRAN POLL RESULT THREATENS EU'S POLICY OF ENGAGEMENT
By Roula Khalaf

Financial Times (UK)
June 27, 2005

http://news.ft.com/cms/s/3a0d269c-e6a7-11d9-b6bc-00000e2511c8.html

The election of a new hardline president in Tehran is likely to complicate the Islamic Republic's engagement with the European Union just as the U.K., France, and Germany prepare to make a detailed offer to Iran on curbing its controversial nuclear program.

Although Iranian officials have quickly moved to ease concerns of a change in policy on the nuclear front, European officials yesterday warned that the victory of Mahmoud Ahmadi-Nejad, the ultra-conservative mayor of Tehran, had made the European policy of engagement, whether on the political, economic or nuclear front, harder to pursue.

"Clearly it makes the task of building a common ground between the west and Iran much more difficult," said a senior European official.

Franco Frattini, European commissioner, told Italy's La Repubblica that Europe was waiting for clear words from the new president on human rights and the nuclear issue. "If the replies are negative, the European Union will have no choice but to freeze dialogue with Iran," he said.

Mr. Ahmadi-Nejad's spectacular rise means all elected institutions in Iran are now in the hands of hardline conservatives. His victory reverses eight years of reformist governments that have rehabilitated Iran's image and sought closer relations with Europe.

The powers of Mohammad Khatami, the outgoing president, were severely curtailed by Iran's unelected institutions also dominated by conservatives. But his moderating influence convinced European governments to step up engagement with Iran rather than follow the U.S. policy of isolating it. Mr. Ahmadi-Nejad has no foreign policy experience but his ideological background and suggestions that Iran's future need not depend on good ties with the west, have raised alarm in Europe. Vladimir Putin, Russian president, congratulated the new president on his victory on Saturday, but comments from western European governments were far less welcoming. Both the U.K. and Germany questioned the conduct of the poll. European officials said they would be closely watching the government appointed by Mr. Ahmadi-Nejad and the policies it pursued. The most immediate concern remains the nuclear issue. The U.K., France, and Germany have been seeking to convince Iran to give up its uranium enrichment program in return for economic and political incentives, and are expected to make a detailed offer to Tehran within a month.

On the surface, the election of a new president should have little impact on the talks since the ultimate decision-maker on this issue is Ayatollah Ali Khamenei, Iran's supreme leader.

But so far the leader's scepticism towards the talks has been tempered by support for the negotiations from allies of Akbar Hashemi Rafsanjani, a powerful figure in the system who just lost the presidential elections, and from the outgoing government. A hardliner in the presidency, however, is likely to reinforce the leader's doubts about the benefits of a compromise.

2.

Middle East & Africa

HARDLINER MAKES MODERATION PLEDGE
By Gareth Smyth

Financial News (UK)
June 27, 2005

http://news.ft.com/cms/s/a290838a-e6a7-11d9-b6bc-00000e2511c8.html

Facing the world's press after his landslide presidential victory on Friday, Mahmoud Ahmadi-Nejad yesterday signalled the end of the reformist presidency of Mohammad Khatami by echoing Mr. Khatami's most cherished phrases. "Moderation will be my policy. This will be a government of religious democracy."

The 49-year-old blacksmith's son fought the election as a "fundamentalist" wanting a return to the social egalitarianism of the 1979 Islamic Revolution.

Yesterday Mr. Ahmadi-Nejad said his "government of justice and friendship" would fight corruption and develop Iran. He has said he wants to distribute Iran's oil revenue more equitably, and the policies of fundamentalist allies in the parliament elected last year suggest he favors state-led solutions.

"The obvious comparison is [President] Hugo Chávez in Venezuela," said a correspondent who has worked in both oil-producing countries. "His election exposed a similar divide between better-off and poor, and both countries are major oil producers. Chávez was similarly demonized by the west and wealthy elites in Venezuela, in many cases without justification."

But Mr. Ahmadi-Nejad's aides have stressed their egalitarianism is not hostile to private enterprise or foreign investment.

He said yesterday his widely quoted description of the Tehran stock exchange as "gambling" were "words that never even crossed my mind." He also urged transparency in the oil sector.

The TSE index has dropped 168.2 points, or 1.3 per cent, since the result. "The fall is not big and Mr. Ahmad-Nejad's comments will have a positive impact," said Khosro Pour-Memar, a leading broker.

Even in affluent parts of Tehran, some expressed pleasure at having a president from humble origins.

Hadi, a Tehran school colleague of Mr. Ahmadi-Nejad, remembers a quiet adolescent in the last years of Iran's U.S.-backed monarchy. "He was shy and didn't play football," he says. "He spent time at the mosque and gave out chocolates on religious occasions. Some boys made fun of him -- he was too honest for those times."

But the times were changing. With the 1979 Islamic Revolution, Mr. Ahmadi-Nejad joined the Basij, an Islamic militia, worked as an engineer in the 1980-88 war with Iraq, and held various administrative posts in the provinces. What he saw as weakening commitment to the revolution's ideals led him to join fundamentalists who won the 2003 Tehran municipal elections as Abadgaran ("Developers") and then took control of parliament last year.

Abadgaran pushed for "social justice" and asserted parliament's right to amend the government's foreign contracts, including the deal with Turkcell for Iran's second cellular network, which finally collapsed last week as the Turkish-led consortium refused a share cut from 70 to 49 per cent.

Mr. Ahmadi-Nejad and his allies now control both parliament and the presidency. The Guardian Council, the Islamic watchdog overseeing Iran's political process, will be co-operative.

While this gives them leeway to implement policies, it also removes any room for excuses if they fail. Mr. Ahmadi-Nejad has offered millions of Iranians tangible improvements in their lives, and they will expect him to deliver.

3.

IRAN PRESIDENT-ELECT VOWS TO RESTART NUKES
By Kathy Gannon

Associated Press
June 26, 2005

http://www.washingtonpost.com/wp-dyn/content/article/2005/06/26/AR2005062600538.html

[PHOTO CAPTION: Iran's President-elect Mahmoud Ahmadinejad, speaks to the media, during his first news conference since being elected on Friday, in the City Council building in Tehran, Iran, Sunday, June 26, 2005. The ultraconservative Ahmadinejad has vowed to pursue a peaceful nuclear program and said Iran doesn't need America to make progress.]

TEHRAN, Iran -- Iran's ultraconservative president-elect, at once defiant and at ease, vowed Sunday to restart the nation's controversial nuclear program and warned European negotiators that building trust required a mutual effort.

Asked about relations with the United States during his first news conference since Friday's election, Mahmoud Ahmadinejad said Iran "is taking the path of progress based on self-reliance. It doesn't need the United States significantly on this path."

In a sign of tensions likely ahead, Secretary of Defense Donald Rumsfeld said Ahmadinejad was "no friend of democracy" and dismissed the vote as a "mock election."

Ahmadinejad entered the crowded chambers in Iran's municipal building with little fanfare, maintaining the unassuming style embraced by the roughly 17 million Iranians who voted him to power in a landslide victory.

He fielded questions confidently and smiled broadly when asked by an Iranian female journalist wearing a colorful head scarf whether he would introduce a strict dress code.

It wasn't his job to decide, he said.

"I am the president. There are people who make those decisions," Ahmadinejad said.

In his opening statement, he promised to shun extremism and cobble together a moderate regime. Yet critics say his election only consolidated the hard-liners' hold on power, and no reform-minded people remain in the government.

"He is no friend of democracy," Rumsfeld said on "Fox News Sunday." "He is a person who is very much supportive of the current ayatollahs, who are telling the people of that country how to live their lives, and my guess is over time the young people and women will find him as well as his masters unacceptable."

A key concern for the United States is Iran's 20-year-old nuclear program, revealed in 2002.

The United States alleges the program is aimed at building atomic weapons. Iran insists it is only interested in generating electricity. Uranium enriched to low levels has energy uses, while highly enriched uranium can be used in bombs.

Iran suspended all uranium enrichment-related activities in November to avoid possible sanctions from the U.N. Security Council, but it said all along the suspension was temporary. France, Britain and Germany have offered economic incentives in hopes of persuading Iran to permanently halt enrichment.

"Iran's peaceful technology is the outcome of the scientific achievements of Iran's youth," Ahmadinejad said. "We need the peaceful nuclear technology for energy, medical and agricultural purposes, and our scientific progress. We will continue this."

He said Iran's decision would not change, but he did not say when the resumption would begin.

"This is the final path we have taken," he said.

Concerning Iran's negotiations with France, Britain, and Germany, Ahmadinejad said he was waiting for specific offers to break the stalemate.

"We will continue talks with Europeans while preserving our national interests and insistence on the right of the Iranian nation to use nuclear energy," he said. "If there is to be trust-building, then it should be mutual."

Western leaders have worried that relations with Iran may become increasingly troublesome with Ahmadinejad as president.

As Tehran mayor, he also served as managing director of a newspaper affiliated with the Tehran municipality. He quickly replaced journalists who defended pro-democracy reforms with conservative writers.

He also replaced most district mayors considered pro-reform.

"We didn't have a revolution to have a democracy," he is widely quoted as saying, referring to the 1979 Islamic Revolution.

A former Revolutionary Guard commander, Ahmadinejad resurrected platitudes popular in the movement's early days.

"Iran can accomplish anything. Iranians have everything they need themselves to accomplish everything," he said Sunday.

His comments overlooked the fact that Iran's economy is staggering under the weight of high unemployment, double-digit inflation and interest rates of 25-30 percent on personal loans.

He also responded harshly to comments in Sunday's Rome daily La Repubblica, where European Union Justice Commissioner Franco Frattini was quoted as saying: "We are waiting for clear words on human rights and the nuclear issue from the new president. But if the responses are negative, the European Union can't but freeze the dialogue with Iran."

Ahmadinejad said the European Union "should come down from its ivory tower and understand that they cannot talk to the Iranian nation in this way. We are ready for trust-building measures in all fields, but . . . our nation is a great nation and they cannot talk to the Iranian nation in such an arrogant manner."

Ahmadinejad said he would seek to improve relations with other countries and "pay attention to improving relations with any country that doesn't seek hostilities against Iran."

His government's foreign policy would focus on "peace, moderation, and coexistence," he said.

"Moderation will be the policy of (my) popular government. Extremism will have no place in (my) popular government."