Intifada, Sharon unite Iran with Arabs but not the U.S.

By Paul Taylor

TEHRAN (Reuters): The Palestinian Intifada (uprising) and the rise of hardline Israeli Prime Minister Ariel Sharon have boosted Iran's reconciliation with moderate Arab states but could obstruct rapprochement with the United States.

The collapse of U.S.-sponsored peace efforts has reunited Iranian reformists and conservatives behind a rejection of Israel's right to exist that had begun to look untenable just a few months ago, Iranian analysts say.

As a result, the Palestinian cause is not a divisive issue in Iran's campaign for a June 8 presidential election, which President Mohammad Khatami seems certain to win.

"The end of the Middle East peace process allows Iran to maintain its old line on Israel without complicating relations with its Arab neighbors, because it can claim to have been vindicated," said Anoush Ehteshami, director of the Centre for Middle East and Islamic Studies at Durham University in England.

Diplomats and analysts say Tehran is close to resuming diplomatic ties with Egypt, broken off after the 1979 Islamic Revolution over the late President Anwar Sadat's peace treaty with the Jewish state.

Relations with Jordan, the other Arab state to make peace with Israel, are also warming. Many Arab states share Iran's view that the United States cannot be an honest broker in the Middle East because of its bias towards Israel.

Under Khatami, ties with conservative Arab monarchies across the Gulf have never been better since the revolution, despite an unresolved dispute with the United Arab Emirates over three Iranian-held islands claimed by both countries.

Under the late shah, Iran had full diplomatic relations and some military cooperation with Israel. Revolutionary leader Ayatollah Ruhollah Khomeini reversed that policy in 1979.

He handed the former Israeli embassy to the Palestine Liberation Organization, prompting PLO chairman Yasser Arafat to declare that the road to Jerusalem passed through Tehran.

But the honeymoon was short-lived. Iran sided with Arafat's Syrian adversaries in Lebanon and denounced him as a traitor when he signed the 1993 Oslo peace accords with Israel.

By the time U.S.-brokered Arab-Israeli peace efforts seemed on the brink of success last year, Iran looked increasingly lonely in continuing to call for the destruction of what its media routinely calls the "racist Zionist regime".

Khatami began to modify the Iranian position, pledging when he met Palestinian President Yasser Arafat in 1997 that Iran would not actively oppose any deal that was acceptable to the Palestinians, diplomats said.

While hardline opponents warned against a sell-out of Islamic claims to all of Palestine, some reformists went further than Khatami in arguing that Iran should not be "more Palestinian than the Palestinians".

"Considering the realities in the region and the whole international system, the peace process is something inevitable and Iran must adapt its policies," argued reformist journalist Ahmad Zeinabadi, who spent seven months in jail partly for espousing an Israeli-Palestinian compromise.

Even Supreme Leader Ayatollah Ali Khamenei, who sees the Palestinian cause and the Islamic revolution as inseparably intertwined, began to edge towards a less unbending stance.

He embraced the idea that all Palestinian refugees should be allowed to return to their homeland, and Israelis and Palestinians should then hold a joint referendum on the future nature of their state.

Many ordinary Iranians, fed a daily diet of television footage of Palestinian children being shot by Israeli soldiers, sympathize with the Palestinians. But the issue rarely attains the emotional resonance in Iran that it has in the Arab world.

For 22 years, Iranians have chanted "Death to Israel" at Friday prayers across the Islamic Republic. But many Iranians say they find the ritual meaningless. However, since there is no prospect of peace, there is no need for Iran to adapt for now.

However, Tehran's backing for radical Palestinian militant groups and arms supplies to Lebanese Hizbollah guerrillas fighting Israel over a small disputed border area are major obstacles to restoring ties with the United States, which Iranian leaders seem increasingly keen to explore.

"Iran's role in the Middle East conflict is not very great. Our support for the Palestinians is limited to psychological and humanitarian support, but Iran has paid a big price for this sense of mission," Abbas Maleki, one of Khamenei's foreign policy advisers, told Reuters.

"This issue is in Iranian hearts even though the reality might be different in our national interest," Maleki said. "It is part of the Islamic Republic's identity."

Western intelligence sources say Iran's backing goes beyond the verbal and financial, and includes operational support and training from the hardline Revolutionary Guards for some of the most radical guerrillas.

Zeidabadi said Iran's hardline religious rightists used the Palestinian cause domestically to burnish their revolutionary credentials to their dwindling band of supporters.

Fierce anti-Israeli rhetoric at a recent Tehran conference in support of the Intifada increased the likelihood of the U.S. Congress renewing sanctions against foreign firms investing in Iran's oil and gas sector when they elapse in August.

Khamenei told the conference Palestine was an Islamic, not an ethnic (Arab) issue. And he accused the Jews of exaggerating the scale of the Nazi Holocaust "to solicit the sympathy of world public opinion, lay the ground for the occupation of Palestine and justify the atrocities of the Zionists".

Such talk "is deadly on Capitol Hill", said Gary Sick, a veteran U.S. expert on Iran.