Iran progresses in EU ties despite crackdown

By Paul Taylor

LONDON (Reuters): Iran is making steady progress in boosting relations with the European Union despite a crackdown on reformers and the muzzling of its outspoken liberal press.

In this week, German parliament speaker Wolfgang Thierse and Italian Prime Minister Giuliano Amato will visit Tehran, flanked by eager businessmen, and Iranian Foreign Minister Kamal Kharrazi will have a first meeting with the European Union's foreign policy chief, Javier Solana, in Brussels.

A European Commission study on ties with Iran gave an upbeat assessment of political prospects this month. The EU executive recommended that the 15-nation bloc negotiate a trade and cooperation agreement with the Islamic republic and intensify bilateral contacts.

But EU officials acknowledge differences among member states over the pace of rapprochement, with Scandinavian countries and Britain voicing greater unease over human rights and Iran's alleged pursuit of weapons of mass destruction.

"It's quite a challenge to fine-tune EU policy. Iran is a great potential market but there is a lot of sensitivity in some member states about human rights," one EU official said.

Italy, Greece, Spain and France, keen to build on business opportunities and bolster reformist President Mohammad Khatami, favor a faster pace of opening with Tehran.

"We expect the Americans to be in there quite soon. This is a good time to build on Europe's advance," a south European diplomat said.

The Commission report acknowledged that Khatami had suffered a series of reverses and embarrassments at the hands of hardline Islamic conservatives in recent months, but said the EU had both political and economic reasons to develop closer ties.

It cited harsh sentences on Iranian Jews accused of spying for Israel and on intellectuals who attended a recent conference in Berlin, the closure of more than 20 reformist newspapers and the sentencing to death of leaders of student protests last year as setbacks for reform in Iran.

But it concluded: "Despite the mixed picture described above, the prospects for positive and gradual political evolution in Iran are better than they have been since 1979. Despite some recent setbacks, the reformists are likely to be able to consolidate their position ..."

Branding the Iranian economy inefficient and unreformed, the report said the level of EU trade with Iran was far from reflecting the country's potential in terms of population and natural resources.

"The administrative and legal environment for trade and investment is ... untransparent and arbitrary and therefore discouraging for importers," it said.

It noted problems in the treatment of expatriate personnel of foreign companies, granting import licenses, foreign ownership and the repatriation of profits.

Some EU governments face domestic criticism over their ties with Iran from parliamentarians, human rights groups and Jewish communities.

The United States presses its European allies to take a tougher line with Tehran on Iranian links to violent Middle Eastern radicals, hostility to Israeli-Palestinian peace efforts and alleged attempts to acquire nuclear weapons technology.

EU Middle East peace envoy, Miguel Angel Moratinos, raised some of these issues in a discreet visit to Tehran late last year which EU officials said was the first effort to engage Iran constructively on the peace process.

In Italy and Britain, hundreds of parliamentarians have signed petitions -- prompted by an exiled Iranian guerrilla movement -- condemning closer ties on human rights grounds.

British Foreign Secretary Robin Cook has twice postponed planned trips to Iran because of the Iranian Jews' trial and other human rights concerns and Prime Minister Tony Blair spurned a possible meeting with Khatami at the United Nations last September, diplomats said.

Cook's long-awaited visit has now been put back at least until after an expected British general election in May and the Iranian presidential election in June, they said.

Some EU governments were surprised that Thierse should go ahead with his visit so soon after the Berlin conference participants, including a German embassy translator, were sentenced in summary trials to years behind bars.

A senior German official argued that maintaining a dialogue helps Khatami and the reformers. He stressed that as long as the intellectuals' sentences stand, there is no question of setting a date for Chancellor Gerhard Schroeder to visit Iran.

EU foreign ministers will debate the Commission proposals and hear a report from Solana next month. The EU official said that barring new setbacks, they were likely to give the Commission a mandate to start negotiating a trade pact.