Iran sets terms for U.S. ties

TEHRAN (Reuters) - Iran has responded to U.S. President Barack Obama's offer of better relations by demanding policy changes from Washington, but the Islamic state is not closing the door to a possible thaw in ties with its old foe.

Iran wants the United States to show concrete change in its behavior toward it, for example by handing back frozen assets, but Tehran is not pursuing "eternal hostility," said Professor Mohammad Marandi at Tehran University.

"I think they (the Iranian leadership) are quite willing to have better relations if the Americans are serious," said Marandi, who heads North American studies at the university.

A day after Obama held out the prospect of a "new beginning" of diplomatic engagement, Iran's top authority spoke at length on Saturday about its grievances against the United States and said he saw no real policy shift yet by the new administration.

But Supreme Leader Ayatollah Ali Khamenei, who has final say on all matters of state, also added in his speech at Iran's most prominent religious shrine in the northeastern city of Mashhad: "You change, our behavior will change."

Marandi said Khamenei did not dismiss Obama's overture but was "effectively saying that this is simply not enough, that the United States must take concrete steps toward decreasing tension with Iran."

Iran and the United States have not had diplomatic ties for three decades and are now embroiled in a dispute over Tehran's nuclear program, which the West suspects is aimed at making bombs. Iran denies the charge.

Saeed Laylaz, editor of business daily Sarmayeh and an outspoken political commentator, said Khamenei in his speech had sent a "counter-offer" to the United States following Obama's video message on Friday to mark the Iranian New Year. "I think he opened the doors to the United States," Laylaz said.

FROZEN ASSETS

After taking office in January, Obama talked of extending a hand of peace to Tehran if it "unclenches its fist," in contrast to his predecessor George W. Bush, who branded Iran part of an "axis of evil" and spearheaded a drive to isolate it.

In his warmest offer yet of a fresh start in relations, Obama said in Friday's video message: "The United States wants the Islamic Republic of Iran to take its rightful place in the community of nations."

But Khamenei made clear more than a change in U.S. rhetoric was needed, saying the United States was "hated in the world" and should stop interfering in other countries.

He also spoke of "oppressive sanctions" imposed on the Islamic Republic, Iranian assets frozen in the United States and Washington's backing of Israel, which Tehran does not recognize.

"Khamenei suggested a very clear way for Obama's administration, how they can start real action about Iran," Laylaz said.

Marandi said the United States could make a significant move by giving back Iranian assets blocked after a group of Iranian students seized the U.S. embassy in Tehran in 1979 and held 52 Americans hostage for 444 days.

Analysts have said Iran is setting tough conditions for dialogue to buy time. Adding to uncertainty, it holds a presidential election in June that could strengthen moderate voices backing detente over more hardline opponents.

President Mahmoud Ahmadinejad has demanded Washington apologize for decades of "crimes" against Iran. Tehran also says it cannot let down its guard as long as U.S. troops are on its borders in Iraq and Afghanistan.

But Professor Hamidreza Jalaiepour, who teaches political sociology in Tehran, said Khamenei had delivered a pragmatic message rather than one based on ideology on Saturday.

If the United States eased sanctions imposed on Iran or released frozen funds, Iran was likely to respond, for example in helping to stabilize neighboring Afghanistan, he said.