Obama's overtures 'just a slogan', says Iran's spiritual head

Ayatollah Khamenei's uncompromising rebuff rounds off a week of setbacks for the US President

Iran's spiritual leader has rebuffed diplomatic overtures from Barack Obama, saying that the US President's promise of a new beginning in relations between the countries was nothing more than a "slogan".

Speaking a day after Mr Obama issued a video appeal to the Iranian leadership, Ayatollah Ali Khamenei said the US continued to insult Iran, to back its enemies and to impoverish its people through sanctions. He said the US must alter its actions as well as its language. "You change, and our behaviour will change."

The supreme leader's uncompromising response came in his own video address, broadcast to a crowd in the north-eastern city of Mashhad. Chants of "Death to America" broke out as he spoke.

The scenes will be a disappointment to Mr Obama, who had hoped for some sign that Iran's religious leadership would respond to the hand being extended them. It was another setback to end the President's most difficult week since taking office, during which he has struggled to keep up with public anger over financial bailouts and made a TV gaffe.

Mr Obama's video message to Iran, released on Friday, was timed to coincide with the festival of Nowruz, which marks the arrival of spring. "My administration," he said, "is committed to pursuing constructive ties among the United States, Iran and the international community."

Iran's President, Mahmoud Ahmadinejad, had already said on Friday that "minor changes will not end the differences". Yesterday's response from Ayatollah Khamenei is potentially much more significant, however, because the spiritual leader has the final say on all matters of state. In his message, he celebrated the testing of Iran's first nuclear power plant, at Bushehr, as one of the "joyful developments" of the past year.

The Obama administration has also warned of tougher sanctions if Iran continues to defy UN demands to halt sensitive nuclear work, and Ayatollah Khamenei accused the US President of hypocrisy. "Our nation cannot be talked to like this," he said. "In the same congratulatory message they accuse the Iranian nation of supporting terrorism, pursuing nuclear arms and such things. What has changed?"

Mr Obama's intervention was designed as much as a message to the Iranian people as a direct address to the country's leadership, and has been accessible on the internet and on television channels broadcast across the border. Analysts say that President Obama could find changing relations will be slower than he hoped – something that is becoming a common theme for the new leader.

His efforts to roll back the bonus culture on Wall Street were set back by news yesterday that bonuses to the staff at AIG, the nationalised insurance giant, were $218m (£150m), or nearly a third higher than previously disclosed.

And, during an appearance on Jay Leno's talk show on Thursday, Mr Obama joked that his terrible performance at ten-pin bowling was like "the Special Olympics", a comment that sparked a furore. Mr Obama immediately called the chairman of the Special Olympics, Tim Shriver, to apologise.