US officials met Iranian aides in secret

A United States Treasury official secretly met senior Iranian government aides and banking representatives to discuss money-laundering and terrorism, it was reported yesterday.

The back-channel talks, which came despite a near-absolute ban by the Bush administration on formal contact between the two countries, took place last month in Paris, according to the Associated Press.

Representatives of several other countries attended the meeting, which was co-chaired by Italy and the US, represented by Daniel Glaser, the Treasury Department's deputy assistant secretary for terrorist financing and financial crimes.

The clandestine talks took place against the backdrop of attempts by President George Bush to raise pressure on Iran to halt atomic activities that, Washington believes, could lead to nuclear weapons.

News of the talks came after a separate US official threatened that, unless Iran confesses to trying to make atomic weapons, an International Atomic Energy Agency inquiry into Tehran's nuclear past would be doomed. Critics said that Gregory L Schulte, the chief US delegate to the Vienna-based IAEA, appeared to set the bar insurmountably high for the investigation – due to report in a week – by the United Nations agency's chief, Mohamed ElBaradei.

Mr Schulte said the "measure for progress is whether Iran fully discloses its past weapons work and allows IAEA inspectors to verify it's halted.

"This includes explaining past work on weapons design and weaponisation and the role of the Iranian military," he told reporters.

The developments came amid reports that Washington had also given the IAEA permission to confront Iran with some of the evidence.

Iran, which insists its programme is intended only to produce energy, has refused UN demands that it suspend its uranium enrichment programme.

In May last year, officials from both countries entered talks which ended without progress. Iran has been effectively "in the cold" since President Bush branded the country part of an "axis of evil" – along with North Korea and Iraq, then led by Saddam Hussein – in his State of the Union speech in 2002.

Since then, and the subsequent 2003 invasion of Iraq, fears grew over a possible US military strike against Iran. However, these were reduced by last year's intelligence assessment that Iran had shelved active pursuit of a nuclear weapons programme in 2003.