The Norwegian move showed that talks about Mr Rushdie between Iranian and European representatives in Paris on 22 June were fruitless, despite attempts at the time to portray the meeting as mildly positive. It also demonstrated that the Rushdie case has become a microcosm of the complex and volatile political crisis engulfing the Iranian establishment and the regime of President Ali Akbar Hashemi Rafsanjani.
The Foreign Ministry in Oslo said it decided to withdraw its ambassador, Birger Bye, because of "the continued refusal by the Iranian authorities to distance themselves from the fatwa". In 1989, the late Ayatollah Khomeini issued a fatwa, or religious ruling, condemning Mr Rushdie to death for his book, The Satanic Verses. The present Iranian leadership says it cannot revoke the fatwa for theological reasons. But some ministers and officials have indicated that the Tehran government has no intention of trying to carry it out.
The Paris talks were supposed to provide a mechanism by which a formal undertaking might be made by Iran not to harm Mr Rushdie. They ended without any such agreement. As a result, EU leaders issued a statement last week regretting the "lack of progress".
Yesterday's move by the Norwegian government gave a clearer indication that the issue has entered a stalemate. Some European governments, keen to maintain trade and to vindicate their policy of "critical dialogue" with Iran, had evidently preferred to blur the facts of the matter in their own interests.
Norway, by contrast, has taken a consistently firm line ever since Mr Rushdie's Norwegian publisher, William Nygard, was shot and severely wounded in Oslo in 1993.
Yesterday, the Norwegian foreign ministry said it would refrain from promoting trade with Iran and would press international organisations to put pressure on Tehran to improve human rights and lift the death order. Norway will also oppose any new World Bank loans to Iran and Iranian membership of the Asian Development Bank. A spokesman said he hoped other countries would "follow our example".
Britain maintains only a charge d'affaires in Tehran. But the Foreign Office continues to oppose economic sanctions and to adhere to the notion of "critical dialogue". The US takes a harder line. It has imposed a trade embargo and seeks to isolate the Iranian government, both to curb its alleged support for terrorism and to stop its nuclear programme.
The combination of international pressure and an economic crisis has produced an atmosphere of tension and rivalry in Tehran as competing factions of the clergy vie for influence. As exemplified by Mr Rushdie's case, this has resulted in conflicting and confusing signals to the outside world.
Yesterday, for instance, President Rafsanjani announced that Iran had softened its attitude to the Middle East peace process and would respect any treaty between Israel and Syria. It can confidently be predicted that this will provoke a chorus of radical disapproval and within a few days the government will give an indication to the contrary.