Brussels talks strengthen EU ties with Iran

The European Union held its highest-level meeting with Iran since the 1979 Islamic revolution yesterday, pressing for new economic ties in defiance of America's insistence on sanctions against companies investing there.

The talks in Brussels, designed to encourage reformers within President Mohammad Khatami's government, shows EU foreign-policy chiefs' readiness to take a different tack to Washington in some of the most sensitive parts of the globe.

Kamal Kharrazi, the Iranian Foreign Minister, said after talks with Romano Prodi, the European Commission president: "I am very happy after these meetings. We are moving in the right direction and we have to continue ... until we arrive at an agreement."

Efforts to forge a trade and co-operation agreement between the EU and Iran contrast sharply with Washington's determination to brand Tehran as a sponsor of state terrorism. One EU official said: "When in doubt we favour engagement, when in doubt they favour isolation. We will find out whose stance has most influence."

In July the American Congress extended for five years a 1996 sanctions law that penalises foreign companies trading with Iran. By contrast, Brussels wants to increase investment in the energy sector and hopes to see an opening up of tourism as well as political co-operation on drugs and asylum. The EU is Iran's most important trading partner and, in 1999, imported 4.7bn euros (£2.9bn) of Iranian goods.

Chris Patten, the European commissioner for external affairs, said he had raised issues including "freedom of the press, concern about the way some political opponents have been dealt with, and about capital punishment and public executions". EU officials said any trade accord would include a clause on human rights.

Mr Kharrazi was careful not to reject that prospect, saying that human rights should not be dealt with "selectively".