War of Words

EU foreign policy chief Javier Solana has said the EU will pursue a "double track" policy towards Iran until the Iranian government responds to a proposal, made by the bloc on June 14, that Iran cease uranium enrichment in return for economic incentives.

Solana, who was attending a UN disarmament conference in Geneva, Switzerland, told Reuters news agency he was hoping to get an answer soon

"In the meantime, we will keep the double track open," Solana said. "We want to have a solution which is diplomatically negotiated."

But Iran's parliamentary speaker and former chief negotiator on nuclear questions, Ali Larijani, said the EU was taking the wrong tack.

In an open session of the Iranian parliament he warned that the West could "face a fait accompli that will block the path of return to a compromise with Iran."

Asset removal

There are reports that Tehran, perhaps fearful of a further deterioration in relations and further sanctions from the EU, is beginning to withdraw its assets from European countries.

On Wednesday, the German newspaper Die Zeit -- citing information from Germany's national bank -- reported that Iran's largest commercial bank had sold off 11 million euros ($17 million) in German stocks and other securities in the first quarter of this year.

And the mood is particularly poor between Iran and Britain.

On Monday, the British government decided to remove the Iranian opposition group, the People's Mujahideen of Iran (PMOI), from its list of terrorist organizations -- drawing an angry response form Tehran.

The move followed the recommendation of a top British court, which found that the group should not be considered terrorist in nature.

But Iran's Foreign Ministry spokesman, Mohammad Ali Hosseini, called the decision "politically motivated" and said it "discredited" Britain.

Controversial knighthood

And on Wednesday, Britain's Queen Elizabeth II officially knighted the Anglo-Indian author Salman Rushdie in a ceremony that could not have sat well with Tehran.

In 1989, Iran's then spiritual leader, the Ayatollah Khomenei, declared Rushdie's novel The Satanic Verses blasphemous and pronounced a fatwa on the author, saying that anyone who killed Rushdie would be honored with martyrdom.

Britain and Iran broke off diplomatic relations, and Rushdie was forced to live in hiding for years thereafter.

In 1998, as a prelude to restoring diplomatic ties with Britain, the Iranian government said it would no longer support attempts to assassinate Rushdie.

But in 2006, Iran's official state news agency said that the fatwa would remain in place forever.