EU trade deal with Iran nearer

TEHRAN, Iran (Reuters) -- Belgian Foreign Minister Louis Michel said on a visit to Tehran he was optimistic progress could be made on a political and trade deal between the European Union and Iran, the official IRNA news agency said on Tuesday.

The trade and cooperation agreement would be an important milestone in the EU's efforts to engage Iran and encourage change. The policy is in stark contrast to U.S. hostility to Iran, which Washington says is part of an "axis of evil."

"I am very optimistic about signing the trade agreement between Iran and the European Union," the agency quoted Michel as saying.

The Belgian minister arrived in Tehran late on Monday and is due to meet his Iranian counterpart Kamal Kharrazi and reformist President Mohammad Khatami as well as a senior conservative cleric before departing on Thursday morning.

Diplomats said a deal was still a long way off. EU foreign ministers in May failed to agree to give the European Commission a green light to start negotiating the agreement with Tehran.

Ministers differed over whether to go for a quick trade accord with the oil-rich Islamic Republic, excluding provisions on human rights, political dialogue and fighting terrorism, or seek a broader agreement that might take longer to take effect.

The EU sees the agreement as a way to boost the embattled Khatami and encourage the reform process he began five years ago but which has become stymied by conservative opposition.

Diplomats say the sharp differences between EU and U.S. policies on Iran may in fact be an effective way of encouraging change in the Islamic Republic. "It's the good cop, bad cop routine," said one. "The EU carrot and the U.S. stick."

Iran is expected to lobby Michel to take a soft line on it when EU foreign ministers meet next week to again discuss whether to give the European Commission the mandate to begin negotiating the agreement.

Michel, for his part, is expected to press Iran on human rights concerns and ask Tehran to accept the return of failed Iranian asylum seekers and illegal immigrants. Tehran refuses to accept its citizens who are deported against their will.

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