Iran threatens to set Israel ablaze as fears grow of US-backed war

IRAN has issued a strident warning that it would "set on fire" Israel and target the US navy in the Persian Gulf as its first response to any American attack over its nuclear programme.

Rising tension in the area where Iran and the United States are both carrying out military exercises have contributed to driving oil prices to record highs.

Bizarrely, the sabre-rattling and psychological warfare conducted by both sides comes against the backdrop of an ongoing diplomatic initiative to resolve the Iranian nuclear crisis.

Iran on Friday gave a non-committal response to a three-week-old international offer of incentives if Tehran curbs its nuclear programme. The long-awaited reply pointedly refused to address the key demand: that Tehran suspends uranium enrichment.

But Javier Solana, the EU's foreign policy chief, who delivered the offer, was sufficiently encouraged by a professed Iranian desire for further negotiations to agree to meet later this month with Iran's top nuclear negotiator, Saeed Jalili.

Iran's latest warning of how it would retaliate carried more weight than usual because it was delivered by an aide to the supreme leader, Ayatollah Ali Khamenei.

"The first US shot on Iran would set the United States' vital interests in the world on fire," said Ali Shirazi, a mid-ranking cleric who is Khamenei's representative to the naval forces of Iran's elite Revolutionary Guards. "Tel Aviv and the US fleet in the Persian Gulf would be targets that would be set on fire in Iran's crushing response," he said.

Mr Shirazi spoke as the Revolutionary Guards launched a new round of war games – dubbed Great Prophet III – to "improve combat capability". The US on Monday launched "Exercise Stake Net" in the Persian Gulf aimed at "ensuring a lawful maritime order".

Washington has vowed that Iran will never be allowed to block the Strait of Hormuz, the narrow entrance to the Gulf through which 40 per cent of the world's oil exports flow. Iran, in its strongest declaration yet that it would use oil as a weapon, threatened at the weekend to block the strait if attacked, and said it would rain "fatal blows" against enemy vessels with "the most advanced missiles".

Choking off the strait would not be without cost to Iran itself. Iranian oil exports, vital to its economy, pass through the waterway which Tehran, because it lacks refining capacity, also relies on for importing 40 per cent of its petroleum and kerosene imports. Closing the strait could trigger an energy crisis in Iran.

Iran has already dismissed the US or Israel military posturing as mere "psychological warfare".

Tehran's latest military rhetoric appears designed to heighten American concerns that an attack on Iran – which George Bush, the US president, refuses to rule out – could be disastrous. Admiral Mike Mullen, chairman of the US Joint Chiefs of Staff, warned last week that with fighting in Iraq and Afghanistan, opening a "third front" against Iran would be "extremely stressful" and "very challenging" for US forces, "with consequences that would be difficult to predict".

But there is growing speculation that Israel could go it alone in attacking Iran's nuclear facilities. Israel recently launched large-scale military exercises that appeared to be a practice run in striking at Iran. Tehran has already made clear that any Israeli attack using US-made warplanes in US-controlled airspace would be considered as an act of war by Washington.

Yesterday's bellicose talk from Tehran appears to have been intended to intensify the debate in Washington about the wisdom of giving Israel a green light to attack Iran.

Washington finds mixed messages from Tehran intriguing

HIGHLIGHTING a power struggle in Iran over finding a way forward, Tehran has sent mixed signals to the incentives package offered by the US, Britain, Russia, China, France and Germany.

Iran's hardline president, Mahmoud Ahmadinejad, has struck a typically defiant stance, insisting Tehran would never suspend uranium enrichment.

Yesterday, at a conference of Muslim nations in Malaysia, he said he did not see the possibility of a war with the US or Israel, dismissing military threats by the two countries as a "funny joke".

But other influential hardliners have spoken optimistically that a compromise can be found.

Washington, which usually dismisses conflicting messages from Iran as playing for time, now appears more intrigued than suspicious.

It seems that from "the varying public responses from various parts of the Iranian government that there is clearly a debate… on how to respond," Sean McCormack, the US State Department spokesman, said.

Some Iranian analysts believe Tehran is sincere in wanting to negotiate to eliminate any risk of an Israeli or US attack for the rest of the hostile Bush administration. Iran's sights are set on better relations with Washington if Barack Obama wins the White House.

Iran's foreign minister, Manouchehr Mottaki, hinted at this strategy in a recent CNN interview. "We hear new voices in America… and we think that the rational thinkers in America can, based on these new approaches, seek reality as it is. We are ready to help them in this endeavour."

Professor Gary Sick, an Iran expert at Columbia University in New York, told The Scotsman: "If there really is a power struggle going on in Iran, you should look at the positive signals which are coming from the people who really want change over the objections of the president."