Members of Mohammed Khatami's reformist government say the new legislation is a blow to their efforts to attract investment and is part of a wider conservative attack on economic reform. Khatami postponed a late September visit to Ankara but telephoned his Turkish counterpart and said Iran had not yet annulled the deals and was still eager to expand bilateral ties.

Conservative MPs, who drew up the bill, say it is necessary to prevent foreign control over key areas of national infrastructure. They have questioned Turkish relations with Israel and the US. In August, the Majlis threw out the Khatami government's five-year development plan (FYDP), which included proposals to change constitutional obstacles to privatisation and foreign investment in some sectors.

'The Majlis has the right to supervise all affairs, including the conclusion of contracts with foreign companies,' said Majlis speaker Gholam Hoddad-Adel.

The GSM deal, struck with a consortium led by Turkcell, has now been signed, but will remain subject to Majlis approval. There is some uncertainty over whether Turkcell has paid the whole $300 million licence fee or if it will be repaid if the deal is blocked. South Africa's MTNwas the second-placed bidder and has renewed its bid bond, but some deputies in the Majlis have said they do not want to see any foreign companies running the new network.

Turkey's Tepe Akfen Ventures (TAV)won the contract to operate Imam Khomeini International Airport and to build its second terminal. However, the airport was closed on its first day of operations by the Islamic Revolutionary Guards Corps (IRGC), which said that TAV posed a security threat. The company says it is still hopeful the deal will be approved (Turkey, MEED Special Report, 20:8:04, pages 32-33).