Tehran is also believed to be seeking war reparations totalling $100,000 million from its neighbour, although its position on the matter has not yet been formally announced. Kurdistan Democratic Party leader Jalal Talabani said he had recently led a mission to Iran for meetings with government officials and the issue had not been raised. 'They did not discuss with us, in any of our meetings, the subject of reparations,' he said.

Speaking after talks with Foreign Secretary Jack Straw on 17 December, Abdul Aziz al-Hakim, a prominent member of Iraq's governing council (GC), said, 'according to the UN, Iran deserves reparations. She must be satisfied'. However, he went on to say, 'whether we will pay or not is something which we need to discuss further'.

A decision on reparations may have to wait until after the Iranian general election, scheduled for 20 February. Tensions between reformists and hardliners have been rising in the run-up to the poll. Iran's main reformist party, the Iran Participation Front (IPF), has indicated that it will consider boycotting the elections if too many of its members are prevented from standing. Mohammad Reza Khatami, brother of President Khatami and leader of the IPF, said that many reformist candidates might not pass the vetting procedures imposed by the conservative Guardian Council. 'People should be given various options to choose from. That [the Guardian Council] say they know what is best for the country when they disqualify candidates with certain views - this is dictatorship and unacceptable,' he said.

President Khatami on 11 December endorsed a conciliatory attitude between differing concepts of democracy. He said, 'We can take [democracy] as Muslims.We must accept this has been materialised in the West, and we must accept this as Muslims'.

The statement was rebuked the next day by a senior Iranian cleric, Ayatollah Ahmad Jannati, who said that Western-style democracy and Islam were not compatible.

Tehran announced on 18 December that it would sign a protocol with the International Atomic Energy Agency to allow snap inspections of its nuclear facilities.

The move, which was welcomed by the White House, will be seen as a defeat for the hardliners, who had argued that inspections were a violation of Iran's national integrity.