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U.S. and European diplomats believe that hard-line elements inside Iran's political establishment used the Saberi case in a bid to sabotage any rapprochement with Washington.

The target also comes about ten weeks after the Iranian presidential election June 12, giving the U.S. some time to gauge the new Tehran administration. Current Iranian President Mahmoud Ahmadinejad, who is running for re-election, has at times publicly welcomed Mr. Obama's call for negotiations on the nuclear question. But Tehran continues to expand the number of centrifuges enriching uranium at its Natanz facility.

The U.S. Congress is debating legislation that would require the White House to sanction companies exporting refined petroleum products to Iran. Tehran imports roughly 40% of its gasoline despite having some of the largest energy supplies in the world.

All Iran's presidential candidates have said they will not abandon enriching uranium, but Tehran political insiders with knowledge of the talks say Iran could agree to a short-term "freeze for freeze" formula. Iran would then offer that Western powers can freely monitor Iran's program to ensure it is not turning military -- in return for sharing technology and expertise.

"The Americans will have to accept this offer, they have no choice," said Sadegh Kharazi, a former deputy foreign minister who remains involved in Iran's foreign policy. "Iran will not back down. From now on, let's all talk about how to form partnerships so it benefits both parties."

The benchmarks the U.S. and its allies are establishing also include signs Tehran will be willing to rein in its support for militant groups in the region.

Israel and key Arab allies have voiced concerns about the usefulness of diplomacy with Iran. The U.S. point man on Iran policy, Dennis Ross, was greeted with skepticism from Arab allies during a tour this month through Egypt and the Persian Gulf countries, said U.S. officials. Saudi Arabia and the United Arab Emirates., in particular, have expressed alarm over Iran's nuclear activities and its moves to support militant groups operating in Lebanon, Iraq and the Palestinian territories.

Israel believes Tehran could be far enough advanced in its nuclear work by early next year to make protracted negotiations moot. Last week, Brig Gen. Michael Herzog, chief of staff to Israel's defense minister, publicly called at a conference in Washington for the Obama administration to set clear timetables and benchmarks for its Iran diplomacy. He reiterated statements by new Israeli Prime Minister Benjamin Netanyahu's government that Jerusalem might take military action against Iran to end its nuclear threat. "When we say a nuclear Iran is unacceptable, we mean it," Mr. Herzog said. "When we say all options are on the table, we mean it."

Iran rejected the report, saying the US was guilty of double standards. Foreign Minister Manouchehr Mottaki said the US had no right to accuse others in light of its actions at Abu Ghraib and Guantanamo Bay.

The report charges that Iran's involvement in countries like Lebanon, Iraq, Afghanistan and in the Palestinian territories threatens efforts to promote peace, economic stability in the Gulf and democracy.

The report singles out the Quds force, an elite branch of Iran's Revolutionary Guard as the channel through which Iran supports terrorist activities and groups abroad. The report also takes to task Syria, an Iranian ally in the region.

Of equal concern, our correspondent notes, is the advance of al-Qaeda in Pakistan and Afghanistan where terrorist attacks are sharply on the rise while the rest of the world, including Iraq, has seen terrorist attacks decrease. The acting coordinator for counter-terrorism for the state department, Ronald Schlicher, told journalists that al-Qaeda was using border areas of Pakistan to regroup. "Al-Qaeda and al-Qaeda associated networks remain the greatest terrorist threat to the US and its partners," he said.

Mr Schlicher said they were using the Afghan-Pakistan border area "as a safe haven where they can hide, where they can train, where they can communicate with their followers, where they can plot attacks and where they can make plans to send fighters to support the insurgency in Afghanistan".

Washington is worried that the government in Islamabad might collapse, and last week US Secretary of State Hillary Clinton said the Taleban fighters posed an existential threat to Pakistan, which is a nuclear power, our correspondent adds.

But Al Jazeera's Hoda-Abdel Hamid, reporting from Mosul, said: "[Despite] the impression of a withdrawal and a return to sovereignty... there is a sense of anxiety in the air.

Fireworks continued to light up the sky over Baghdad into the early hours on Tuesday, after thousands of Iraqis, an unprecedented number for a public post-war event, attended a party in a park where singers performed patriotic songs.

Despite the formal pullback, some US troops will remain in cities to train and advise Iraqi forces. US forces are also ready to return if asked. The US military is to continue combat operations in rural areas and near the border with the permission of the Iraqi government. The US has not said how many troops will be in the cities in advisory roles, but the vast majority of the more than 130,000 US troops forces remaining in the country will be in large bases scattered outside cities.

The Turkish press touts Davutoglu as "Turkey's Kissinger," and even Erdogan and Gül refer to him as "hoca" ("venerable teacher"). The country's foreign policy increasingly bears his signature. For example, at his suggestion, Turkish diplomats revived talks between Syria and Israel that had been discontinued in 2000, leading to secret peace talks that began in Istanbul in 2004. However, the talks were temporarily suspended in late 2008 because of parliamentary elections in Israel and the Gaza offensive.

Davutoglu is convinced that Ankara must be on good terms with all its neighbors, and it cannot fear contact with the countries and organizations branded as pariahs by the West, namely Syria, Iran, Hamas and Hezbollah. He believes that Turkey should have no qualms about acknowledging its Ottoman past -- in other words, it should become a respected regional power throughout the territory once ruled by the Ottoman Empire (see graphic).

Davutoglu, like President Gül, is from Central Anatolia and a member of a new elite influenced by Islamic thought. He completed his secondary-school education at a German overseas school, learned Arabic and taught at an Islamic university in Malaysia. He believes that a one-sided Western orientation is unhealthy for a country like Turkey.

Ankara is also seeking to reduce tensions in the Caucasus region, where the Turks have often acted against Russia, prompting Moscow to accuse Turkey of being sympathetic to the Chechen cause. After the war in Georgia last summer, the Erdogan government brought together officials from Tbilisi and Moscow. Turkey and Armenia are now seeking to overcome long-standing hostility by establishing diplomatic relations and reopening their shared border.

The Turks say that they achieved more during the Gaza conflict than Middle East veterans like Egyptian President Hosni Mubarak, arguing that Hamas's willingness to accept Israel's ceasefire offer was attributable to Ankara's intervention. They also say that the fact that Erdogan angrily broke off a discussion with Israeli President Shimon Peres at the World Economic Summit in Davos cemented his reputation in the Islamic world as a friend of the Palestinians. When street fighting erupted in Lebanon between supporters of the pro-Western government and of Hezbollah in May 2008, Erdogan intervened as a mediator.

Off the Horn of Africa, the US Fifth Fleet turned over the leadership of Combined Task Force 151, which is responsible for combating piracy in the Gulf of Aden and off the coast of Somalia, to the Turkish navy. At the same time, a man paid an official visit to Ankara who had not appeared in public since 2007: Iraqi Shiite leader Muqtada al-Sadr, the head of the notorious Mahdi Army militia. Davutoglu had sent a private jet to bring him to Turkey from his exile in Iran.

Critics like political scientist Soner Cagaptay describe Ankara's foreign policy as "pro-Arab Islamist." In a recent op-ed for the Turkish daily Hurriyet, Cagaptay argued that Turkish diplomats, who had once "looked to Europe, particularly France, for political inspiration" have now fallen for the Arab world, and generally for Islamists

Diplomats like Hakki Akil, the Turkish ambassador in Abu Dhabi, disagree. According to Akil, Turkey has acquired "soft power" by expanding its sphere of influence from the Balkans to Afghanistan, transporting Russian, Caspian Sea and Iranian oil and gas to the West, and building housing and airports in Kurdish northern Iraq. Europe, says Akil, ought to be pleased with Ankara's course. As Akil's boss Davutoglu said in Brussels, political stability, a secure energy corridor and a strong partner on its southeastern flank are all "in the fundamental interest of the EU."

According to a recent internal European Commission report, Turkey has made "only limited progress." Some EU countries have already abandoned the idea of accepting Turkey into their midst. In Bavaria, conservative Christian Social Union campaigners promote a message of "No to Turkey" as they make the rounds of beer tents. At a televised campaign appearance in Berlin, German Chancellor Angela Merkel and French President Nicolas Sarkozy made their opposition to EU membership for Turkey clear.

Ironically, Turkey's strategic importance for Europe "is even greater today than in the days of the Cold War," says Elmar Brok, a German member of the European Parliament for the conservative Christian Democratic Union who specializes in foreign policy issues. And then there is the paradox of the fact that the more intensively Turkey, out of frustration with Europe, engages with its eastern neighbors, the more valuable it becomes to the West. According to Brok, the West must "do everything possible to keep Ankara on board."

Brok and other members of the European Parliament envision making so-called "privileged partner" status palatable to Turkey. It would enable Turkey to have a similar relationship to the EU as Norway does today and to enjoy many of the benefits of EU membership, including access to the European single market, visa-free travel, police cooperation and joint research programs. But it would not, however, become a member.

The episode demonstrates the extent to which the administration views social networking as a new arrow in its diplomatic quiver. Secretary of State Hillary Rodham Clinton talks regularly about the power of e-diplomacy, particularly in places where the mass media are repressed.

There were also suspicions that some pro-government forces might be using new-media outlets to send out misinformation. One popular opposition site, Persiankiwi, warned its followers on Tuesday to ignore instructions from people with no record of reliable posts.

Mr. Cohen, a Stanford University graduate who is the youngest member of the State Department’s policy planning staff, has been working with Twitter, YouTube, Facebook and other services to harness their reach for diplomatic initiatives in Iraq and elsewhere.

Tehran has been buzzing with tweets, the posts of Twitter subscribers, sharing news on rallies, police crackdowns on protesters, and analysis of how the White House is responding to the drama.With the authorities blocking text-messaging on cellphones, Twitter has become a handy alternative for information-hungry Iranians. While Iran has also tried to block Twitter posts, Iranians are skilled at using proxy sites or other methods to circumvent the official barriers.

Last month, he organized a visit to Baghdad by Mr. Dorsey and other executives from Silicon Valley and New York’s equivalent, Silicon Alley. They met with Iraq’s deputy prime minister to discuss how to rebuild the country’s information network and to sell the virtues of Twitter.

In addition to Twitter, YouTube has been a critical tool to spread videos from Iran when traditional media outlets have had difficulty filming the protests or the ensuing crackdown. One YouTube account, bearing the user name “wwwiranbefreecom,” showed disturbing images of police officers beating people in the streets. On Monday, Lara Setrakian, an ABC News journalist, put out a call for video on Twitter, writing, “Please send footage we can’t reach!”

Journalists were told on Tuesday that they could not cover protests without permission. The restrictions “effectively confine journalists to their offices,” a spokesman for the BBC said.

Member states, who wrangled for months over the draft document for the Geneva conference, had ultimately removed controversial statements about Israel; about what constitutes defamation of religion, a position pushed by Muslim states; and about compensation for slavery.

Besides the United States, the countries staying away included Germany, Italy, Poland, the Netherlands, New Zealand and Australia. Canada and Israel announced months ago that they would not attend.

“Following World War II they resorted to military aggressions to make an entire nation homeless under the pretext of Jewish suffering,” Mr. Ahmadinejad said, grinning as he spoke, his remarks coincidentally falling on the day that Jewish communities mark the Holocaust. “And they sent migrants from Europe, the United States and other parts of the world in order to establish a totally racist government in occupied Palestine.”

The speech prompted the normally mild-mannered Mr. Ban and other top United Nations officials to voice uncommon criticism of the leader of a member state. “I have not experienced this kind of destructive proceedings in an assembly, in a conference, by any one member state,” Mr. Ban said.“I deplore the use of this platform by the Iranian president to accuse, divide and even incite,” he said, urging members to “turn away from such a message in both form and substance.”

Navi Pillay, the United Nations high commissioner for human rights, criticized Mr. Ahmadinejad for “grandstanding” from a United Nations dais and said his performance should not be an excuse to derail the important topic of the conference. She also made a not-so-subtle dig at Iran’s treatment of its own minorities, after noting that the president’s remarks were outside the scope of the conference. “This is what I would have expected the president of Iran to come and tell us: how he is addressing racial discrimination and intolerance in his country,” Ms. Pillay said.

Israel recalled its ambassador to Switzerland to protest both the conference and meeting Sunday between the Swiss president, Hans-Rudolf Merz, and Mr. Ahmadinejad.

Not everyone at the conference was critical of the speech, which also wandered through topics like the economic collapse and Iraq and Afghanistan. “If we actually believe in freedom of expression, then he has the right to say what he wants to say,” the Pakistani ambassador to the United Nations in Geneva, Zamir Akram, told The Associated Press. “There were things in there that a lot of people in the Muslim world would be in agreement with, for example the situation in Palestine, in Iraq and in Afghanistan, even if they don’t agree with the way he said it.”

Clinton had pressed for Iranian participation in The Hague conference, stressing the importance of finding a regional solution to the insurgency in Afghanistan and Pakistan, and western officials were encouraged that Akhundzadeh, a deputy foreign minister and former charge d'affaires in London, was sent by Tehran.

Akhundzadeh told ministers from more than 70 countries at the meeting: "Welcoming the proposals for joint co-operation offered by the countries contributing to Afghanistan, the Islamic Republic of Iran is fully prepared to participate in the projects aimed at combating drug trafficking and plans in line with developing and reconstructing Afghanistan."

He repeated Tehran's criticism of the Nato role in Afghanistan, but used relatively moderate language, saying: "The presence of foreign forces has not improved things and it seems that an increase in the number of foreign forces will prove ineffective, too."

Akhundzadeh added: "The military expenses need to be redirected to the training of the Afghan police and army and Afghanisation should lead the government building process" - an apparent nod towards the Obama administration's decision to send 4,000 more American military trainers.

Western officials expressed hopes that the west and Iran could return to the close co-operation over Afghanistan that took place in the months after the 9/11 attacks. Iranian officials even helped the US target the Taliban, but the relationship cooled after Bush's "axis of evil" speech.

"There is a meeting of minds on drugs, development issues and the [August Afghan] elections, though not on foreign troops, on which they made clear their objections."

Malloch Brown acknowledged that Iran had done some "bad things" in both Afghanistan and Iraq, supplying weaponry to insurgents that had been used against British soldiers.But he argued: "This is Iran supporting its proxies because of a lack of diplomatic partnership around Iraq and Afghanistan. If this is a rapprochement, whether it is overall rapprochement or just aimed at stabilising Afghanistan, it offers the prospect of this behaviour getting moderated and hopefully stopping."

And, then, there is the Incirlik Air Base in southern Turkey, which serves as logistics hub for missions in Iraq and Afghanistan. There's also the fact that Turkey's proximity to the central-Asian countries that are rich in raw materials makes it an important transit hub in the energy supply.

Then, of course, there's the issue of Iran. Ankara nurtures strong ties with the country, meaning that Turkey could play a role in facilitating new diplomatic overtures between Washington and Tehran.

Turkey's government has already helped to organize talks between high-level officials in Pakistan and Afghanistan and to negotiate a cease-fire in the Gaza conflict.

According to poll figures, more than half of all Turks think Obama is the most trustworthy foreign statesman

America's reputation has suffered major damage in Turkey, particularly as a result of its disastrous invasion of Iraq. When Obama was elected president, polls indicated that only 9 percent of Turkey's population approved of Washington's policies. America's efforts to aid Turkey's ambition to become part of the EU have impressed few Turks, particularly since progress has been so sluggish.

"Obama should treat Turkey as more than a Muslim country," says Soner Cagaptay, an expert on Turkey at the Washington Institute for Near East Policy. As he sees it, it was a good idea for Obama to visit Turkey right after attending meetings with NATO and EU representatives as a way of underscoring the country's close ties with the West.

last year, Swiss mediators helped Turkish and Armenian diplomats hammer out a comprehensive agreement that would envision a historic coming to terms with the events of 1915 -- as well as to clear the path for the resumption of diplomatic relations between Turkey and Armenia.