Friday August 15 2008 | Robert Tait in Istanbul

Ahmadinejad snubbed by breakdown of energy sale
Aim of president's visit thwarted by intervention

Turkey delivered a humiliating snub to Iran's visiting president, Mahmoud Ahmadinejad, yesterday by backing out of a lucrative energy deal under pressure from the US government, which feared it would enhance Iranian nuclear ambitions.

Signing the £1.87bn agreement to provide Turkey with Iranian natural gas - on which memoranda of understanding had already been agreed - was to have been the crowning achievement of Ahmadinejad's two-day visit to Istanbul, which Turkish officials had agreed to after intense Iranian lobbying. Iran is Turkey's second-biggest energy supplier after Russia and has been seeking to woo Turkish investment in its South Pars gas fields.

But as Ahmadinejad met his Turkish counterpart, Abdullah Gül, at Ciragan Palace in Istanbul, it emerged that US intervention had effectively torpedoed a deal.

Rather than unveiling the expected landmark agreement, a press conference by the two leaders last night merely yielded a joint statement in which the countries "reiterated their desire for on-going cooperation".

Turkish officials had earlier cited Iranian pricing and investment conditions as a reason for stalling. However, that appeared to be a smokescreen aimed at disguising Turkish deference to American demands. A western diplomatic source told the Guardian that Turkey had pledged not to sign any major energy deals with Iran in return for Washington's blessing for Ahmadinejad's visit after Bush administration officials privately criticised it.

"Steve Hadley (the US national security adviser) voiced objections to Ahmadinejad's trip when he visited Ankara a month ago," the source said.

"The attitude was, we've allowed them to host [Manouchehr] Mottaki and [Saeed] Jalili (respectively, Iran's foreign minister and chief nuclear negotiator), but having Ahmadinejad was sending the wrong signal.

"However, the Turks explained that he had been pressing for a visit to Turkey for a while and that they couldn't say no any longer. To meet American reservations, they promised they wouldn't sign any major energy deals, apart from maybe something on electricity, and would pressure Ahmadinejad to accept the UN security council incentive package in exchange for suspending uranium enrichment."

Amid suspicions that Iran's nuclear programme is aimed at building an atomic bomb, the US and the security council's four other permanent members - Britain, France, Russia and China, plus Germany - have pressed Tehran to suspend it through a combination of sweeteners and sanctions. Iran refuses and insists the programme is for peaceful purposes.

In recent weeks, Turkey - a Nato member and ally of the US and Israel - has used gradually improving bilateral ties to engage senior Iranian officials on the dispute. Turkey says it is opposed to a nuclear-armed Iran but has encouraged cooperation on other issues, including military action against Kurdish rebels.

However, Ahmadinejad's trip has generated criticism at home and abroad, including from Israel, which said it was "disappointed" at the invitation.

Turkey's authorities have responded by downgrading the visit to "working" status and hosting it in Istanbul rather than the capital Ankara, a decision which enabled the religiously devout Iranian leader to avoid visiting the mausoleum of Mustafa Kemal Atatürk, founder of the modern secular Turkish state.

Cengiz Aktar, professor of EU studies at Istanbul's Bahcesehir university, said the absence of an energy deal meant Ahmadinejad's visit had been of little value to Turkey. "Turkey cannot treat Iran as the westerners do.

"It is our neighbour after all. It's realpolitik - we are obliged to this evil."