June 27, 2005 - 4:35 AM

New Iran leader vows moderation

By Paul Hughes

TEHRAN (Reuters) - Hardline President-elect Mahmoud Ahmadinejad said he would form a government of moderation but triggered Western concern he would toughen policy on Iran's nuclear program and roll back freedoms at home.

U.S Defense Secretary Donald Rumsfeld said on Sunday Ahmadinejad, who takes over from reformist President Mohammad Khatami on Aug. 3, was "no friend of democracy (and) no friend of freedom." The European Union also expressed worries.

Ahmadinejad said he would press on with the nuclear program, which Iran says is only for power generation but which Washington charges is designed to create atomic bombs.

The former Tehran mayor told his first news conference Iran had no real need for ties with the United States, often dubbed the "Great Satan" in the Islamic Republic.

But he said Iran would not abandon talks on its nuclear program with the European Union, although negotiations would be based on Tehran's "national interest."

Many Iranians fear his landslide victory in Friday's presidential election run-off, when he crushed veteran cleric Akbar Hashemi Rafsanjani, heralds a return to the purges and strictures of the early days after the 1979 Islamic revolution.

Ahmadinejad now faces the task of assuaging those fears as he starts forming a government to unite the divided country, the world's fourth largest oil exporter.

"GOVERNMENT OF FRIENDSHIP"

"Today moderation and tolerance will be our government's main lines, a government of friendship and tolerance that belongs to all Iranians ... We will serve members of this nation without considering their tendencies," he said.

The United States, which criticized the presidential vote as unfair before the first ballot was cast, said Ahmadinejad's government would be unacceptable to young Iranians and women.

EU Commissioner Franco Frattini told Italy's La Repubblica newspaper the 25-nation bloc would freeze dialogue with Iran if its comments on nuclear or human rights issues were "negative."

Many analysts say Iran's president has little power to change national policy because the final word on matters of state under Iran's system of clerical rule rests in the hands of Supreme Leader Ayatollah Ali Khamenei.

But a hardline presidency is likely to toughen Iran's resolve.

"Decision-making in Iran is by consensus, and if you eliminate the voices of moderation, then the consensus is going to shift toward the right," said Karim Sadjadpour, Tehran-based analyst for the International Crisis Group.

Ahmadinejad, a former officer in the hardline Revolutionary Guard and instructor with the Basij religious militia, both fiercely loyal to Islamic revolutionary ideals, has pledged allegiance to Khamenei.

"I believe religious democracy ... is the best kind of government in the world," said the 48-year-old, who visited the shrine to the Islamic state's founder Ayatollah Ruhollah Khomeini on Sunday.

He secured many votes from Iran's religiously devout poor as he railed against what he called rich cliques and vowed to share out oil wealth.

Iranian conservatives have hailed Ahmadinejad as a man who could take on the United States and uphold the moral principles of the revolution. Reformists have blamed themselves for failing to implement change more effectively under Khatami.