The restoration Last month of diplomatic relations between Iran and Britain was hailed as a major triumph for Foreign Secretary Robin Cook's diplomacy of ' ethical foreign policy'.

British and other EU members ambassadors were withdrawn in 1989 following a fatwa by the late Iranian leader Ayatollah Khomeini, calling for the death of British Author Salman Rushdie for writing the Satanic Verses, after three months of demonstrations and public burning of the book by Muslims in Britain and elsewhere.

It was a dramatic finale to a decade of and frustration, and months of secret negotiations, so secret, that `` even Mr Rushdie was not told about any thing until the last minute,'' in the words of as a Foreign office mandarin.

On 24th September, 10 years to the day after the publication of the Satanic Verses, Mr Cook and Iran's foreign Minister Kamal Kharrazi announced, in New York, that the affair was over and that Mr Residue's safety and security were guaranteed.

Britain stated it had never condoned the offence caused to Muslims by Mr Residue's book The Satanic Verses. However, Mr Cook emphasised the right to free speech in international law and in the UN charter for human rights.

In March this year Mary Robinson, the United Nations Human Rights Commissioner, who was in Teheran to attend a conference on Human rights, said that she was assured by Iran's deputy Foreign Minister Mohammed Javad Zarif, Iran would not try to carry out the death penalty against Mr Rushdie.

The diplomatic efforts had centred on persuading Iran to withdraw support from the $2.5 million bounty offered by the 15 Khordad Foundation, backed by hardliners opposed to the liberalising Iranian president, Mohammed Khatami.

Two recent gestures set the stage for the agreement reached in New York - Iran's public expression of condolence for the victims of the Omagh bombing, and the condemnation by Britain of the murder of nine Iranian diplomats by Taliban militiamen in Afghanistan. Both went well beyond the norms of the frosty relations between the two countries, signalling a shared desire to bury the hatchet.

Iran's President Mohammed Khatami, who fought his last year election campaign on platform of liberalisation, started a charm offensive in the United States added extra touches to the decoration of facade of Iran's new forging policy. He told Iranian Americans at Columbia University that a new era has begun, he then praised President Clinton's speech at the UN. When he was door-stepped by reporters he told them `` the file of Mr Rushdie was closed.''

At the same time the superpowers were trying to find a way out of a possible all out Iran Afghanistan war. (See page this issue...)

``We both agreed on the need to see a broad-based government in Afghanistan and a negotiated settlement under UNOIC auspices. We also agreed on the need to combat terrorism.'' Said Mr Cook signalling a major shift in policy.

Significantly he condemned `` terrorist incidents'' inside Iran by the Mujaheddin-e-Khalq Organisation, which has offices in London and support among some British MPs, but has been placed on the State Department list of ''terrorists organisations.''

British firms, especially in the oil and gas field, were delighted with the news. Britain enjoys a large surplus ($596 m in 1997), but trade should now grow substantially, especially if Iran ends its suspected discrimination against British suppliers.

Iran also wanted close revolutionary chapter. `` No doubt Mr Khatami would have secured the agreement of hardliners within the regime before taking such a step,'' A Teheran based diplomat told the Middle East.

Mr Khatami persuaded Teheran hard-liners that Taliban, now controlling most of the country, might strike a deal to build a gas and oil pipe line in Afghanistan and bypass Iran ( see page ...).

Last December Unocal, the Houston-based company bidding to build the 876-mile pipeline from Turkmenistan to Pakistan, invited a Tailbone delegation to visit them in Texas to close the deal worth $3.5 Bn.

Taliban swift victory brought the project closer to reality.

In his speech in the UN, President Khatami said his army was '' combating drug smuggling that affects young people in Iran and the West.'' He was applauded by a world audience wary of Taliban excesses. ( see page..)

Saudi Arabia called its charge affair from Kabul and ordered the Taliban diplomatic mission out of Riyadh, just 48 hours before the UK-Iran joint declaration. Saudi Arabia, the UAE and Pakistan are the only nations recognising Taliban.

The Rushdie deal also asserts Britain's leadership in the Middle East, as the US stands even more isolated in its sanctions against Teheran, which are now the main obstacle in the way of a pipeline across Iran carrying the oil and gas from the Caspian and Central Asia to its deep water port at Bandar Abbas. A proposal, which is, for the oil industry, vastly cheaper, much simpler and preferable to the alternative of a pipeline to either Russia or Turkey's Mediterranean coast.

Observers noted that Secretary of State Madeline Albright was not too warm to the news. The congress still hostile to the idea of restoring relations with Iran as the memory of the American Embassy hostages still fresh in the nation psyche.

``The US needs a cautious re-adjustment to its policy towards Iran,'' said Gordon Adams, former policy adviser to Bill Clinton, ''there is no serious difference of opinion between London and Washington.'' Mr Adams believes the dual US containment policy will fade away slowly thus Britain's role becomes more valuable as London acts as a go between.