Iranian President Mohammed Khatami said that Iran now wanted to move on from the cultural clash of the Rushdie affair, which poisoned relations between the Islamic republic and Europe, to promote a dialogue between civilisations.

Speaking to journalists in New York on Tuesday he said, ``We should consider the Salman Rushdie issue as completely finished.'' President Khatami's statement was, however, in keeping with the Iranian government position that it would take no action on the fatwa, while maintaining that a fatwa can only be revoked by the person who passed it.

The British Foreign Office reacted cautiously to Khatami's statement. Foreign Secretary Robin Cook is meeting the Iranian Foreign Minister Kamal Kharrazi at the United Nations tomorrow, and British Diplomats are reported to have said that they hoped Kharrazi would clarify Iran's position, and possibly announce some practical measures to lessen the threat to Salman Rushdie's life.

Today's Guardian newspaper claims that Kharrazi ``plans to make an explicit commitment when he meets Cook today. The paper also says that the Iranian government may provide a firm indication that the Rushdie affair is over by calling on the Khordad Foundation to drop the offer made in 1989 of the $ 1.5 million bounty for Rushdie's head.

A formal commitment to distance itself from the fatwa will go someway in improving Britain-Iranian relations at a time when Iran is trying to return to the global mainstream. Iran's relations with other European Union countries have moved to a surer footing over the last few years, with improved economic ties, including contracts for European oil companies. In Britain's case, however, the Rushdie affair has been the major obstacle.

The Iranian government's effort to distance itself from the fatwa, is one aspect of a large power struggle in Iran, between the reformists and the orthodox Islamists supported by Ayatollah Ali Khamenei. For the orthodoxy, the fatwa remains intact.

On the eve of the ninth anniversary of the fatwa, Iran's chief prosecutor, Morteza Moqtadie reiterated its substance. He said, ``The shedding of this man's blood is obligatory. Any Muslim who hears an insult to the prophet must kill the person who commits the insult.''

Around this time the Khordad Foundation also raised the bounty for Rushdie's head from the original $ 1 million to $ 1.5 million. For nine years, Salman Rushdie has lived in the hiding. Under the shadow of the fatwa, he has never been able to stay at one address for long and can go nowhere without special branch protection. People who want to see him have to go through an elaborate security sysem, which Rushdie calls `dry cleaning'. In the last couple of years, Rushdie has once again appeared at public literary events, but other invitees are subject to the sort of security checks normally reserved for heads of governments.