Egypt's Mohamed Morsi wants to renew ties with Iran

Egypt's Islamist President-elect Mohamed Morsi voiced interest in restoring long-severed ties with Tehran to create a strategic "balance" in the region, in an interview published on Monday with Iran's Fars news agency.

Morsi's comments are likely to unsettle Western powers as they try to isolate Iran over its disputed nuclear program, which they suspect it is using to develop a nuclear weapons capability. Tehran denies this.

Since former Egyptian president Hosni Mubarak was toppled by a popular uprising last year, both countries have signalled their interest in renewing ties which were severed more than 30 years ago.

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"We must restore normal relations with Iran based on shared interests, and expand areas of political coordination and economic cooperation because this will create a balance of pressure in the region," Morsi was quoted as saying in a transcript of the interview.

Fars said it had spoken to Morsi a few hours before Sunday's announcement that declared him the winner of Egypt's presidential election.

Asked to comment on reports that, if elected, his first state visit would be to Riyadh, Morsi said: "I didn't say such a thing and until now my first international visits following my victory in the elections have not been determined."

Rivalry between Sunni Muslim Saudi Arabia and Shi'ite Iran has been intensified by the "Arab Spring" revolts, which have redrawn the political map of the Middle East and left the powerful Gulf neighbors vying for influence.

Iran hailed Morsi's victory over former general Ahmed Shafik in Egypt's first free presidential election as a "splendid vision of democracy" that marked the country's "Islamic Awakening".

Western diplomats say in reality Egypt has little real appetite to significantly change relations with Iran, given the substantial issues the new president already has to face in cementing relations with regional and global powers.

"Iran is hoping for Egypt to become a deterrent against an Israeli attack as well as a regional player that Iran can use as a potential counter-balance against Turkey and Saudi Arabia," said a diplomat based in Tehran.

"Egypt, at least under present circumstances, would side with either of these against Iran."

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In contrast to comments Morsi made in a televised address after his victory was announced on Sunday, Fars news quoted him as saying Egypt's Camp David peace accord with Israel "will be reviewed", without elaborating.

The peace treaty remains a lynchpin of U.S. Middle East policy and, despite its unpopularity with many Egyptians, was staunchly upheld by Mubarak, who also suppressed the Muslim Brotherhood movement to which Morsi belongs.

The Sunni Brotherhood, whose Palestinian offshoot Hamas rules the Gaza Strip, is vehemently critical of Israel, which has watched the rise of Islamists and political upheaval in neighboring Egypt with growing concern.

Egypt's formal recognition of Israel and Iran's 1979 Islamic Revolution led in 1980 to the breakdown of diplomatic relations between the two countries, among the biggest and most influential in the Middle East. They currently have reciprocal interest sections, but not at ambassadorial level.

Egypt's foreign minister said last year that Cairo was ready to re-establish diplomatic relations with Iran, which has hailed most Arab Spring uprisings as anti-Western rebellions inspired by its own Islamic Revolution.

But Iran has steadfastly supported Syrian President Bashar al-Assad, Tehran's closest Arab ally, who is grappling with a revolt against his rule, and at home has continued to reject demands for reform, which spilled onto the street following the disputed re-election of President Mahmoud Ahmadinejad in 2009. (Editing by Andrew Roche)

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