Iran says EU ruling on Iran group unacceptable

TEHRAN, Dec 13 (Reuters) Iran said today a ruling by Europe's second-highest court to annul an EU decision freezing the funds of an exiled Iranian opposition group was unacceptable and encouraged ''terrorist ideas''.

Europe's second-highest court, the Court of First Instance, yesterday faulted the European Union for not giving adequate reasons for the decision or a fair hearing to the People's Mujahideen when it ordered the funds frozen in 2002.

''This verdict is illegal and not acceptable,'' Iran's ISNA news agency quoted Foreign Ministry spokesman Mohammad Ali Hosseini as saying.

''It (the ruling) is contrary to the European Union's responsibilities in fighting terrorism,'' he said, adding that it was ''encouraging terrorist ideas''.

Iran's official news agency IRNA quoted Hosseini as saying: ''This act will call into question the credibility and the competence of the organisations, whose responsibility is defending the public interest and basic rights of the people.'' The People's Mujahideen, the armed wing of the France-based National Council of Resistance of Iran (NCRI), said it had renounced military activity since 2001. NCRI called the court decision ''a great victory''.

The People's Mujahideen, labelled a terrorist group in the EU and the United States, has devoted followers on both continents and was the first body to expose Iran's covert nuclear programme.

But diplomats and Iran analysts say it has little support within Iran, where few can forgive it for siding with Saddam Hussein in the 1980-88 Iran-Iraq war.

The NCRI complained the group was added to the EU terrorist list under pressure from Tehran at a time when Western countries were trying to improve relations with Iran.

REUTERS PDM KN2054