Iran's stance on the Middle East and its alleged arms stockpile are "a serious obstacle" to closer relations with the European Union, according to EU Foreign Policy Chief Javier Solana.

The diplomat arrived in Tehran on Monday as part of a regional tour, before he heads to the Association of South East Asian Nations forum in Brunei later this week.

However, Solana added that the EU was still intent on further strengthening its ties to Iran. This required both economic and political progress. "They go hand in hand," he told a joint news conference with Iranian Foreign Minister Kamal Kharrazi in Tehran.

Iran has denied seeking weapons of mass destruction and says its arms development is for defensive purposes. It also denies supplying weapons to Palestinian militant groups, such as Hamas and Islamic Jihad, who have launched suicide attacks in Israel.

More than just commercial interests

The EU and Iran have seen an improvement in relations in recent years. Earlier this month, Brussels decided to open negotiations with Iran on a Trade and Cooperation Agreement. But, said Solana, the EU did not believe that such an agreement can cover only economic aspects.

It also had to include political issues, such as human rights, cooperation on fighting terrorism and continued Iranian support for the new government in Afghanistan.

"We see all these parts as an inseparable whole," he said. "Our relation is a two-way relation. It will not progress unless there is a clear reciprocity. We also believe that EU-Iran relations can never reach their full potential if we do not eliminate problems that hamper such a positive development."

The U.S. has voiced concern about similar issues, but it has taken a different path from the EU and placed Iran in its so-called "axis of evil".

At the news conference, Foreign Minister Kharrazi criticized what he termed Washington's "bullying, go-it-alone" approach. He praised the EU's "independent" stance.

A further concern by Iranian leaders is the threat of U.S. military action in neighboring Iraq. According to government officials in Tehran, this will also be a topic of discussion during Solana's visit.

Iran against U.S. assault on Iraq

Iran has repeatedly denounced plans by Washington to forcefully depose Iraqi leader Saddam Hussein. But European nations don't appear to be giving backing on this issue.

Britain and Turkey have openly pledged support for a U.S. assault. Germany, however, is still maintaining a low-key stance.

But according to the German news magazine Der Spiegel, Washington expects a clear answer by the end of September, when NATO defense ministers are to meet in the Polish capital of Warsaw.

The magazine said U.S. and British troops would lead the assault against Iraqi leader Saddam Hussein, while Germany would be expected to provide mainly logistical and financial assistance.

Germany has said that too many of its soldiers are helping keep the peace in the Afghan capital Kabul and across the Balkans for the country to consider any further deployments abroad.

Government officials in Berlin declined to comment on the report.