Motorbike gunmen fire shots at British embassy in Iran

The British embassy in Tehran came under fire yesterday in an incident that threatens to turn an already charged atmosphere into the most serious crisis in relations with Iran since the Salman Rushdie affair.

The shooting caused limited damage and injured nobody. But it came on a day when the Iranian ambassador to Britain was recalled to Tehran over the arrest of an Iranian diplomat in Britain.

Shortly before midday in Tehran, shots rang out, hitting windows in upper storeys of the embassy compound. Witnesses said two men on motorbikes stopped in front of the embassy to fire the shots with a handgun before riding away at high speed.

The embassy building is protected by a high perimeter wall that stretches two hundred yards along Ferdowsi street, one of central Tehran's busiest thoroughfares. Bullet holes could later be seen in windows facing the street.

Richard Dalton, Britain's ambassador in Tehran, said: "This was a serious incident. Six shots were fired at the embassy building. Several of them entered offices on the second floor."

The embassy had been on high alert since relations with Iran soured last month over the arrest in Britain of Hade Soleimanpour, an Iranian diplomat. Argentina is seeking his extradition in connection with the bombing of a Jewish centre in Buenos Aires in 1994 which killed 85 people. After failing to secure his release through political channels, Morteza Sarmadi, the Iranian ambassador to Britain, flew to Iran yesterday "for consultations". He is not expected to return.

There was speculation that the embassy attack was the work of Iranians angry with the British and Americans after the assassination in Najaf last week of the Iranian-backed Shia cleric Ayatollah Mohammad Bakr al-Hakim. Ayatollah Hakim had been exiled in Iran and only returned to Iraq in May. His death caused widespread grief in Iran.

But it is more likely that the shootings reflect the struggle for power in Iran and were ordered by hardline religious conservatives eager to provoke the moderate President Mohammad Khatami into tougher action against Britain.

Iran has been incensed by the arrest of Mr Soleimanpour, which it says was politically motivated. Hardliners maintain that Britain is mimicking American policy in the Middle East.

Britain insists that the police had no choice but to respond to an international extradition request. A government spokesman said the matter was purely judicial. He said the former Iranian ambassador to Argentina did not enjoy diplomatic immunity because he was studying at a British university.

With Iranian hardliners calling for the expulsion of Mr Dalton, the British Government has been braced for reprisals. Mr Dalton cut short his holiday to fly back to Tehran after Mr Soleimanpour was refused bail.

The effect of the row, compounded by yesterday's shooting, is to undermine the strategy of constructive engagement in which Jack Straw the Foreign Secretary, has invested considerable energy. The Government has been working to repair links with Iran which were severed in 1989 after the fatwa calling for the murder of Salman Rushdie, author of The Satanic Verses. Diplomatic relations were restored in 1999. Mr Straw has been to Iran four times to urge Tehran's support for the "war on terror".

A rupture with Britain would leave Iran with few friends in the international community.

There is mounting concern that Tehran may be secretly developing a nuclear weapon. The IAEA, the UN's nuclear watchdog, revealed last week that its inspectors found enriched uranium at a power plant south of Tehran. The finding appeared to confirm the suspicions of those in the Bush administration who regard Iran as a member of the "axis of evil". Mr Blair has expressed concern about Iran's nuclear ambitions and the EU may postpone a valuable trade deal when it considers the IAEA inspectors' conclusions.

The Foreign Office said diplomatic ties had not been downgraded and discussions with Iran were continuing.