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Financial Times
By Guy Dinmore in Washington
 Even by the standards of Washington
politics it was an unusual spectacle - the veiled leader of a Middle East
group banned in the US as a terrorist organisation delivering a speech by
live video-link to applauding members of Congress inside the Capitol
itself.
But since the organisation is dedicated to the overthrow of Iran's
theocracy, the People's Mujahideen Organisation and its political
co-leader, Maryam Rajavi, are given leeway in the US as they campaign to
have the "terrorist" tag removed and to become eligible for US
funding of Iranian opposition groups.
In suit and matching headscarf, Mrs Rajavi spoke from France. She thanked
six congressmen by name for their support, praised President George W. Bush
and called for an end to western "appeasement" of the "engine
of Islamic fundamentalism".
The audience - a mix of Iranian-Americans, politicians and staffers filling
a conference room in the Capitol last Thursday - gave her a standing
ovation. Sheila Jackson Lee, a Democrat congresswoman from Texas, spoke
warmly of "sister Maryam".
Known by its acronyms MKO and MEK, the group led by Mrs Rajavi and her
husband Massoud, was outlawed by the US for its killing of Americans before
the 1979 Iranian revolution; alleged collaboration with Saddam Hussein's
genocidal campaigns against Iraqi Kurds; and attacks on civilians inside
Iran.
The MKO denies the charges of terrorism, saying it was banned by
then-president Bill Clinton in an attempt to engage the Iranian government.
Despite its attraction to the US - and particularly to some Pentagon
planners - as an armed force inside Iraq ready in opposition, analysts in
Washington doubt the group will regain legitimacy.
Nonetheless, its lobbying reflects the ferment inside the Bush
administration as it grapples with producing a coherent policy towards
Iran, working out - in the words of one European diplomat - whether to
"engage, isolate or disrupt".
Stephen Hadley, national security adviser, commissioned 10 briefing papers
exploring various options. A National Security Council meeting was
cancelled this month after one of the papers, which proposed expanding
diplomatic contacts with Iran, was leaked to the Wall Street Journal. Some
officials suspect that someone senior wanted to sabotage the idea.
Diplomats and two US officials said the latest review was prompted by the
conclusion reached by Condoleezza Rice, secretary of state, and others that
an effective sanctions option did not exist, and that they had been misled
by the predictions of neoconservatives who saw the Iranian regime ripe for
overthrow by a restless populace.
Recent statements by Ms Rice point to an effort to broaden diplomatic
contacts with Iran.
Diplomats also say there is a new effort to find a settlement, negotiated
through European allies, to the standoff over Iran's nuclear programme. But
officials say any such pragmatic tendencies would be tempered by the
conviction that the Bush administration should do nothing that would be
seen to confer legitimacy on the regime while actively supporting the
democratic aspirations of Iranians.
Iranian-American sympathisers of the MKO, who are active donors to US
politicians, remain hopeful their group will be de-listed.
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