"A definitive end to stoning practices, and the adoption of an anti-torture bill would be positive indicators" the Commissioner said while also welcoming Iran's invitation for UN human rights observers to come to the country.

Carrot and stick

The Commissioner reiterated that parallel negotiations in areas of trade, politics and counter-terrorism are "indissociable."

A Trade and Co-operation Agreement with the EU would alleviate some of the risks inherent in Iran's demographic make-up and insufficient levels of foreign direct investment argued the Commissioner.

Iran's population exploded after the Islamic revolution in 1979. The worry for the Commission is that political instability, inadequate economic performance and large numbers of young people being unemployed will result in dangerous social tensions.

The Commisison is promoting a trade agreement as one means of avoiding this. As an incentive to work toward an agreement the Commissioner offered EU backing for a potential membership bid for the World Trade Organisation. But the Commission will also need political movement to silence critics back home.

Members of the European Parliament have been extremely vocal in their criticism of the EU's policy and gave Iranian Foreign Minister Kemal Kharazzi a cold reception on a recent trip to Brussels.

NGOs are equally unhappy. In a letter to the UK foreign Minister Jack Straw, Hanny Megally, of Human Rights Watch said "Despite years of rhetoric about reform, recent developments in Iran are not at all positive... human rights progress in Iran is caught in a continuing power struggle between popularly elected reformers, who control both the presidency and parliament"

To put additional pressure on Tehran, Mr Patten cast doubt on the EU's support for Iran at the UN. A resolution is likely to be tabled condemning Iran's human rights record at an up-coming at the UN Commission on Human Rights.

Mr Patten said, "I cannot predict here the final EU position"

Not practical

Some commentators have flagged up practical problems with the Commission's approach. They argue that the three part dialogue is difficult because of the power struggle in Iranian politics and because few are committed to wholesale reform.

Consultant Bijan Khajehpour wrote in a recent article for the Middle East Report: "The factions favouring political liberalisation are at odds with economic liberalisation." President Khatami is a moderate member of this group according to Mr Khajehpour.

On the other hand there is a "faction that promotes privatisation and free-market economics is distant from views such as political pluralism" he writes.

- While in Iran Mr Patten reaffirmed his invitation to President Mohammed Khatami to visit Brussels.