{mosimage}Financial Times: The European Union is set to strike an exiled Iranian opposition movement off its list of banned terrorist groups, a step likely to anger the authorities in Tehran.

Financial Times

By Tony Barber in Brussels

{mosimage}The European Union is set to strike an exiled Iranian opposition movement off its list of banned terrorist groups, a step likely to anger the authorities in Tehran.

At a meeting on Monday, EU foreign ministers are poised to remove the People's Mojahedin Organisation of Iran from the 27nation bloc's blacklist in order to comply with two EU court rulings issued last month.

The PMOI, founded in 1965, advocates the overthrow of Iran's Islamic republic and was designated a terrorist group in 2002, when the EU drew up its blacklist after the September 11 2001 attacks on the US.

Since then, the PMOI has fought a long battle in the European courts to clear its name, shadowing Iranian government representatives who have done their best to persuade EU member states that it would be unwise to take the group off the list.

The US government named the PMOI as a terrorist organisation in 1997 and has kept it on its list ever since. In Europe, however, the group's restoration to legal respectability could hardly come at a more sensitive time.

It would risk complicating western relations with Iran just as the administration of Barack Obama, the US president, is expected to consider discreet approaches to Tehran as a way of containing its nuclear ambitions and reshaping its policies on Israel, Lebanon and Iraq.

In recent years, EU governments have chosen to keep the PMOI on their blacklist partly as a favour to Iran, in return for which a channel has remained open for diplomatic contacts over the nuclear issue.

The US, EU and Israel suspect Iran of using its uranium enrichment programme to develop nuclear weapons and are fearful the first Iranian device may be ready in three years or less.

Iran, led by Mahmoud Ahmadi-Nejad, president, rejects attempts to curtail its programme as "nuclear apartheid" and says it has every right to exploit nuclear energy for peaceful purposes.

Some EU countries, especially France, have been reluctant to remove the PMOI from the EU's blacklist on the grounds that such a decision will infuriate Iran's leaders and reduce the EU's ability to influence Tehran's behaviour.

But the EU's hand was forced when the European Court of First Instance, a Luxembourg-based court that forms part of the EU's judicial system, ruled on December 4 that EU governments had been wrong to freeze the PMOI's funds.

Two weeks later the court rejected as "manifestly inadmissible" an attempt by EU governments to delay implementation of the December 4 judgment. As a result, ambassadors of the 27 member states agreed in Brussels on Thursday that the next update of the EU's terrorism blacklist should not include the PMOI.

It would be the first time any organisation had been removed from the list.

The envoys forwarded their recommendation to Monday's foreign ministers' meeting, whose agenda lists it as item set to be approved without debate.

But some diplomats warned that a discussion might still take place.