PARIS 9^TH Feb (IPS) Former Mayor of Tehran Qolamhossein Karbaschi says Iran can have relations with the Israelis provided they "resolves their problems with the Palestinians and take their atomic bombs out of the region".

In his first interview with a Western newspaper days after he was released from prison, Mr. Karbaschi also pointed out that Iran's relations with the United States could not remain cut "forever".

Charged with fraud, embezzlement of public funds, financial corruption and abuse of power, Mr. Karbaschi was condemned to 2 years of total ban from all public function, 60 suspended lashes, payment of more than 300.000 US Dollars and 5 years of firm prison, Mr. Karbaschi was sentenced to two years of imprisonment.

He was freed from prison on 25^th of January, pardoned by ayatollah Ali Khameneh'i, the leader of the Islamic Republic and on personal intervention from Chairman of the Council for Discerning the Interests of the States (CDIS), ayatollah Ali Akbar Hashemi Rafsanjani, considered as his Mentor.

In a wide-range interview with the French conservative daily "Le Figaro", Mr. Karbaschi said "if we protest against Israel, it is because of its attitude towards the Palestinians. But if the Israelis resolve their problems with the Arabes and take out of the region their atomic bombs, we can have relations with them".

"One has to consider the interests of the nation", he pointed out.

Observers said this the first time that an Iranian who enjoys influence and is regarded as being close to both the former and the present presidents has made such a clear-cut statement concerning the thorny and sensitive relations with the Jewish State that the official media and the ruling conservatives describes as "Zionist Entity" and a cancerous tumour that must be eradicated from the region.

[In an interview with the US magazine "Newsweek", Iranian Foreign Minister Kamal Kharrazi reiterated the Islamic Republic's official view concerning Israel and the stalemated Middle East Peace process, saying Iran would never recognise Israel]

Denying allegations that he was freed thanks to special relationships, Mr. Karbaschi said he recovered his freedom in the framework of existing laws that allows any ordinary prisoner to be released after having served more than one third of his term on condition that he has behaved, a law that allows each year between 10.000 to 15.000 prisoners to benefit from the leader's prerogatives for pardon.

Because of the important role he played during the last presidential elections, paving the way for the surprise victory of hojatoleslam Mohammad Khatami, Mr. Karbaschi was almost hated by the conservatives who saw him as the instrument of their defeat in the presidential race of May 1997.

Asked if he was planing to return to the politic arena with ah eye on the next presidential elections of 2001, Mr. Karbaschi, self-appointing himself as a "king-maker", noted that "king-makers are not made to become king themselves".

Reminding that he is prevented from any active official services, he nevertheless confirmed, indirectly though, that he would work for the success of the former president, saying Mr. Hashemi Rafsanjani would make a very good Speaker".

"I would work for the victory of the candidates presented by my Party, the Reconstruction", the former powerful Mayor said answering a question to know if he would back any specific candidate.

"He (Mr. Rafsanjani) has a lot of experience and would know how to run the Majles (parliament). He is a pragmatic who do not think in term of right or left", Mr. Karbaschi pointed out.

He also confirmed that he was prepring a new newspaper named "Ham Mihan" (Compatriot).

When Mayor, Mr. Karbaschi launched successfully a moderate newspaper named "Hamshahri" (Citizen) that quickly became the nation's largest circulation daily and played an important role in the triumph of Mr. Khatami.

Nevertheless, he threw an open yet indirect dart against Mr. Khatami by observing that more than freedom, the Iranians wanted a better life, better economic conditions.

Conservatives, including Mr. Rafsanjani routinely criticises the President because placing political reforms before economic considerations.

"I think the time of heroes is passed. What we need is to be intelligent and work hard to reconstruct the nation. In my view, the hero is the one who succeed in his projects, who build roads and create jobs and not the one who all the time shouts empty slogans and ideas. I think Iranians wants above all to ameliorate their material conditions. Job, family rather than freedom only", he said in reference to his own achievements as Mayor.

Though he modernised Tehran, probably one of the world's ugliest capitals that grew out of any urban planing, by building numerous urban highways and parks, transforming the visage of the poor downtown, he was strongly criticised for his "dictatorial and arrogant" handling of the affairs, that included imposing heavy taxes and allowing the building luxurious apartments and towers.

Asked if he was not criticising hojatoleslam Abdollah Nouri "another hero of the day" who was jailed by the conservatives because of his defence of the moderate political parties, secularism, the rights of women and above all, the grand ayatollah Hosseinali Montazeri, Mr. Karbaschi said he was not criticising any one, but wanted to state that economy was also an important issue.

"I don't know what Mr, Nouri said during his trial was his ideas or not, let's say it was correct to express them. One had to do it anyway. Maybe I share some of his ideas but expressed differently. But let me tell you that he (Mr. Nouri) very different when (serving as) Interior Minister. When I began as Mayor of Tehran, I would constantly observe to him that his policemen where very hard on bad veiled women and mind you that he would defend his policemen", Mr. Karbaschi said, expressing his "jalousy" for the publisher of the banned daily Khordad that had replaced Hamshahri as the nation's most powerful, largest circulation and influential newspaper. ENDS KARBASCHI INTERVIEW 9200