EDITOR'S NOTE: Iranian authorities have barred journalists for international news organizations from reporting on the streets and ordered them to stay in their offices. This report is based on the accounts of witnesses reached in Iran and official statements carried on Iranian media.

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Several thousand protesters - some chanting "Where is my vote?" - clashed with riot police in Tehran on Sunday as Iran detained local employees of the British Embassy, escalating the regime's standoff with the West and earning it a stinging rebuke from the European Union.

Witnesses said riot police used tear gas and clubs to break up a crowd of up to 3,000 protesters who had gathered near north Tehran's Ghoba Mosque in the country's first major post-election unrest in four days.

Some described scenes of brutality, telling The Associated Press that some protesters suffered broken bones and alleging that police beat an elderly woman, prompting a screaming match with young demonstrators who then fought back.

The reports could not be independently verified because of tight restrictions imposed on journalists in Iran.

North Tehran is a base of support for opposition leader Mir Hossein Mousavi, who has alleged massive fraud in Iran's disputed June 12 presidential election and insists he - not President Mahmoud Ahmadinejad - is the rightful winner.

Sunday's clashes erupted at a rally that had been planned to coincide with a memorial held each year for Ayatollah Mohammad Beheshti, who came to be considered a martyr in the Islamic Republic after he was killed in a major anti-regime bombing in 1981.

Witnesses said the protesters also chanted, "Ya Hussein, Mir Hossein," linking Mousavi's first name with a highly revered Shiite saint, Imam Hussein - the grandson of the Prophet Muhammad and a symbol of personal sacrifice for a cause.

Witnesses who spoke with the AP said they did not spot Mousavi at the rally. But one of his close assistants addressed the crowd through a loudspeaker and other opposition figures also appeared, including reformist presidential candidate Mahdi Karroubi.

Later, after the situation calmed, police set up patrols and cordons.

It was Iran's first election-related unrest since Wednesday, when a small group of rock-throwing protesters who had gathered near parliament was quickly overwhelmed by police forces using tear gas and clubs.

Iranian authorities say 17 protesters and eight members of the volunteer Basij militia have been killed in two weeks of unrest, and that hundreds of people have been arrested.

The Paris-based International Federation of Human Rights said its information suggests at least 2,000 arrests have been made - "not just (people) arrested and later released, but who are locked up in prison," the group's vice-president, Abdol Karim Lahidji, told the AP.

He said his information came from members of human rights groups in Iran and other contacts inside the country.

Iran's diplomatic battles also intensified Sunday after authorities detained several local employees of the British Embassy in Tehran - a move that Britain's foreign secretary called "harassment and intimidation." The EU condemned the arrests.

Iranian media said eight local embassy staff were detained for alleged roles in post-election protests, but gave no further details. British Foreign Secretary David Miliband said "about nine" employees were detained Saturday and that four had been released.

EU foreign ministers meeting in Corfu, Greece, issued a statement condemning the arrests and calling for the immediate release of all those still detained. The 27-nation bloc also denounced Iran's continuing restrictions on journalists.

"They make clear to the Iranian authorities that harassment or intimidation of foreign or Iranian staff working in embassies will be met with a strong and collective EU response," the statement said.

Iran has accused the West of stoking unrest, singling out Britain and the U.S. for alleged meddling and for expressing concern about the ferocity of the regime's crackdown on protesters. Last week, Iran expelled two British diplomats, and Britain responded in kind. Iran has also said it's considering downgrading diplomatic ties with Britain.

On Sunday, Iranian Intelligence Minister Gholam Hossein Mohseini Ejehi accused some British embassy staff of mingling with protest crowds to encourage unrest.

The British Foreign Office says the embassy has a staff of more than 100, including at least 70 locally hired Iranians. Last week, Britain sent home 12 dependents of embassy staff because the protests had disrupted their lives.

Miliband, in Corfu for the EU meeting, said Britain lodged a protest with the Iranian authorities over the detentions, which he called "quite unacceptable."

"The idea that the British Embassy is somehow behind the demonstrations and protests that have been taking place in Tehran. ... is wholly without foundation," he said.

A senior Iranian cleric, Ahmed Khatami, had lashed out at Britain on Friday in a nationally televised sermon. "In this unrest, Britons have behaved very mischievously and it is fair to add the slogan of 'Down with England' to the slogan of 'Down with USA,"' he said.

Iran's sharpening anti-Western rhetoric threatened to dash hopes for the new dialogue President Barack Obama initially envisioned when he took office.

Obama wants to engage Iranian leaders in talks over the country's suspect nuclear program which the U.S. and other western countries worry is aimed at developing nuclear weapons. Iran defends its nuclear program as civilian in nature. EU foreign policy chief Javier Solana said Sunday the bloc would "like very much" to restart nuclear talks with Tehran despite the rising tensions.

Senior White House adviser David Axelrod played down Ahmadinejad's accusations against the U.S., saying they aren't credible and are meant for domestic consumption. "This is political theatre," he said on ABC's "This Week."

Iran's supreme leader, Ayatollah Ali Khamenei, called for national unity, appealing to both sides in the dispute, even though he has come down firmly on the side of Ahmadinejad.

"I admonish both sides not to stoke the emotions of the young or pit the people against each other," he said Sunday. "Our people are made of one fabric."

Mousavi, meanwhile, signalled anew he won't drop his political challenge.

In a new statement, he insisted on a repeat of the election and rejected a partial recount being proposed by the government. However, Mousavi's challenge seemed largely aimed at maintaining some role as an opposition figure.

The latest statement by Mousavi, who has been increasingly isolated, appeared Sunday on Ghalamnews, a Web site run by supporters. Mousavi-related Web sites have frequently been blocked by the government, and one was shut down by hackers last week.

For the first time since the election, former President Hashemi Rafsanjani spoke publicly about the unrest, claiming that "suspicious hands" were trying to open rifts between the people and the Islamic system.

He also praised Khamenei for giving the Guardian Council, Iran's top electoral body, more time to evaluate charges of vote-rigging. That was significant because there had been growing speculation that Rafsanjani could be at odds with the supreme leader - setting the stage for a possible high-level power struggle.

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Kole reported from Cairo. Associated Press Writers Shaya Tayefe Mohajer in Cairo, Jamey Keaten in Paris, Shawn Pogatchnik in London and Elena Becatoros in Corfu, Greece, contributed to this report.

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Top Obama adviser rejects calls for 2nd economic stimulus package

By Philip Elliott

THE ASSOCIATED PRESS

WASHINGTON - A senior White House adviser said Sunday the economic stimulus has not yet "broken the back of the recession" but set aside calls for a second massive spending bill. Republicans, meanwhile, called spending underway a failure.

White House adviser David Axelrod urged patience for President Barack Obama's $787 billion economic stimulus package in the face of sliding poll numbers. Former Massachusetts governor Mitt Romney, a past and potentially future presidential candidate, said the spending was ill-designed and served only to expand the size of government.

Republicans have seized on the public's growing unease over government debt and spending to challenge the popular president. Sensing their own vulnerabilities, Obama's top advisers have ramped up their defence of spending that is incomplete and going slower than many had hoped.

"You know, we take the long view on this. Look, when the president signed the stimulus package - the economic recovery package - he said it's going to take a while for this to work," Axelrod said. "And we're going to go through some rough times, and unemployment is going to go up, and ... we have to work our way through this."

Some economists and business leaders have called for a second spending bill designed to help guide the economy through a downturn that has left millions without jobs. Axelrod said it's too early to know if more spending would be needed or if the administration would seek more money from Congress.

"Most of the stimulus money - the economic recovery money - is yet to be spent. Let's see what impact that has," Axelrod said. "I'm not going to make any judgment as to whether we need more. We have confidence that the things we're doing are going to help, but we've said repeatedly, it's going to take time, and it will take time. It took years to get into the mess we're in. It's not going to take months to get out of it."

Republicans, though, aren't waiting.

"I don't think the stimulus that was passed is going to be much help," Romney said. "The stimulus that was passed was, unfortunately, focused more on government and creating employment inside government than it was creating jobs in the private sector."

Another Republican, Sen. Lindsey Graham, said Obama and his Democratic allies rammed through the spending bill without Republican support or significant input.

"He missed a chance to have a bipartisan stimulus package that would have created more jobs and helped people who'd lost their jobs," Graham said. "I hope they'll rethink it."

In the meantime, the current spending isn't doing enough, they said.

"For the millions of extra people who are going to be unemployed, it has not been successful," Romney said. "It has failed in delivering the stimulus that was needed at the time it was needed."

Axelrod acknowledged the economic challenges and unemployment inching close to 10 per cent nationally.

"Well, there's no doubt that ... we have not broken the back of the recession," he said. "No one's happy with that number."

Axelrod appeared on ABC's "This Week" and NBC's "Meet the Press." Graham and Romney appeared on ABC.

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