Apart from the two countries' differences, internal bickering within Iran has prevented the Turkish operator from setting up Iran's first private mobile phone network as well as another Turkish entity from building and operating a major airport in southern Tehran.

Ramezanzadeh said the issue was raised during recent visit of Iranian Foreign Minister Kamal Kharrazi to Turkey, but it led to no breakthrough.

"The most important issue in TAV and Turkcell contracts is the lack of stability in the country's laws, which has been shown to the foreign investors and the problems resulting from it still exists," he said.

"The problem is not merely the conclusion of the two deals; rather we should show to the world that there are stable laws in our country for investment," Ramezanzadeh added.

Turkey's leading GSM operator Turkcell is expected to invest about three billion dollars in the project, making it one of the biggest foreign investments in Iran since the 1979 Islamic Revolution.

Turkcell, however, has failed to go ahead with the project amid political saber-rattling inside Iran over worries that the country's security could be compromised.

Iran's Minister of Communications and Information Technology, Ahmad Motamedi, said last Monday that negotiations continue to be held to work out the dispute.

"The ongoing negotiations on resolving the problems relating to the Irancell deal move on a hopeful trend," he said during a seminar on devising strategies for the induction of new generation of mobile phones into Iran.

Like Irancell, the fate of a deal to build and operate a major airport in southern Tehran by a Turkish consortium, TAV, has remained in balance amid security worries as well as suspicions about the entity's links to Israel.

Iran's armed forces closed down the Imam Khomeini International Airport on May 8, citing security concerns, just after it was officially inaugurated with the landing of a foreign aircraft.

Officials have said that the IKIA will eventually be able to handle 40 million passengers a year, making Tehran a regional transport hub.

The country's armed forces, however, have stressed that the airport will remain closed as long as 'security requirements' for carrying out flights from the facility are not met.

The dispute has beaten all the way up to the Iranian parliament, leading to the impeachment in October of transport minister Ahmad Khorram, whose ministry had awarded the IKIA contract to the Turks.

The parliament also passed an urgent bill, giving itself the prerogatives to scrap the two contracts if they are deemed them a threat to the country's national security.

The decision prompted the Government to postpone President Mohammad Khatami's planned visit to Turkey.

Motamedi announced the government's readiness 'to remove the MPs' concerns regarding the (Irancell) contract and implement necessary modifications'.

"The esteemed parliament deputies will certainly not accept cancellation of this important national project, given the sensitivities which exist regarding national interests and the people's welfare.

"Despite the concerns which certain individuals outside the parliament created among the MPs and led to the presentation of an urgent bill ordering to prevent the implementation of the Irancell deal, negotiations continue on a hopeful note," he added.

Motamedi said the current Iranian mobile phone network, providing connection to 3.5 million subscribers in the 70-million-country, lags 10 years behind the rest of the world in updating its technology.

"Bridging this gap in the short-term through traditional methods is certainly impossible," he said.

According to the communications minister, the Irancell deal, better known as the Second Operator in Iran, is 'one of the solutions to overcome this problem'.

"A simple estimate indicates that if we rely on the capability of the First Operator, given the 25-fold increase in the country's capacity, it will take between eight and ten years to meet the existing demands (for mobile phones)," Motamedi said.

Next year, 2.5 million new lines will be added to the network, he added.