Khatami's UN visit is overshadowed by bid in Congress to endorse Iranian opposition.
Dreams of detente - or at least a thaw in relations - between the United States and Iran seem to be stalling as both sides face strong opposition at home to turning enemies into friends.
Cautious steps have been made: Iran's moderate President Mohamad Khatami in January praised the "great American people" and asked for dialogue, and in June President Clinton responded with a call for "genuine reconciliation."
But now such moves to end nearly two decades of hostility appear under threat, as some in the US Congress and Iranian hard-liners work separately to undermine reconciliation.
"Like two young lovers, there is a mutual fascination," says a Western diplomat. "It is like a game: They want to be together, but they don't want to be seen to be together."
Iran is emerging as a strategic regional power and an efficient channel for Caspian Sea oil. But from the American perspective Iran remains suspect for allegedly backing terrorism and for posing a military threat to Israel.
In the US, a narrow congressional majority last week demanded in a statement that Iran's main opposition group, the Mujahideen e-Khalq (MKO), be taken off the State Department's list of "terrorist" organizations. The MKO, whose name translates to "People's Holy Warriors," was recognized as a terrorist group for the first time last year.
"If they manage to take the MKO off the list, it will be a major blow to the process of detente," says the diplomat. "For the Iranians it is a major topic, [listing the MKO] was the most significant American action since President Khatami was elected."
Fundamentalists hold sway
In Iran, Islamic fundamentalists who control the instruments of power consider the US the "global arrogance" that imposes "Zionist plots." They are led by conservative Supreme Leader Sayed Ali Khamenei, whose role as spiritual guide includes making final foreign policy decisions.
The reform-minded Mr. Khatami has been engaged for months in a battle against hard-liners who despise his policies of promoting a civil society, freedom of speech, and the rule of law.