Iran and Egypt are working toward normal diplomatic relations after 21 years of estrangement, reported The Associated Press, quoting head of the Egyptian Interests Section in Tehran, Mohammed Rifa'a.
Egyptian President Hosni Mubarak and Iranian President Mohammad Khatami spoke last week by telephone - the first direct contact between leaders of the two states since Iran's 1979 Islamic revolution.
Mubarak congratulated Khatami on Iran's entry to the G-15 economic grouping of developing nations. Iran was admitted at this year's summit, held Monday and Tuesday in Cairo and presided over by Mubarak.
"It definitely reflects the strong political will on both sides to improve ties," the official told the AP.
"The way is truly being paved for normalization of ties."
Ties between the two were severed after Egypt's 1979 peace treaty with Israel. Relations deteriorated further when Egypt gave refuge to the ousted Iranian shah, who died in Egypt in 1980.
Since Iranian President Mohammad Khatami's election in 1997, relations have begun to improve.
In other moves toward reconciliation, the two countries have set up a non-governmental Iran-Egypt friendship society, said the agency.
In November, 300 Iranian businessmen took part in the first Iranian trade fair in Egypt in two decades -- Albawaba.com
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