Iran's supreme leader says no war or talks with U.S.

Iran's supreme leader said Monday that his country will neither go to war nor enter into negotiations with the United States as the Trump administration restores sanctions lifted under the 2015 nuclear deal.

In remarks carried by state television, Ayatollah Ali Khamenei said "along with sanctions, Americans have recently raised two more options, war and talks… War will not happen and we will not enter talks."

U.S. President Donald Trump withdrew the United States from Iran's nuclear deal with world powers in May and last week the U.S. began restoring sanctions, exacerbating a financial crisis in Iran that has sent its currency tumbling. The sanctions target Iran's trade in gold and other precious metals, its purchases of U.S. dollars and its car industry.

Trump has suggested he would be willing to hold talks with Iranian leaders, but that would be impossible without permission from Khamenei, who has the final say on all major policies.

"Negotiations with the U.S. would definitely harm us and they are forbidden," Khamenei said, adding that the Americans had proven they could not be trusted. "Negotiation with the bullying and very eager government of the U.S. means giving it an instrument through which it can add to its hostility," he said.

Deteriorating economy

Khamenei, whose remarks on Monday come amid a sharp fall in the rial currency that has prompted angry protests, criticized the government of President Hassan Rouhani, a pragmatist cleric who championed the 2015 deal aimed at ending Iran's political and economic isolation.

"More than the sanctions, economic mismanagement [by the government] is putting pressure on ordinary Iranians… I do not call it betrayal but a huge mistake in management," state TV quoted Khamenei as saying.

"With better management and more efficient planning we can resist the sanctions and overcome them," Khamenei said, in an apparent effort to deflect public anger over the deteriorating economy toward Rouhani's government.

European countries, which still back the 2015 deal, fear Trump's moves will undermine Rouhani and strengthen the hand of his hardline rivals in the clerical establishment.

Officials arrested

The rial has lost about half of its value since April in anticipation of the renewed U.S. sanctions, driven mainly by heavy demand for dollars among ordinary Iranians trying to protect their savings.

Iranian officials have blamed "enemies" for the fall of the currency and a rapid rise in the price of gold coins, and more than 60 people, including several officials, have been arrested on charges that carry the death penalty.

"The corrupt people [officials] should be punished firmly," Khamenei said on Monday.

Thousands of Iranians have protested in recent weeks against sharp rises in the prices of some food items, a lack of jobs and state corruption.

The protests over the cost of living have often turned into anti-government rallies.

Unverified military milestone

Also on Monday, Iran said it launched a production line for a radar-evading, short-range missile. Defence Minister Gen. Amir Hatami told state TV the surface-to-surface missile, dubbed Fateh-e Mobin, or Bright Conqueror, was effective in all weather conditions.

He did not discuss the range of the missile, but older versions like the Fateh-313 have a range of some 500 kilometres. Iran is believed to have long-range missiles with a range of 2,000 kilometres, which are capable of reaching U.S. bases in the region and Israel.

Iran often announces military achievements that cannot be independently verified.

With files from Reuters