By MICHAEL WEISSENSTEIN, Associated Press Writer Michael Weissenstein, Associated Press Writer – 2 hrs 44 mins ago

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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President Mahmoud Ahmadinejad vowed Saturday to make the U.S. regret its criticism of Iran's postelection crackdown and said the "mask has been removed" from the Obama administration's efforts to improve relations.

Ahmadinejad — with his internal opponents virtually silenced — all but dared Obama to keep calling for an end to repression of demonstrators who claim the hardline leader stole re-election through massive fraud.

"You should know that if you continue the response of the Iranian nation will be strong," Ahmadinejad said in a speech to members of Iran's judiciary, which is directly controlled by the ruling clerics. "The response of the Iranian nation will be crushing. The response will cause remorse."

Ahmadinejad has no authority to direct major policy decisions on his own — a power that rests with the non-elected theocracy. But his comments often reflect the thinking of the ruling establishment.

The cleric-led regime now appears to have quashed a protest movement that brought hundreds of thousands to the streets of Tehran and other cities in the greatest challenge to its authority in 30 years. There have been no significant demonstrations in days, and the most significant signs of dissent are the cries of "God is great!" echoing from the rooftops, a technique dating to the days of protest against the U.S.-backed shah before the 1979 Islamic Revolution.

Days of relatively restrained talk from both Washington and Tehran appear to be returning to a familiar pattern of condemnation and recrimination despite Obama's stated desire to move away from mutual hostility. Iran and the U.S. still appear interested in negotiations over Iran's nuclear program, but the rising rhetorical temperature can be expected to slow progress toward a deal, experts said.

"The political feasibility of pursuing it, and the likelihood of success has changed," said Trita Parsi, president of the National Iranian American Council. "I have a hard time seeing any real engagement taking place for at least four to six months."

Obama acknowledged Friday that Iran's violent suppression of unrest would hinder progress, saying "There is no doubt that any direct dialogue or diplomacy with Iran is going to be affected by the events of the last several weeks."

Obama struck a conciliatory tone toward Iran after taking office, sending a video greeting for Persian New Year that used the government's formal name — the Islamic Republic of Iran — in a signal that the goal of regime change had been set aside. He even avoided strong language as Iran began suppressing street protests, saying he wanted to avoid becoming a foil for Iranian hard-liners who blame the United States and other Western powers for instigating internal dissent.

But Obama decried Iran's crackdown more vigorously as amateur videos of beating and shootings began flooding the Internet. He said Friday in his strongest condemnation yet that violence perpetrated against protesters was "outrageous," and dismissed a demand from Ahmadinejad to repent for earlier criticism.

"I would suggest that Mr. Ahmadinejad think carefully about the obligations he owes to his own people," Obama added.

Iran also had been stopping short of its normally harsh language about the U.S., mostly blaming Britain and even France and Germany as Mousavi's supporters demanded a new election. Ahmadinejad had made relatively few appearances in an apparent attempt to avoid inflaming the situation.

The protests dwindled to scattered clashes as riot police and Basij militiamen put down the unrest using batons, tear gas, water cannons and, in at least 17 cases, live ammunition. Mousavi said Friday that he would seek official permission for any future rallies, effectively ending his role in street protests.

Ahmadinejad appeared self-assured and even invigorated Saturday in the face of the previous day's personal challenge from Obama.

"We are surprised at Mr. Obama," Ahmadinejad said. "Didn't he say that he was after change?

"They keep saying that they want to hold talks with Iran. All right, we have expressed our readiness as well. But is this the correct way?" Ahmadinejad told judiciary officials. "They showed their hand to the people of Iran, before all people of the world. Their mask has been removed."

He still appeared to leave some opening for dialogue, saying Iranians officials "have expressed our readiness" and still want the U.S. to "join the righteous servants of humanity as well."

Experts said, however, that it was not yet certain that Ahmadinejad and his most powerful backer, Supreme Leader Ayatollah Ali Khamenei, would emerge from the unrest as strong as before. Many speculated that the fight between hard-liners and reformists had moved behind the scenes and would add more uncertainty to U.S. dealings with the already opaque regime.

Authorities briefly arrested relatives of Ayatollah Hashemi Rafsanjani in a move seen as a warning to the powerful former president not to work against Ahmadinejad and Khamenei. Other prominent conservatives such as Tehran's mayor and the parliament speaker have criticized the government in recent days in another indication of possible internal divisions.

"This will complicate the decision-making process inside Iran," said Bahman Baktiari, an expert on Iranian factional politics and director of the Middle East Center at the University of Utah. "I think we will see paralysis in the Islamic Republic when it comes to making important decisions."

A 30-year-old resident of the central city of Isfahan told The Associated Press on Saturday that people continue to shout "God is Great!" and other anti-regime slogans from their roofs at night in Tehran and Isfahan.

"People are angry and afraid," he said on condition of anonymity for fear of government reprisal. "They are afraid of the future and angry because they failed to achieve change with their ballots."

Members of the Basij militia have been raiding homes and beating residents in an attempt to stop the chanting, Human Rights Watch said, accusing authorities of seizing satellite dishes to prevent citizens from seeing news broadcast from overseas. Iranian officials have blamed the British Broadcasting Corp., Voice of America and other news channels for fomenting unrest on behalf of Western governments.

"While most of the world's attention is focused on the beatings in the streets of Iran during the day, the Basijis are carrying out brutal raids on people's apartments during the night," said Sarah Leah Whitson, the rights group's Middle East director.

Italy has granted visas to Iranians seeking to flee the violence and wants the European Union to adopt a common policy on how to assist them, the Italian foreign minister said.

Italy and other members of the Group of Eight industrialized nations called Friday for an end to the violence in Iran and urged the authorities to find a peaceful solution.

Iranian Foreign Ministry spokesman Hasan Qashqavi was quoted by the official news agency IRNA as accusing the G-8 of "interventionist and hasty remarks."

In Sweden, Foreign Ministry spokesman Andre Mkandawire said the Swedish ambassador was summoned by Iran's foreign ministry Friday after clashes between demonstrators and Iranian Embassy officials outside Stockholm.

Demonstrators broke into the embassy, climbing through shattered windows and injuring one embassy worker, police said.

I think he is talking sh1t. What's he got that could really do anything to anybody?

George Bush is smiling again.....Obama extended the olive branch and now Amadmadman is even more demanding......Even more audacious. So much for the "talk with our enemies for results policy."

Get a clue would ya. Bush can smile all he wants, but he created the anxiety in the first place.

BS Obama wanted to talk without pre-conditions and look what that has gotten him.

Bush is smiling.......but should be saying I told ya so.....

If I remember correctly...the trouble between Iran and the US started with Carter and continued with every president since

Right now the circumstances are in the hands of the Iranian people themselves. It's not Obama making talks difficult, it's the rhetoric of the Iranian government and the Republicans pushing Obama to be the bully that Bush was. There are people in the Iranian government that are not as radical as their idiot leader.

How the heck would Bush know of extending an olive branch, he never offered to talk to anyone, he was too busy calling other countries name, and pissing off the world, besides he would have to be articulate which he was not..

But I am sure that Bush appreciates your view, some one has to.

Even Carter is not solely responsible, it takes two. The Iranian people have to stand up too. Besides the issue is right now, and while Obama was willing to talk, he couldn't have known what the people of Iran would do after the election and what the response of the government would be to the US. Problem is that Iran's leader is a Bully just like Bush was. Two Bully's can't talk to one another.

Oh please, look what has happened. Obama extended the olive branch to Iran and Iran spit in his face. Bush was smart enough to know that such would happen. Other presidents before him were too. It's the same with North Korea. Both countries are more demanding and defying than ever.

My country is peopled by i-dee-ots.

This current mess was here long before Bush... and it or something else will still be here after Obama is gone. (cept yall will then blame it all on Obama).

Smart enough or not... I am at least pleased that someone tried.

How do you think the policy of not talking with our enemies without pre-conditions evolved? It wasn't just a Bush 2 policy. The USA learned through attempts to talk long ago that regimes like Iran and North Korea would only use the olive branch to be more demanding and defying. Can you imagine Reagan using the olive branch to Russia???
The Berlin Wall would still be standing.

I want MJ buried already so