HIGHLIGHTS: "Iran would have no problem with the United States if it tones down its hostile rhetoric, " Khatami||Khatami Receives a Warm Welcome in Malaysia||Washington Accused of Meddling in Iranian Affairs||Khatami Opposes any Attack against Iraq & Describes the Israeli Government as Being the Most Supressive & Cruel Government in the World|| STORY: Iranian President Mohammad Khatami lashed out against the United States and Israel Tuesday, accusing Washington of promoting war and the Israeli government of cruelty.

"We live in a frightening situation today," Khatami said at a news conference during an official visit to Malaysia. "In the course of the history of the world ... we have never witnessed war being promoted so much in the United States."

Khatami, a reformist leader who is under new pressure from hard-liners in his Islamic nation, said that Iran would have "no problem" with the United States if it toned down its hostile rhetoric.

Khatami said Washington was using "the tongue of threats and insults" against Iran, and rejected U.S. President George W. Bush's accusations that Iran was part of an "axis of evil" with North Korea and Iraq.

"The great nation of Iran has never trod on the path of evil," Khatami said, speaking through an interpreter. "Evil is when a country has power and defines everything according to its own interests."

A WARM WELCOME IN KUALA LUMPUR

Khatami has received a warm welcome in Malaysia, including a 21-gun salute at a parliamentary ceremony. On Monday, he held talks with Malaysian Prime Minister Mahathir Mohamad, a moderate Muslim leader who has become a key U.S. ally in the fight against terrorism.

The meeting was the centerpiece of three-day visit - Khatami's first official trip to Malaysia since being elected in 1997 - to promote trade and bilateral ties.

WASHINGTON ACCUSED OF MEDDLING IN IRANIAN AFFAIRS

The visit comes amid a wave of anti-U.S. sentiment in Iran triggered by remarks Bush made earlier this month expressing support for the reform movement. His comment were seen as U.S. meddling in the power struggle between Iran's reformists and hard-liners opposed to political and social change.

Hard-liners have accused the reformists of being pawns of the United States - claims the reformists have rejected. Many Iranians see the United States as their country's greatest enemy.

ISRAEL, MOST SUPPRESSIVE & CRUEL GOVERNMENT IN THE WORLD

Khatami also criticized the United States for backing Israeli Prime Minister Ariel Sharon's government, and urged countries that support the Palestinian cause to make their voices heard.

"The most suppressive and cruel government in the world is Israel," Khatami told Malaysian academics Tuesday at a separate event. "It is being supported by the United States, which is alone in supporting Israel."

Khatami added that Iran was opposed to a U.S. attack against Iraq, a move widely anticipated and believed to be aimed at toppling its leader, Saddam Hussein.

"Any interference in the domestic affairs of Iraq would be against the interests of the people of Iraq and the peace and tranquility of the region and the world," Khatami said.

Khatami also defended the pace of reforms in his Muslim homeland, which is politically and economically isolated from the West. He has promised a more open society, economic growth and greater contacts with Western countries.

"I am certain that this process will never stop," Khatami said. "It may become slow or fast but the process will continue."

Khatami, who threatened in May to step down if he felt his program was stymied by conservatives, said he hoped to remain in office as long as he had the support of the Iranian people.

PHOTO CAPTION

Iranian President Mohammad Khatami speaks during a news conference at a hotel in Kuala Lumpur, Malaysia, Tuesday, July 23, 2002. (AP Photo/Andy Wong)