Jan. 26 (Bloomberg) -- The European Union took a prominent Iranian anti-government group off its list of terrorist organizations, sowing tensions with Iran’s theocratic leadership.

In a move that may complicate efforts to persuade Iran to halt its nuclear program, EU foreign ministers today let the People’s Mujahedeen of Iran operate freely throughout the 27- nation bloc, ending restrictions imposed in 2002.

After ignoring pleas from the Iranian government, EU ministers explained the decision as a response to rulings by the European supreme court, not a politically motivated effort to foment resistance inside Iran.

“What we are doing today is abiding by the interpretations of the European court,” EU foreign policy chief Javier Solana told reporters in Brussels. “There’s nothing we can do about this.”

Iran yesterday warned Europe against worsening relations by making a “conscious political decision” to ease curbs on the exile group. The government had no immediate reaction to the EU announcement today.

EU-Iran tensions come as President Barack Obama considers restoring U.S. ties with Iran, a country cold-shouldered by successive American governments since the 1979 Islamic revolution.

Dual Approach

EU leaders have taken a twin-track approach to Iran, offering closer economic ties while pursuing United Nations sanctions against its nuclear program.

Europe has made “a very clear offer of economic, civilian and scientific cooperation, including civil nuclear cooperation, but that is only possible if the doubts and concerns about the nuclear weapons program of the Republic of Iran are taken care of,” U.K. Foreign Secretary David Miliband said.

The People’s Mujahedeen, formed in 1965 to resist the shah, says the EU banned it as a concession to the Iranian government, at a time when the EU and U.S. are trying to dissuade Iran from pursuing nuclear weapons.

People’s Mujahedeen officials first called international attention to Iran’s uranium enrichment program in 2002. The group says the clerical regime in Tehran has executed 120,000 of its members in the past three decades.

Appeal to U.S.

The U.S. also rates the People’s Mujahedeen as a terrorist entity. The group says it renounced military activity in June 2001, a year before the French and British governments persuaded the EU to blacklist it and freeze its assets.

The People’s Mujahedeen is part of the National Council of Resistance of Iran, an umbrella organization that styles itself as an Iranian parliament-in-exile.

Today’s EU move makes the group’s blacklisting by the U.S. “more unjustified than ever,” Maryam Rajavi, head of the resistance council, said in an e-mailed statement. She hailed the end of “Europe’s policy of appeasement.”

The EU’s deliberations coincide with Obama’s planned overhaul of U.S. strategy toward Iran. While backing the Bush administration’s aims of preventing Iran from building nuclear weapons, Obama has promised a different approach, relying more on diplomacy.

With an eye to countries like Iran now in U.S. disfavor, Obama said in his inaugural address on Jan. 20 that his government would “extend a hand” to any foe willing to “unclench your fist.”

From 2006 to 2008 the European supreme court ordered EU governments three times to take the People’s Mujahedeen off the proscribed list. In a December ruling, the court called EU delaying tactics “manifestly inadmissible.”

The court issued its rulings on procedural grounds, saying EU governments failed to give the group the opportunity to defend itself. France last week appealed the latest court ruling, while bowing to today’s decision to strike the group from the list.