AFP/HO - Iran's supreme leader, Ayatollah Ali Khamenei (R), meets with Venezuelan President Hugo Chavez (L)

TEHRAN (AFP) - Iran's supreme leader Ali Khemenei hailed on Saturday as a "courageous" step the Venezuelan government's decision to cut ties with Tehran's archfoe Israel over the Gaza war.

Venezuela expelled the Israeli ambassador in January to protest the Israeli invasion of the Gaza Strip that left more than 1,400 Palestinians dead.

Khamenei "hailed the courageous stance taken by the Venezuelan president in cutting ties with the Zionist regime," in a meeting with the visiting Hugo Chavez, the leader's website reported.

"The action taken by the government of Venezuela is in reality the duty of the European nations who claim to be supporters of human rights," the Islamic republic's guide added.

The comments came three days after new Israeli Prime Minister Benjamin Netanyahu said the biggest threat faced by the Jewish state was the possibility of "a radical regime armed with nuclear weapons," in a reference to Iran.

Khamenei also criticised the West over its approach to Iran's nuclear drive, feared by the West to be a covert programme for military purposes but claimed by Tehran as purely for peaceful.

"The anger shown by the world's arrogant powers is due to the fact that Iran acquiring nuclear technology is an effective action in consolidating the front of righteousness in the global arena," he said.

"The West knows well that we are not seeking nuclear weapons, but their anger emanates from the fact that we acquired nuclear technology without their permission," Khamenei said.

At the end of Chavez's visit to Iran, during which the two sides signed a memorandum of understanding on boosting banking and oil cooperation, a joint statement expressed satisfaction with developments.

"Both sides are pleased by the opening of a joint bank in Tehran and emphasise the opening of a joint strategic fund in Caracas as soon as possible," state television quoted part of the statement as saying.

On Friday, Tehran and Caracas inaugurated a bank to finance their joint economic, industrial and mining projects projects.

The Iran-Venezuela Joint Bank, based in Tehran, has an initial capital base of 200 million dollars, with each nation providing half the funds.

The Export Development Bank of Iran, which is under sanctions from the US Treasury, was tasked with creating the joint bank with the Venezuelans.

The United States has also imposed sanctions on three large Iranian banks -- Mellat, Melli and Saderat -- accusing them of financing weapons proliferation.

In October, the US Treasury said it had imposed sanctions on the Export Development Bank of Iran (EDBI), alleging it helped with the country's nuclear programme.

Iran is also under international banking sanctions over its nuclear programme.

Iran and Venezuela are members of the Organisation of Petroleum Exporting Countries (OPEC), and have vowed to further strengthen ties and find common ways to cope with the global economic crisis.

"Both presidents emphasised joint cooperation in OPEC and more coordination among the non-OPEC oil producers in order to defend the rights of the oil exporting and importing nations, especially when it comes to determining a fair price for oil in the international market," the joint statement added.

The two sides also signed a number of deals in the field of mining, agriculture, visa waiver, oil exploration, gas refinery and pharmaceutical plants.

The leftist Venezuelan leader's visit to Tehran was his sixth as president and follows an Arab-South American summit in Doha.

Source: YahooNews