The Bush administration said any move by the European Union to boost economic ties with Iran should be linked to changes in Iranian behavior, including its support for terrorism. It left open the possibility of U.S. sanctions against European firms dealing with Tehran.

The administration is giving a chilly response to the European Union announcement that it will seek to negotiate closer trade and political ties with Iran.

In a move seen as a break with Washington, EU foreign ministers Monday authorized the community's executive arm, the European Commission, to begin trade negotiations with Iran once the necessary legal directives are in place.

At a briefing here, State Department spokesman Richard Boucher said the United States has been in an ongoing dialogue with the EU about its relationship with Iran, and has pressed the Europeans to link any benefits to progress on issues of U.S. concern.

"We've also made quite clear in this discussion our concerns, our grave concerns, about Iranian behavior. That includes Iranian support for international terrorism, Iran's opposition to the Middle East peace process, its pursuit of weapons of mass destruction and the means to deliver them through ballistic missile development, and Iran's human rights record. It has been our understanding that any economic incentives for Iran would be linked to improvement in Iranian behavior in these areas of concern," Mr. Boucher said.

Mr. Boucher said the United States will continue to consult closely with EU officials with regard to Iranian policy and would have to look at any business deals that may be reached "in terms of U.S. law."

That is a reference to long-standing legislation and executive orders providing for U.S. sanctions against foreign firms investing certain areas of the Iranian economy, including its oil industry.

In their decision, the EU foreign ministers said the envisaged trade accord should include "separate instruments" on political dialogue and counter-terrorism that would address such topics as human rights and weapons of mass destruction.

EU officials said they hoped the approach to Iran would bolster moderate elements in Tehran against hard-line clerics.