The US has accused Iran of backing a $1.5mn hit on the Saudi Arabian ambassador to Washington, which it says it foiled with the arrest of an American-Iranian.
"This plot was a flagrant violation of international and US law and a dangerous escalation of the Iranian government's long-standing use of political violence and sponsorship of terrorism," Hillary Clinton, the US secretary of state, said.
Soon after, the US imposed a fresh round of sanctions against the country it has long described as being part of an 'axis of evil'. Saudi Arabia too vowed to punish Iran.
But Tehran says the allegations are ludicrous and that Washington and its allies are using the case in a bid to further isolate the Islamic Republic.
Al Jazeera's Tony Harris sat down with Mahmoud Ahmadinejad, the Iranian president, to get his view on the latest diplomatic spat with the US and Saudi Arabia, the allegations against Iran and their impact on diplomatic relations.
|"We don't need to do this. Why should the Iranian people go inside the US and kill the ambassador of a friendly country? What will it gain us? We have a logic, we are opposed to the US policies and we have said it clearly. And we are not worried about expressing our opposition, but we have to ask this: Why has the US administration done this, levelled this accusation?
There are different theories: If the US is under the impression that, by doing this, it can create a conflict between us and Saudi Arabia then I have to say that the US administration is surely mistaken. The truth will be revealed ultimately and there will be no problem for us at that time. The US might want to divert attention from what is going on inside the US. It's crystal clear that such a thing won't happen. The economic problems of the US are very serious, and by accusing Iran it is not going to solve any problem."
The Iranian president talks about Iran's internal politics, the aftermath of the presidential elections in 2009 and Iran's role in Israel. He also shares his view on the unfolding of the Arab Spring, with Iran condemning the Yemeni government for its crackdown on the one hand while maintaining its close relationship with Syria's government on the other.
In response to the question of what is at the core of the ongoing dispute with the US, Ahmadinejad says:
"The way the US administration treats the region is wrong. And because of this they are defeated all the time. They should correct their methods, their policies, and if they do that they will be victorious .... Iran is a free, independent country and it would be [in] the best interest[s] of the US to be on the side of Iran."