Details below the fold.

Now with UPDATE

TEHRAN, Iran (CNN) — Iranian President Mahmoud Ahmadinejad has met with some of the 15 British military personnel held in Iranian custody, shortly after pardoning the group and vowing to set them free.

Iranian state television showed footage of Ahmadinejad shaking hands, smiling and chatting with the detainees. One of the 15 was heard to comment in English: “We are grateful for your forgiveness.”

Ahmadinejad announced the amnesty at the end of a lengthy news conference on Wednesday in which he said the 15 detainees had violated Iran’s territorial waters, calling their release “a gift to the British people.”

“I declare that the people of Iran and the government of Iran — in full power to place on trial the military people — to give amnesty and pardon to these 15 people and I announce their freedom and their return to the people of Britain,” Ahmadinejad told a news conference.

The action was a goodwill gesture for the Iranian new year, he said, adding that Iran had received a letter from Britain promising not to intrude into Iranian waters.

“The British government sent a letter to our Foreign Ministry and said it would not happen again. Of course, our decision had nothing to do with the letter. It’s a decision made by our government to give a gift to the people of Britain,” Ahmadinejad said in answer to a reporter’s question.

I guess Tony Blair didn’t want the drama of these 15 British captives to be Bush’s excuse for air strikes Iran, after all. From the looks of things, both sides backed down from their earlier hard-line positions. Iran was demanding that Britain confess it had violated their territorial waters, and Britain was demanding a release of the 15 British sailors and marines without any conditions. Obviously, the letter from the British Ministry was the catalyst for both sides to save face, and allow the release of the British captives to proceed, despite what Ahmadinejad said at his press conference. Praise be to whomever or whatever that common sense prevailed in this instance. If this had been American sailors who had been captured, you can be assured the bombs would already be dropping on Tehran.

Update [2007-4-4 11:16:44 by Steven D]: I also wonder if this event yesterday had something to do with the release of the Brits:

DUBAI: A series of developments including the release of an Iranian diplomat in Iraq have raised hopes that the standoff between Britain and Iran over the seizure of 15 British sailors may be coming to a close.

The Iranian embassy in Baghdad said on Tuesday that Jalal Sharafi, its second secretary, had been released. Mr. Sharafi was seized in Baghdad in February by gunmen outside the branch of the Iranian state-owned Bank Melli. “Yes, he was released yesterday [Monday],” an official at the Iranian embassy in Baghdad was quoted as saying. The diplomat is expected to return to Tehran later on Tuesday.

Iraqi officials have said they are working on the release of the five other Iranian nationals seized by the Americansfrom an Iranian official building in Irbil. Analysts point out that the possible release of seized Iranians and the fate of the British soldiers might get interlinked. British Prime Minister Tony Blair said on Tuesday the next two days were “fairly critical” to resolving the dispute. His remarks came after Iran’s national security head Ali Larijani made conciliatory remarks.

My guess is that it did.

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