Russian President Vladimir Putin said Friday that Iran was prepared to accept tight international oversight of its nuclear program. He also called for security guarantees to be given to North Korea to solve the deadlock over its nuclear activity.

In his annual Kremlin news conference, Putin also said that Palestinian leader Yasser Arafat (search) must not be shut out of the Mideast peace process.

"He's influential," Putin said. "A lot of people in the region count on him."

Putin said Iranian President Mohammad Khatami (search) had assured him in a telephone call two days ago that his country does not strive for nuclear weapons and that it was prepared to sign protocols required by the International Atomic Energy Agency (search).

"The Iranian leadership is ready to fully meet all the IAEA demands regarding control over its nuclear program," Putin said.

On Thursday, the U.N. nuclear watchdog urged Iran to allow more inspections and to stop enriching nuclear fuel, but it rejected Washington's effort to bring the matter before the U.N. Security Council.

Tehran insists its program is intended to produce electricity. Russia has an $800 million contract to build a nuclear power plant in Iran and insists U.S. fears that the project could help Tehran develop nuclear weapons are unfounded.

Under U.S. pressure, Russia has urged Iran to open itself up to broader nuclear inspections, but it has not made fulfillment of the power plant contract contingent on Tehran's signing an additional IAEA protocol providing the U.N. organization with greater access.

Putin warned against pressuring Russia to abandon the Bushehr (search) contract, saying Russia was against "using the nuclear card in unfair competition on the Iranian market."

In response to a question from a South Korean journalist, Putin said President Bush did not favor using force against North Korea.

"As far as I know from my meetings with President Bush, he has no plans to solve the Korean nuclear problem militarily," Putin said.

He said that the U.S. and Russian positions on the crisis were becoming closer but insisted that Pyongyang's security worries be addressed.

"We think this problem must be solved by negotiations, taking into account North Korea's legitimate interests and concerns. North Korea should not be cornered, and the problem should not be exacerbated."

Turning to Russia's often tense relations with its ex-Soviet neighbor, Georgia, Putin said Russia supports Georgia's territorial integrity in its conflict with the breakaway province of Abkhazia (search) and pledged to help ethnic Georgian refugees return there. But he urged the Georgian government to take stronger steps to end alleged cross-border attacks by Chechen militants from Georgia.

Most of the questions concerned domestic politics, and Putin's remarks often sounded like a dress-rehearsal for next year's presidential campaign. He described his administration's achievements in restructuring the state as the boldest in Russia's history, and praised the government's successes in boosting economic growth and establishing conditions that have encouraged Russians to repatriate capital that had been stashed abroad.

However, Putin said he was pained by the poverty of many Russians and called for the government to write off some $2 billion in farmers' debts.