TEHRAN -- President Mohammad Khatami said on Wednesday that instability in Iraq serves the interests of the Zionist regime and that evidences available show escalation of Israeli activities in Iraq in the past several days, IRNA reported.

Speaking in an interview with Dubai-based Al-Arabiya television network, President Khatami said that the terrorist acts are aimed at disrupting peace and security in Iraq.

"I express grief over martyrdom of the great religious and political leader from the household of the Hakim," he said.

"He was a personality who could usher in democracy, solidarity and progress in Iraq. I believe that his assassination was engineered to hamper establishment of stability and justice in Iraq," President Khatami said.

"What is going on in Iraq is the outcome of the big mistake the occupying forces made. They thought that the Iraq crisis will be resolved through occupation of the country," he said.

"The occupying forces invaded Iraq while there had been logical solutions to the Iraq problem. They could have established security in Iraq without occupation," President Khatami said.

"The first step ahead is that the occupying powers should hand over the country’s affairs to the Iraqi people by establishing a democratic government in Iraq without ethnic affiliations," the president said.

"I don’t think the terrorist operations in Iraq are launched by an ordinary group. Absolutely, a state terrorism is going on with a state behind it," President Khatami said citing the extensive bombing in Najaf, destruction of the United Nations Office in Baghdad and bombing of Jordan`s Embassy in Baghdad.

"The occupying powers are responsible for security of the Iraqi people. They should fulfill their responsibility in this respect," he said.