The presidents of Egypt and Iran have held their first talks since the Iranian Islamic Revolution of 1979.
Modern Iran has been building diplomatic bridges in the region
Egyptian President Hosni Mubarak held talks with Iran's Mohammad Khatami in Geneva, where they are attending a UN forum on information technology.
The Islamic Republic severed ties with Cairo in 1980 after it granted asylum to ousted Shah Mohamed Reza Pahlavi.
Egypt is America's most important Arab ally while deep distrust remains between Iran and Washington.
After the talks, Mr Mubarak told reporters: "Our relations with Iran are normal."
The two states have representative offices in each other's country but plans to
hold top-level talks routinely failed before Wednesday, Iranian Vice-President Mohammad Ali Abtahi told Reuters news agency.
"This is the first big step towards forming full relations between Iran and Egypt and I hope it won't be the last step," he said.
Egyptian Foreign Minister Ahmed Maher said earlier that Wednesday's talks would examine "new horizons for relations between the two countries".
"We are keen to have Iran as a part of positive efforts to establish peace, security and
trust in the region," he said on Egyptian state television.