By Frances Harrison
BBC News, Iran
There has been furious comment in Iran this week over the decision to award a knighthood to Salman Rushdie. The honour comes at a time of growing anti-British feeling there, which is allied to a campaign encouraging Iranians to have nothing to do with foreigners.
Deep down, a surprising number of Iranians believe in the conspiracy theory about the British: that there is a British hand behind everything that happens in this country.
Talk of foreign enemies is seeping into the public consciousness
America may be the Great Satan, but Britain is the smaller, more devious devil.
It makes no difference if it is someone who supports or opposes Iran's Islamic system - both blame Britain.
During the last elections a British colleague went around asking people who they thought would win, only to find Iranians looking at him strangely and saying: "Surely you know the answer - you are British."
Now some Iranians accuse Britain of trying to topple the regime by supporting insurgents and separatists and, well, having diplomatic parties.
Islamic students gathered outside the British Embassy to protest at what they called the historical betrayal of Iran by the British Government.
It was timed to coincide with the biggest diplomatic reception of the year at the embassy, the Queen's birthday party, to which 1,500 people had been invited.
Some of the Iranian guests had already been telephoned and warned not to attend, while hardline newspapers had run a campaign against the party, saying it broke the taboo on contact with foreigners.
Someone on a loudspeaker addressed us saying: "BBC and Reuters don't sleep, open your ears, open your eyes and report what is happening here." It was rather uncomfortable being the BBC representative at an event where anyone who had contact with Britain was denounced as a dirty traitor willing to eat the birthday cake of the Queen of Lies.
We went to buy water because it was extremely hot. The shopkeeper asked what all the fuss was about. When we told him, he said: "What nonsense, why are they attacking the British Embassy when they themselves have been put up to it by the British?" The conspiracy theory again.
An unwitting florist tried to deliver flowers to the embassy and was quickly intercepted. In seconds the arrangement was pulled to pieces. Later we heard the delivery man ended up in hospital.
The space is shrinking for those who want to bridge the two worlds of the West and Iran
There were clashes with the police, as students from the Basij or Islamic vigilante force tried to prevent any guests entering.
Shiny diplomatic cars beat a hasty retreat down the road. Puzzled-looking guests tried to approach on foot. The traffic got worse and many people gave up trying to attend the party and went home.
Riot police beat the students back down the street and surrounded a group of women protestors, who they pushed with their riot shields and hit with their batons.
To see male policemen beating women in all-enveloping black chadors was shocking, and that, too, because of a party. That was when the security forces started confiscating cameramen's tapes and warning them to go. They did not want to be seen on TV beating their own people to defend the British.
The whole event took a more sinister turn as guests were videoed and photographed on the way in and out of the party.
Some were arrested when leaving. One woman said plain clothes agents had tried to drag her husband out of the car.
Embassy staff spent two hours ferrying their guests out of the compound in diplomatic cars to ensure they were not arrested on the way home. This was a first for the Tehran diplomatic cocktail circuit.
But what does all this mean?
In the view of the radicals now in power in Iran, those who have contact with the British are dirty Iranians. Imagine what it is like to be half Iranian, half British in this atmosphere.
Iran issued a fatwa in 1989, ordering Sir Salman's execution
One of the slogans the demonstrators shouted was: "Lackeys of the English - Shame on You." How does that make my colleagues feel who work for the BBC?
Already the relatives of one of my staff members told him the food in his home was not halal - or Islamically sanctioned - because it was bought with money that came from foreigners.
The space is shrinking for those who want to bridge the two worlds of the West and Iran. Iranians who want to reach out to the outside world now run the risk of being called traitors and foreign agents.
Already three Iranian American academics who believed in building bridges between Iranian and US experts abroad have been jailed on suspicion of spying.
The intelligence minister warned Iranians not to attend conferences abroad for fear of being used by foreigners to give information.
Several Iranian journalists and activists who have gone on training courses abroad have been interrogated and even arrested on their return - to the point that it is now too dangerous to hold such events.
When the reformists were in power they spoke of dialogue of civilizations, of democracy and rule of law.
But the radicals around President Ahmedinejad constantly speak of the enemy and they do it so much that it is seeping into people's consciousness.
Personally I am fed up of being cast in the role of the enemy just because I am a foreigner.
From Our Own Correspondent was broadcast on Thursday, 21 June 2007 at 1100 BST on BBC Radio 4. Please check the programme schedules for World Service transmission times.