June 14 (Bloomberg) -- Iranian President Mahmoud Ahmadinejad defended his election victory after police cracked down on protests and his main challenger called for the results to be canceled due to widespread violations.

Police arrested more than 100 people in Tehran, including political leaders, after they took to the streets accusing Ahmadinejad of electoral fraud. The clashes came after Ahmadinejad won almost 63 percent of the June 12 vote, according to official results, with former Prime Minister Mir Hossein Mousavi taking around 34 percent.

“These protests are similar to problems at a football match,” Ahmadinejad said at a news conference today in Tehran. “A team wins and the other loses. Accept that your team has lost.”

Ahmadinejad, accused by rival candidates of unnecessarily stoking tensions with the West, may see success at the ballot box as a vindication of his policies. That could be a setback for President Barack Obama’s policy of engaging Iran in dialogue, rather than ostracizing it, as a means to ensure the Islamic republic doesn’t acquire nuclear weapons.

Mousavi, who alleged voting irregularities, wrote today to the Guardian Council, urging the election’s supervisory body to annul the outcome. He called on supporters to continue “civil and legal opposition throughout the country peacefully” in a statement on his Web site.

‘Real Doubt’

Vice President Joe Biden said “there is some real doubt” about the election results, citing “the way they are suppressing speech, the way they are suppressing crowds.”

“Talks with Iran are not a reward for good behavior,” he added on NBC television’s “Meet the Press.” “Our interests are the same before the election as they are after the election.”

The U.S. has fundamental interests in the region, including preventing a Middle East arms race, which requires pressing for Iran to abandon any pursuit of nuclear weapons, said an administration official, speaking on condition of anonymity.

Developing better relations with Iran “will be tougher under a resurgent Ahmadinejad, who strongly believes that his toughness and defiance in foreign policy have brought dividends,” said Richard Dalton, a former U.K. ambassador to Iran who is now an analyst at Chatham House, a research institute in London.

Riot Police

Claiming an electoral fix, Mousavi’s supporters yesterday clashed with ranks of anti-riot police guarding the Interior Ministry in Tehran, which served as the election headquarters.

Protesters set fire to motorbikes belonging to police, who used tear gas and batons to disperse a crowd of several thousand chanting “fraud last night” and “Mousavi, Mousavi, get my vote back.”

“In our questioning, we’re after finding links between the plotters and the foreign media,” the state-run Fars news agency cited Ahmadreza Radan, deputy police chief, as saying at a news conference in the capital today. He dismissed as wrong reports that Mousavi is under house arrest.

Arrests yesterday included the detention of “10 of the major plotters who had been members of campaigns,” Fars cited Radan as saying. Police fired tear gas at a crowd of about 200 stone-throwers as they protested in the city today, Agence France-Presse reported.

Leaders Detained

At least 10 leaders of two groups that backed Mousavi were detained, AFP said, citing Rajab Ali Mazroei, an official of the Islamic Iran Participation Front. The Front and the Islamic Revolution Mujahedeen Organization were the groups targeted.

Former member of parliament Mohsen Mirdamadi and Behzad Nabavi, a former deputy parliament speaker, were among those held, AFP said, and Mohammad-Reza Khatami, a brother of former President Mohammad Khatami, was also detained.

Mohmmad Ali Abtahi, a senior adviser to one of the candidates, former Parliamentary Speaker Mehdi Karrubi, said that some of the political leaders who were detained yesterday, including Mohammad-Reza Khatami, were released today. Others remained in detention, including Mostafa Tajzadeh, former deputy interior minister, and Abdollah Ramezanzadeh, who was cabinet spokesman under Khatami, Abtahi said in a telephone interview today from Tehran.

The crackdown on protests is “unacceptable,” AFP cited German Foreign Minister Frank-Walter Steinmeier as saying today. “The violent actions of the security forces against demonstrators is not acceptable, nor is preventing peaceful protest,” Steinmeier said in a statement. “We will continue to monitor the situation on the ground very carefully.”

Sporadic Service

Mobile telephones weren’t working in Iran yesterday and were functioning sporadically today. The Internet was either down or working slowly in Tehran. Social networking sites such as Facebook and Twitter weren’t operational today and Mousavi- supporting Web sites didn’t work. It wasn’t clear whether government agencies were involved in blocking services.

Al-Arabiya television channel announced that the Iranian authorities ordered its office in Iran to close for one week. The Iranian authorities didn’t give a reason for the measure, the Dubai-based channel said.

Electoral fraud is “the best working hypothesis” to explain Ahmadinejad’s landslide win, though sustained protest against the result is unlikely because it would be viewed as “a coup attempt” and suppressed, Dalton said. “People will think twice before going up against the security forces.” he said.

Mousavi, 67, who called during the campaign for a more conciliatory approach to the West and acknowledged the shift in U.S. policy under Obama, claimed victory after polls closed on June 12, shortly before state-run media said Ahmadinejad had won.

Supreme Leader

Ahmadinejad, 52, had the backing of Ayatollah Ali Khamenei, Iran’s supreme leader who has the final say on all affairs of state. Khamenei moved to endorse the incumbent’s victory and discourage protests yesterday, describing the election as a “glittering event” and called for a day of “kindness and patience,” in comments read out on state television.

About 39 million of the 46.2 million eligible voters cast their ballots in the election, the Interior Ministry said. Turnout was a record 85 percent, Interior Minister Sadegh Mahsouli said. There were no international monitors.

Ahmadinejad’s campaign targeted voters in the more religiously inclined countryside, where about a third of Iran’s 70 million people live. Since taking office in 2005, he has visited each of the country’s 30 provinces twice.

Oil Wealth

Rural voters helped Ahmadinejad win a surprise victory four years ago on a promise to redistribute oil wealth. During the campaign, Karrubi and Mousavi accused him of squandering windfall gains from higher oil prices. They argued that the government’s handouts and subsidies fuelled inflation that reached 24 percent in January, and helped push the unemployment rate to 10.5 percent.

Spending on subsidies for goods such as sugar, wheat and cooking oils rose more than 50 percent from 2005 to 2007. With crude prices down about half from last year’s peak of $147 a barrel, Iran -- holder of the second-largest oil reserves in the world after Saudi Arabia -- faces widening budget deficits, the International Monetary Fund has warned.

The outcome of the election may have little effect on the oil market, one analyst said.

Market Prices

“It will be business as usual for markets,” said Raja Kiwan, a Dubai-based analyst at consultants PFC Energy. “This is not seen as bullish for oil. Markets have priced this in.

“Arab Gulf states probably don’t feel as comfortable with this result as they would have with another. There will still be a geopolitical element in prices. Iranians are price hawks in OPEC. Iran’s oil policy doesn’t change with the change of a leader.”

Israel said the re-election of Ahmadinejad showed the “enhanced” threat posed by Iran. The Islamic Hamas group, which rules the Gaza Strip and is supported by Iran, welcomed the outcome, saying it was a sign of “wide support” for Ahmadinejad’s policies.

While key policy issues including Iran’s nuclear plans are ultimately decided by Khamenei, Mousavi said he was open to talks with the U.S. that would ease three decades of hostility between the countries, and promised unspecified confidence- building measures to allay international concerns about the atomic program, though the nuclear effort would be continued.

UN Sanctions

Iran is under three sets of United Nations sanctions over its refusal to halt uranium enrichment, a process that can generate fuel for a nuclear power reactor or a weapon. The country increased uranium production during the last three months and continued to stonewall inspectors investigating whether it is concealing a weapons program, the United Nation’s nuclear agency said on June 5.

The U.S. and major allies including Israel say the nuclear program is a cover for the development of a weapon. The government in Tehran denies the charge, insisting the program is peaceful and designed to generate electricity.

Now that Ahmadinejad has been re-elected, it will be “even harder for those who are skeptical in the U.S. Congress about Iran to suspend their disbelief, to agree to make concessions,” Dalton said. “But at the end of the day, it’s the only game in town.”

To contact the reporters on this story: Ladane Nasseri in Tehran at lnasseri@bloomberg.net; Henry Meyer in Dubai at hmeyer4@bloomberg.net.

Last Updated: June 14, 2009 12:08 EDT