The US special envoy for Iran, Brian Hook, on Wednesday publicly confirmed the strategy two weeks after an official, speaking on condition of anonymity, said that Washington had notified Britain, France and Germany of its plan.
In capital Baghdad and southern cities, demonstrators chant "we reject Allawi" and hold posters of the new PM's face with a red cross through it a day after Mohammed Tawfiq Allawi's appointment.
Ayatollah Ali Khamenei, Iran's supreme leader, on Sunday backed the government's decision to raise gasoline prices and called angry protesters who have been setting fire to public property over the hike "thugs."
President Hassan Rouhani says Tehran will continue to reduce its nuclear commitments until European parties to the pact save it by protecting Iran's economy from US penalties.
Donald Trump cannot drag the US into another war ahead of an election and Iran is suffering from a crumbling economy and an increasingly frustrated populace.
Tehran warns "the region will be set on fire" if the US fires one bullet towards Iran, as US President Trump says he aborted Iran strikes "to avoid any deaths" but warns Iran could face "obliteration" in the event of a war.
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