In an annual terrorism report to Congress, released Tuesday, the State Department named seven states — Iran, Sudan, Libya, Syria, North Korea, Cuba and Iraq — as sponsors of terror.
Cuba on Wednesday called the list "arbitrary" while Syria and Libya said they have never supported terrorism.
In Iraq, the official al-Thawra newspaper said Wednesday that American history books have ignored U.S. acts of "wars, conspiracies and genocide" that it had waged in different parts of the world.
"In its annual report on terrorism, the U.S. administration has ignored that the American policy itself is the most active element contributing to world terrorism," al-Thawra said in an editorial.
The report branded Iran the world's most active sponsor of terror, saying it was providing support for Palestinian militants attacking Israel.
Tehran said the new U.S. accusations are irresponsible and further damage any chances of establishing ties between Washington and Tehran.
"President Bush's government does not have a correct understanding of the international situation," Sabah Zanganeh, a senior adviser to Foreign Minister Kamal Kharrazi, told The Associated Press late Tuesday.
"America, which unquestionably supports Israeli state terrorism — acts that deserve to be tried as war crimes — has no right to accuse popular governments of terrorism," Zanganeh said.
"Irresponsible charges and provocative behavior damage international peace and understanding. Such acts mean America will lose opportunities of better relations with a key Mideast country like Iran," he said.
The State Department said Iran continued to supply Lebanese Hezbollah and Palestinian groups with money, shelter, training and weapons. It said that hard-liners, who hold the reins of power in Iran, thwarted efforts to end that support.
On Wednesday, Iran's supreme leader Ayatollah Ali Khamenei said relations with the United States are "both treason and stupidity.
"Those who keep calling for talks ... either don't know the ABCs of politics or are dishonorable," he said on state-run Tehran radio. He made no reference to the State Department report, and was apparently referring to reformists loyal to President Mohammad Khatami who favor dialogue with Washington.
Iran also denied recent U.S. charges that Cuba had supplied technology to help it develop germ weapons.
Iran's ambassador in Havana, Seyed D. Salehi, said Tuesday that Cuba had sent vaccines and medical technology to help Iran vaccinate children for hepatitis B under a 1998 agreement. It had also provided medicine for AIDS, cancer, heart attacks, circulatory problems and kidney ailments, he said.
The State Department said Iraq was concentrating its terror on opponents of President Saddam Hussein but was also providing bases for anti-Israel terror groups.
On the other hand, Libya and Sudan were taking steps "to get out of the terrorism business" and North Korea and Syria took smaller steps in that direction, but continued to host militant groups, the department said.
In Tripoli, Libyan Foreign Ministry spokesman Hassouna al-Shawish said the north African nation "has never supported terrorism. On the contrary, it was one of its prominent victims, and has continuously condemned it."
Libya wanted improved U.S. relations based on respect and compatibility, al-Shawish said, not "extortion or arrogance."
Syrian Foreign Minister Farouk al-Sharaa said during a visit to Oslo, Norway, that Syria "has never sponsored terrorism and we don't finance any group. We don't provide any group with weapons."
"If we want to be fair and square on this issue of terrorism, Israel should be at the top of the list," he claimed.
In Havana, a front page editorial published in the Communist Party daily Granma said the "repeated and arbitrary inclusion of Cuba on the list" as well as Bush's hard-line statements are aimed at appeasing Cuban-Americans while making other U.S. citizens scared of the Caribbean nation.
There was no immediate reaction from North Korea, which was accused of selling arms to terrorists and harboring members of Japan's radical Red Army. Bush has accused North Korea of trying to develop weapons of mass destruction.
"North Korea will probably respond with its usual vitriolic anti-U.S. rhetoric, but I don't think the designation would hurt very much the ongoing efforts to restart U.S.-North Korea dialogue," said Koh Yu-hwan, a professor of North Korea studies at Dongguk University in Seoul, South Korea.
"The United States can justify its hard-line policy toward North Korea by keeping it on the list. And it can be big negotiating card," he said.
Ali Akbar Dareini