From Elise Labott -CNN

WASHINGTON (CNN) -- The U.S. State Department is creating a special office to deal with foreign policy changes related to Iran and to promote a democratic transition in the Islamic republic, State Department officials said Thursday.

Traditionally, Iran has been dealt with as part of a larger grouping of Persian Gulf countries, but the officials said the new Office of Iran Affairs reflects a growing concern over actions by the Iranian regime and the need to devote significantly more personnel and resources to Iran policy.

"Certainly this signals the fact that we believe that Iran and Iranian behavior is one of the greatest foreign policy priorities we will be dealing with over the next decade," a State Department official said.

The office will deal with Tehran's support for groups on the U.S. list of terrorist organizations and Iran's alleged human rights violations. The office also will be involved in issues related to Iran's nuclear energy program, which the Bush administration fears is designed to develop nuclear weapons.

The U.N. watchdog group, the International Atomic Energy Agency, wants Tehran to take action to prove its nuclear energy program is intended for peaceful purposes. Iranian President Mahmoud Ahmadinejad has ordered the Islamic state to end its voluntary cooperation with the IAEA. (Full story)

The creation of the Iran office comes on the heels of an announcement last month by Secretary of State Condoleezza Rice of a $75 million State Department initiative to support democracy in Iran through intensified cultural exchanges, increased programs for democratic advocates and expanded broadcasting into the country.

When asked directly whether the office is being created to promote regime change in Iran, the senior official said the office is being created "to facilitate a change in Iranian policies and actions."

"Yes, one of the things we want to develop is a government that reflects the desires of the people, but that is a process for the Iranians," said the official, who spoke on the condition anonymity. "The development of democracy in Iran is important to the United States, and that is going to be a big part of the office's job, but it is also to pursue the broad range of issues in our policy."

Brian Katulis, director of democracy and public diplomacy for the national security team at the Center for American Progress, said there are serious problems with the Rice plan.

For one thing, he said in a written statement, "it is based on an irrelevant Cold War-era approach to democracy promotion."

Quoting a critique published in the Los Angeles Times, Katulis said, "current conditions in Iran make 'it likely that the administration's new strategy will backfire and only strengthen Tehran's hard-liners.'"

He added, "Democracy must come from within, and the United States needs to offer quiet support through non-governmental organizations."

Several new positions are being created worldwide for the new Iran office. In addition to beefing up Washington-based staff working on Iran, a regional center will be built in Dubai, United Arab Emirates, to focus on neighboring Iran with four new foreign service posts and four local employees to do outreach. There will also be officers stationed in Germany, Azerbaijan and Britain to deal with Iranian expatriates.

"Frankly, there is an imbalance between Iran's role in the world and its impact on U.S. diplomacy and the resources we are devoting to the portfolio," the senior official said. "When you consider the fact that you have the terrorism problem, proliferation concerns, human rights, democracy issues and regional development, two officers is not enough. In order to pursue our broad agenda concerning the country, we've got to have more people doing it."

The move is part of Rice's recent restructuring of the department and her decision to redirect U.S. diplomatic priorities abroad, placing more emphasis on regional issues and threats.

Dubbed "transformational diplomacy," Rice's plan will shift several hundred diplomatic positions to what she called "new critical posts for the 21st century," such as China, India, Nigeria and Lebanon, where rapid change is creating a need for a greater U.S. presence.

This year 100 diplomats will be sent from Europe and Washington to beef up staffs in the new priority countries identified by Rice and her staff. But officials said none of the area is likely to see the increase in staff now being devoted to Iran.

The new Iran office will be based in the department's Bureau of Near East Affairs, but will also have officials working in the Bureau of Human Rights and Labor.

The Iran office will become one of only a handful of country-specific offices at the State Department that reflect the importance the United States places on the policy toward those countries. Out of about 180 countries with which the United States currently has diplomatic relations, fewer than a dozen merit their own regional office. They include Cuba, Mexico, China and Korea.

Cables are going out to U.S. embassies this week requesting volunteers for the new office. Officials said the goal is to create a cadre of Farsi-speaking foreign service officers who specialize in Iran.

In December Rice and President Bush launched a new initiative aimed at persuading Americans to study critical-need languages, such as Arabic, Chinese, Hindi and Farsi.