Iran's state news agency IRNA said on Wednesday that two leaders of "sedition" in the country have fled to a northern province as tens of thousands of government supporters rallied in cities across the country.
"Two of those who played a major role in igniting tension in Iran following the (June presidential) vote, fled Tehran and went to a northern province because they were scared of people, who demanded their punishment," IRNA reported.
The two mentioned were believed to be opposition leaders Mir Hossein Mousavi and Mahdi Karroubi who were reportedly in the Mazandaran province, north of the country.
Earlier on Wednesday, Iran's police chief warned Mousavi's supporters to expect harsh treatment if they joined illegal anti-government rallies, three days after eight protesters were killed in demonstrations.
Tens of thousands took part in the government-organized demonstrations, which state television broadcast live, chanting slogans against Mousavi and Karroubi.
"You should repent ... otherwise the system will confront you as a 'mohareb' (enemy of God)," cleric Ahmad Alamolhoda told reformist leaders at a Tehran rally, state TV reported. Under Iran's Sharia, or Islamic law, the sentence for a mohareb is death.
You should repent ... otherwise the system will confront you as an enemy of God
Cleric Ahmad Alamolhoda
In Tehran, crowds burned American and British flags.
There was no word about any opposition supporters on the streets on Wednesday, despite talk of demonstrations on reformist websites. Foreign media are restricted from moving around to report on such protests, which are illegal.
In Iran's bloodiest unrest since the aftermath of the disputed June 12 presidential election, eight people were killed on Sunday and at least 20 pro-reform figures, including three senior advisers to Mousavi were arrested.
Raising the stakes further in the crisis, a representative of Iran's Supreme Leader Ayatollah Ali Khamenei said on Tuesday that opposition leaders were "enemies of God."
Television footage of the rallies in various cities showed people chanting "Mousavi is responsible for bloodshed ... We support our Supreme Leader". Some of them carried pictures of Khamenei. Similar rallies took place on Tuesday.
Clashes at Ashura
Since the deadly weekend clashes during the Shiite religious ritual of Ashura, political turmoil has entered a new phase in Iran with the clerical establishment piling pressure on the reform movement to end street protests.
"People want the leaders of sedition to be punished. We will not remain silent over insulting the religion," one speaker told a Tehran rally, state TV reported.
Iran's police chief said on Wednesday "there was no more room for tolerance over participants in illegal rallies."
"Those who participate in illegal rallies will be confronted more harshly and the judiciary will confront them more decisively," said Esmail Ahmadi-Moqadam, the official IRNA news agency reported. "Some of Sunday's protesters are ... considered as mohareb and will be confronted firmly."
President Mahmoud Ahmadinejad, locked in a row with the West over Iran's nuclear program, said that the opposition rallies on the religious ritual of Ashura was a foreign-backed "nauseating masquerade."
Pro-government demonstrators also chanted "Death to America" and "Death to Britain", state TV reported. Iran has accused foreign powers of meddling in its affairs, which has provoked robust denials.
When the June poll returned hardline Ahmadinejad to power, his reformist opponents cried foul and thousands of Iranians took to the streets in the biggest anti-government unrest in the 30-year history of the Islamic Republic.
Authorities deny vote-rigging but the protests were showing no sign of subsiding six months after the election and despite a determined crackdown on protesters and opposition leaders.
People want the leaders of sedition to be punished. We will not remain silent over insulting the religion
Speaker tells Tehran rally
The elite Revolutionary Guards on Tuesday accused the foreign media of conspiring with the opposition to harm Iran.
Hardliners who took to the streets on Tuesday also called for the punishment of opposition leaders. The opposition website Jaras said students at two Tehran universities clashed with hardline Basij militia.
"We have asked the judiciary to arrest the leaders of this sedition," said hardline MP Hasan Norouzi, without saying just how many lawmakers made the demand. "Karoubi, Mousavi and all those who ignite tension should be arrested and tried."
Analysts say the arrest of senior opposition leaders would increase tensions in the country. The opposition says more than 900 protesters were arrested on Sunday but police said 500 "rioters" were arrested, with 300 still in detention.
Police said the "suspicious" deaths on Sunday were under investigation, denying opposition claims that the people were killed by police.
Iran's Supreme National Security Council confirmed eight deaths, but Tehran's prosecutor dropped the number to seven.
The semi-official Fars news agency said Mousavi's nephew, who was killed in the bloodshed, was buried on Wednesday at Tehran's Behesht-e Zahra cemetery.
We have asked the judiciary to arrest the leaders of this sedition
Hardline MP Hasan Norouzi
Nuclear program and sanctions
The U.S. and its allies meanwhile are weighing focused sanctions against Iran's leadership rather than broad-based penalties that they fear could harm the protest movement, officials and diplomats said.
Increasingly frustrated by perceived Iranian defiance over its nuclear program, the Obama administration has been crafting a "menu" of sanctions that could be imposed by the United Nations or in concert by the U.S. and its European allies.
U.S. officials, congressional aides and Western diplomats said the administration has grown increasingly cool to broad-based sanctions targeting the oil sector with the aim of destabilizing the Iranian economy.
Such measures, while favored by a growing number of U.S. lawmakers, would not only be a hard sell in the U.N. Security Council and Europe, but could have unintended consequences like undercutting Iranian public support for the opposition movement, officials and diplomats said.
"This is not about trying to bring Iran to its economic knees. It is about stopping the nuclear weapons program," said a Western diplomat. Broad-based sanctions aimed at destabilizing the overall economy "would just feed into Iranian paranoia" about the West, according to the diplomat, who spoke on condition of anonymity.
Diplomats said Washington knows that there is little chance of garnering international support for sweeping economic penalties aimed at the broader economy, citing resistance from Russia and China for far more modest penalties.