DATE=8/5/1999 TYPE=CORRESPONDENT REPORT TITLE=IRAN - NEWSPAPER BAN (L) NUMBER=2-252504 BYLINE=RICHARD ENGEL DATELINE=CAIRO CONTENT= VOICED AT: INTRO: Iran's official news agency reports that a court has ordered a leading newspaper of Iranian reformists banned for five years. Richard Engel in Cairo reports the newspaper's publisher has been barred from working in the media for three years. TEXT: Analysts say the closure of the newspaper, called Salam, is a major blow for Iran's moderate President Mohammed Khatami and his policies of reform. During the past two years, Salam has been a key mouthpiece of the reform movement. Analysts say the newspaper's closure also may hurt moderate candidates in parliamentary elections seven months from now. The elections could determine the future pace of President Khatami's reform policies. The Iranian news agency reports a special court of clerics on Wednesday convicted Salam and its publisher, Mohammed Musavi Khoiniha, of spreading lies and distributing classified information. At the center of the case was an article published in Salam supposedly written by a former security official that outlined a secret plan by hard-liners to silence pro-reform newspapers. Mr. Khoiniha was originally sentenced to a prison term and a whipping. But his sentence was changed to a 75-hundred dollar fine. The banning of Salam and the removal of Mr. Khoiniha had been widely predicted by analysts and diplomats in Iran. The newspaper was ordered shut on July 7th -- the same day Iran's hard- line-dominated parliament passed a bill limiting press freedom. When Salam was banned in July, students staged demonstrations which spread into nationwide protests. Since then, security in Tehran has been increased. About 50-thousand paramilitary reserves began a series of maneuvers in the Iranian capital Wednesday that are apparently aimed at demonstrating their skills at preventing renewed social unrest. (Signed) NEB/RHE/JWH 05-Aug-1999 07:06 AM EDT (05-Aug-1999 1106 UTC) NNNN Source: Voice of America .