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JERUSALEM — Prime Minister Benjamin Netanyahu said this week he hoped the election of a relative moderate in Iran's presidential elections would bring a "positive development" for Israel.

But Netanyahu said it was still too early to draw conclusions about the implications of the Iranian elections, and he added that he was awaiting intelligence assessments.

Diplomatic sources said Israel is still waiting to see if Saturday's surprise election victory of Mohammad Khatami as president would mean a change in Iranian policy toward Jerusalem.

They noted that Khatami's victory was largely a protest against continuing economic hardships in Iran and said it was possible he would focus on a domestic agenda.

The sources, quoted by the Israeli daily Ha'aretz, said any significant change in foreign policy would require the backing of Iran's spiritual leader, Ayatollah Ali Khameini, who is known for his hostility toward Israel.

David Menashri, a Tel Aviv University expert on Iran, said the best result would be that if Khatami is serious about improving the economic situation, Tehran will have to become more open toward the West.

Uri Lubrani, Israel's coordinator of Lebanon policy and a former ambassador to Iran, said Khatami's victory shows that the ideological fires of the Islamic Revolution have ebbed somewhat.

But Lubrani added that Khameini is still the main decision-maker in Tehran.