By Maya Gebeily, Steve Holland and Pesha Magid
BEIRUT/WASHINGTON/JERUSALEM, March 6 (Reuters) - U.S. President Donald Trump demanded Iran's "unconditional surrender" on Friday, a dramatic escalation of his demands a week into the war he launched alongside Israel, which could make it more difficult to negotiate a swift end to it.
Trump made the remarks on social media just hours after Iran's president announced that unspecified countries had begun mediation efforts, one of the first signals of any diplomatic initiative to end the conflict.
"There will be no deal with Iran except UNCONDITIONAL SURRENDER!" Trump wrote.
"After that, and the selection of a GREAT & ACCEPTABLE Leader(s), we, and many of our wonderful and very brave allies and partners, will work tirelessly to bring Iran back from the brink of destruction, making it economically bigger, better, and stronger than ever before."
The surrender demand, and the likelihood that this would complicate any quick path to ending a conflict that has interrupted global energy supplies, caused immediate shock in financial markets. European share markets, open at the time of Trump's post, suffered a sudden swoon. Wall Street opened sharply lower soon after.
On Thursday Trump had told Reuters in a telephone interviewthat he was demanding the right to help select Iran's new supreme leader, to replace Ayatollah Ali Khamenei, killed in the war's first day.
ISRAEL POUNDS BEIRUT AFTER MASS EVACUATION ORDER
On the ground, Israel pursued a major expansion of the war in Lebanon, pounding the capital Beirut on Friday after ordering an unprecedented evacuation of the entire southern suburbs of the city.
It also launched a new wave of attacks on Iran, saying 50 of its warplanes had struck a bunker still being used by Iran's leadership beneath Khamenei's destroyed Tehran compound.
Iran's President Masoud Pezeshkian posted on X: "Some countries have begun mediation efforts." He did not identify the countries or provide further details.
"Let's be clear: we are committed to lasting peace in the region, but we have not the slightest hesitation in defending the dignity and authority of our country," he added.
Under Iran's system, the president is subordinate to the supreme leader, but Pezeshkian is now serving on a panel that has assumed Khamenei's duties.
Israel has extended its bombing to Lebanon to root out Hezbollah, the Shi'ite militia allied to Iran that has been a dominant faction in Lebanese politics since the 1980s and part of a wider, but now weakened, "axis of resistance". Hezbollah fired on Israel this week to avenge the death of Khamenei.
"We’re sleeping here in the streets - some in cars, some on the street, some on the beach,” said Jamal Seifeddin, 43, who fled Beirut’s southern suburbs and spent the night on the streets in the capital’s downtown district. "No one even brought a blanket."
Israel has intervened in Lebanon repeatedly over decades, most recently in a campaign that weakened Hezbollah in 2024. But the ferocity of Friday's strikes had little precedent.
About 300,000 people have been displaced in Lebanon in the past four days, according to the Norwegian Refugee Council.
Inside Israel, explosions could be heard as Israeli defences activated to shoot down incoming Iranian fire. The UAE, Kuwait, Qatar, Bahrain and Saudi Arabia all reported fresh drone and missile attacks.
The Israeli military says it has destroyed 80% of Iran’s air-defence systems in the first week of the campaign and disabled more than 60% of its missile launchers, creating what it describes as a bottleneck in Iran’s ability to fire missiles.
Russia is providing Iran with information that includes locations of U.S. warships and aircraft in the Middle East after Iran's ability to locate U.S. forces was degraded, the Washington Post reported, citing three officials familiar with the intelligence.
Russian missions in the U.S. did not immediately respond to requests for comment on the report.
Meanwhile, sources said the Trump administration was set to discuss accelerating weapons production with defence contractors as Iran and other recent operations drew down supplies.
'WE'RE GOING TO HAVE TO CHOOSE THAT PERSON', TRUMP SAYS
In insisting on the right to help choose Iran's next leader - meant to be a senior Shi'ite Muslim cleric selected by a panel of religious experts - Trump made his most explicit demand for control over a country of more than 90 million people.
"We're going to have to choose that person along with Iran. We're going to have to choose that person," Trump said on Thursday in a telephone interview with Reuters.
Israel has said openly that it aims to overthrow Iran's ruling system. Washington has been more circumspect, saying its goal is to eliminate Iran's ability to project force beyond its borders, while also inviting Iranians to rise up and topple their government.
There was no immediate Iranian response to Trump's remarks. Iran has cast the war as an unprovoked attack and describes the killing of its leader, Khamenei, as an assassination.
It says the panel that will choose the new leader is conducting its work.
Some Iranians openly celebrated the death of Khamenei, weeks after security forces under his control killed thousands of protesters in the worst domestic unrest since the revolutionary era. But there has been little sign of opposition to the authorities during the airstrikes, with activists saying it is not safe to return to the streets.
At least 1,230 people have been killed in Iran since the U.S. and Israel launched strikes on February 28, according to the Iranian Red Crescent Society. The Lebanese health ministry has reported 123 people killed and 683 wounded as a result of Israeli attacks. At least 10 Israelis have been killed by Iranian attacks.
Two U.S. officials told Reuters that military investigators believed it was likely that U.S. forces were responsible for an apparent strike on an Iranian girls' school that killed scores of children on the first day of the war. The investigators have not yet reached a final conclusion.
(Reporting by Reuters bureaux; Writing by Peter Graff, Charlie Devereux; Editing by Alex Richardson, Aidan Lewis)
