* U.S. leads Western walk-out as Iranian leader speaks
* Ahmadinejad doesn't mention Palestinian statehood plan
* Revives nuclear enrichment offer (Adds Ahmadinejad's nuclear offer)
By Alistair Lyon
UNITED NATIONS, Sept 22 (Reuters) - Iranian President Mahmoud Ahmadinejad flayed the West on Thursday for a catalogue of misdeeds, but his address to the United Nations passed over Tehran's nuclear program and the Palestinian statehood issue.
In his 30-minute speech, the Iranian leader also failed to mention the pro-democracy uprisings that have swept the Arab world this year, including Syria, Iran's closest Arab ally.
U.S. delegates walked out when Ahmadinejad said "arrogant powers" threatened anyone who questioned the Holocaust and the Sept. 11, 2001, attacks on the United States with sanctions and military action. Other Western delegates also left, in what has become an annual feature of Ahmadinejad's U.N. appearances.
Ahmadinejad struck out at Zionism, but did not comment on the issue that has dominated this year's General Assembly -- the Palestinian plan to ask the Security Council to admit their nascent state as a full U.N. member.
He accused Washington of using the "mysterious" Sept. 11 attacks as a pretext for wars on Iraq and Afghanistan and said Western powers "view Zionism as a sacred notion and ideology."
The White House dismissed Ahmadinejad's attack and accused Iran's government of "vile mistreatment" of its own citizens.
British Prime Minister David Cameron also assailed the Iranian leader in his own speech to the United Nations.
"He didn't remind us that he runs a country where they may have elections, of a sort, but they also repress freedom of speech," Cameron said, accusing Iran of violently suppressing protests and "torturing those who argue for a better future."
Mark Kornblau, spokesman for the U.S. mission at the United Nations, said Ahmadinejad had "again turned to abhorrent anti-Semitic slurs and despicable conspiracy theories."
PROTESTS OUTSIDE UNITED NATIONS
Thousands of people protested against Ahmadinejad outside the United Nations complex in New York.
The demonstrators, mostly Iranian-Americans, chanted "Down with dictators, down with Ahmadinejad" and called for the overthrow of the Iranian leader, whose bitterly disputed 2009 re-election touched off months of street protests in Iran.
"We are hoping to see that the people of Iran are represented in the U.N. by a democratically elected official," said Hamid Azimi, a computer systems engineer from California.
Ahmadinejad, wearing a jacket with no tie, has often used the U.N. podium to lecture the West on its responsibility for the evils of slavery, colonialism, poverty and militarism.
This year was no exception, but the Iranian president was taking to the world stage as a figure somewhat diminished by sharp political challenges to his authority at home.
Iranian politicians, clerics and the Revolutionary Guards, who quelled the 2009 protests, have taken the president to task for his differences with Supreme Leader Ayatollah Ali Khamenei.
Ahmadinejad has suffered a series of setbacks in his contest with Khamenei, his former mentor. In the past few months, at least 25 associates of Ahmadinejad have been arrested and several websites affiliated with them have been blocked.
His closest ally, Esfandiar Rahim Mashaei, has been accused of graft, of leading a "deviant current" that seeks to challenge the theocratic establishment, and of links to a ${esc.dollar}2.6 billion bank fraud described as Iran's biggest ever.
Although Ahmadinejad did not mention Tehran's disputed nuclear program in his U.N. speech, he said later that Iran would stop producing 20 percent enriched uranium if it is guaranteed fuel for a medical research reactor, seeking to revive a fuel swap deal that fell apart in 2009.
"Any time they can guarantee us this sale ... we will stop 20 percent enrichment," he told reporters. "Whenever these assurances are given, we will do our part."
Tehran's refusal to halt enrichment has provoked four rounds of U.N. sanctions on the world's No. 5 oil exporting state and tighter U.S. and European Union restrictions.
Ahmadinejad acknowledged sanctions had hit the Iranian economy but said "they do not have a decisive effect."
The West believes Iran is covertly seeking nuclear weapons, a charge Tehran denies.
French Foreign Minister Alain Juppe met his Iranian counterpart in New York and told him France and five other big powers were worried about the U.N. nuclear watchdog's latest report, which suggests Iran is violating U.N. resolutions. (Additional reporting by Matt Spetalnick, John Irish, Andrew Quinn, Louis Charbonneau and Paula Rogo; editing by Mohammad Zargham)
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