To anyone who follows the middle east on a regular basis, Ahmadinejad's comments were hardly out of the ordinary for Arab leaders speaking in their native languages to home audiences. Heck, by comparison with some statements, Ahmadinejad's remarks were almost mild. He did not call for universal extermination of all Jews (as past presidents of Indonesia and other Arab heads of state have). He even conceded that if the Holocaust actually happened, the Jews should have been compensated with land in Europe rather than taking Palestinian land. One can attend cocktail parties among the intelligentsia of England or Conteninetal Europe and hear such things said regularly.
Indeed, the western press and western leaders have long had a silent understanding of ignoring the statements Arab leaders make to their own people in Arabic (or other native tongue). Arafat got away with this from Oslo to his death. When challenged, most folks who defend the practice say "well of course they have to say that at home, but they don't really mean it. It would be destabalizing and counterproductive to challenge them about it.
So why all of a sudden is trhe press carrying Ahmadinejad's statements and Eurpoen leaders are shocked, SHOCKED that a leader of the Arab world says such terrible things in public. My cynical guesses:
1) The Europeans are not in the least happy with how negotiations with Iran are going over its nuclear program. Iran was supposed to be the demonstration of how EU diplomacy was superior to US "bullying." Let the EU handle it and the Iranians will forswear their nuclear program for the sake of economic benefits.
But it hasn't worked. Iran continues to press forward with its nuclear plans.Despite years of negotiation, the EU has yet to achieve significant diplomatic success.
Portraying Ahmadinejad as a fanatic conservative provides the EU with an excuse to go all hardball. "We were prepared to do this the diplomatic way until they put a maniac in charge."
2) The Europeans (and the Chinese and Indians) have enjoyed the benefit of trade with Iran without American competition. In particular, they have enjoyed the market liberalizations of teh last ten or so years in Iran. Ahmadinejad is a religious socialist, whose appeal to the poor is to reverse the liberalization of Iranian markets and return to a more socialist Revolutionary economy.
Whatever the virtues or problems of this for the Iranians, it puts billions of Euros in European investment at risk. If the new Iranian government takes steps to renationalize industry or de-legitimize foreign debt, this is a big problem for European multinationionals.
But if Ahmadinejad is a loose cannon who needs to go, this may put the breaks on his expected economic and social reforms. Iran is not a dictatorship in the sense of a single leader dictating power at this point. It has multiple factions, represented in its various organs of government. Some (like the Revolutionary Guard) support Ahmadinejad, but some do not. Foreign pressure from the EU may allow opponents of Ahmadinejad to hold up his reforms and eventually hold new elections.
Of course, this is me being cynical. I should acknowledge the more charitable explanation. The Europeans believe in the myth of Israeli invulnerability. This is why it is always safe to call on Israel to make concessions, because they are invulnerable. But Israel is not invulnerable. And the realization that nuclear weapons may lie in the hands of someone willing to use them may, in fact, have awakened something in the EU consciousness and the press.
But I doubt it.