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Straw justifies Mugabe handshake
The scene was filmed as part of a Newsnight feature following Mr Straw's trip to the United Nations.
Mr Straw said the serious disagreement between the two countries did not justify being "discourteous or rude".
But he made it clear he had not immediately recognised the much-criticised Zimbabwean president.
Talking to BBC correspondent Martha Kearney, Mr Straw said: "I hadn't expected to see President Mugabe there," referring to a lunchtime reception hosted by South African President Tabo Mbeki.
"I was sort of being pushed towards shaking hands with somebody as a matter of courtesy, and then it transpired it was President Mugabe," he added.
"But the fact that there is serious disagreement between Zimbabwe and the UK does not mean we should be discourteous or rude."
Shortly before the reception, in an address to the UN General Assembly, the Zimbabwean president accused US President George W Bush of behaving like God, and Tony Blair of being his prophet.
He said the US and the UK were "raining bombs and hell-fire on innocent Iraqis, purportedly in the name of democracy".
"We are now being coerced to accept and believe that a new political-cum-religious doctrine has arisen, namely that there is but one political God, George W Bush, and Tony Blair is his prophet."
'A new man'
But Mr Straw was in a meeting with Russian diplomats at the time, and was not aware of Mr Mugabe's virulent speech when he met him at the reception, the Panorama report explained.
Zimbabwe last year quit the Commonwealth after the country was suspended indefinitely from the body over human rights abuses.
Mr Mugabe accuses the UK of trying to oust him because of the land redistribution programme his regime is carrying out by confiscating white-owned land and giving it to black Zimbabweans.
Before the controversial encounter with Mr Mugabe, Mr Straw was complimented on his new looks by Mr Mbeki, who noticed the foreign secretary had a new hairstyle and was no longer wearing glasses, and called him "a new man".
But Mr Straw later told the programme he had simply gone back to using contact lenses as he did when he first became a member of parliament.
Asked on whether the public should not read political ambition into his makeover, he laughed and said: "No, the ambition is there anyway."