August 31, 2006

Iran faces sanctions risk

By Mark Heinrich

VIENNA (Reuters) - A defiant Iran faces the threat of U.N.
Security Council sanctions after the world body's atomic
watchdog said Tehran refused to stop work on its nuclear
program by a Thursday deadline.

Western countries, including the United States, and the
European Union fear Tehran is using the program to try to make
atomic bombs. Iran says it wants only electricity from it.

A confidential report by the International Atomic Energy
Agency (IAEA) said Iran on August 24 resumed making
low-enriched uranium, suitable for power plant fuel, with a
cascade of 164 centrifuge machines at its pilot enrichment

It also said a lack of Iranian cooperation had crippled
three-year-old IAEA probes into the nature of the program.

"Iran has not suspended its enrichment related activities,"
said the report by the Vienna-based watchdog, leaked to

"Iran has not addressed the long outstanding verification
issues or provided the necessary transparency to remove
uncertainties associated with some of its activities."

EU foreign policy chief Javier Solana said he had "a good
conversation" with Iranian top nuclear negotiator Ali Larijani
and was trying to arrange a meeting soon to clarify Tehran's
suggestion it could negotiate on the scope of its program.

But President Bush said Iran must pay a price. "It is time
for Iran to make a choice. We've made our choice," he told a
convention of U.S. veterans.

"We will continue to work closely with our allies to find a
diplomatic solution, but there must be consequences for Iran's
defiance. We must not allow Iran to develop a nuclear weapon."

Washington said the six world powers handling Iran's case
at the Council would meet on September 7 in Berlin to mull

State Department spokesman Sean McCormack said Washington
will push hard for quick Council moves to sanctions. He
conceded the "process will take some time" but said Washington
expected the Solana-Larijani contacts to be limited. "Nobody is
talking about negotiating about negotiating here," he told

France deplored what it called Iran's unsatisfactory

Iran shrugged off the threat of punishment, saying he
report showed U.S. accusations about its plans were wrong.

"Generally, although this report has not fully satisfied
us, it shows that America's propaganda and politically
motivated claims over (our) program are baseless and based on
American officials' hallucinations," Iranian Atomic Energy
Organization deputy head Mohammad Saeedi told the official news
agency IRNA.


The Security Council asked Mohamed ElBaradei, head of the
IAEA, to spell out whether Iran had complied with the deadline.

His report said inspectors in mid-August found traces of
highly enriched uranium (HEU), of potential use in nuclear
explosives, in a container at the Karaj Waste Storage Facility.

"We are still unhappy with the results (of probes) and now
we have the new HEU contamination issue. There is a
standstill," said a senior official familiar with the IAEA's
Iran dossier.

"However, inspectors have not uncovered any concrete proof
that Iran's nuclear program is of military nature."

Some diplomats say Iran is withholding answers to IAEA
questions as bargaining chips for crunch talks with big powers.

The report said Iran was preparing to bring a second
164-centrifuge cascade on line at its Natanz plant in

But the senior official said Iran spent much of the past
few months, since its initial enrichment breakthrough in April,
test-spinning centrifuges without uranium inside.

"(Our) findings indicate the qualitative and quantitative
development of the program continues to be fairly limited."

U.S. analyst David Albright said Iran's nuclear progress
was slower than expected and its plan to start installing 3,000
centrifuges later this year in a vast underground wing of
Natanz now under construction now looked unrealistic.

"Iran may either be delaying deliberately the pace of its
work while diplomatic efforts are under way or is experiencing
technical problems," Albright said in an email to journalists.

An impression that Iran's enrichment work is stumbling
could counter U.S. portrayals of Iran as an imminent nuclear
threat and stiffen Russian and Chinese opposition among the six
world powers to pursuing sanctions.

ElBaradei's report said Iran also blocked inspectors in
mid-August from visiting Natanz's underground section.

Iran told the IAEA it was getting tired of frequent visits
to the facility, the report said. After the IAEA protested,
access was restored in the last week of August.

Tehran also refused to give multiple-entry visas to
inspectors over a month's period, violating terms of its
nuclear safeguards pact with the IAEA, but resumed doing so
this week.

The senior official attributed the obstructions to Iranian
anger over the July 31 Security Council resolution ordering it
to halt enrichment. But he said such behavior could only damage
Iran's claims to be unfairly treated by the West.

The six powers have offered Iran trade incentives not to
enrich uranium. Replying on August 22, Iran hinted it could
rein in its nuclear project as a result of talks but not as a
precondition for them, as the sextet insists.

EU nations are keener than Washington to find a compromise
with Iran to avoid isolating one of their biggest oil

(Additional reporting by Louis Charbonneau in Berlin, Mark
John in Brussels, Carol Giacomo and Jo-Anne Allen in
Washington, Karolos Grohmann in Athens, Francois Murphy in
Paris and Parisa Hafezi and Edmund Blair in Tehran)