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Iran dares the West

Unveils nuclear progress to the world | Nejad orders four more nuke reactors

From Tehmina Mustapha

TEHRAN – Iran announced new strides on Wednesday in its nuclear programme, in a defiant blow to US and EU pressure to rein in its atomic activities and amid signs of an increasingly vicious covert war with Israel over the issue.

President Mahmoud Ahmadinejad unveiled on state television what was said to be Iran's first domestically produced, 20-percent enriched nuclear fuel for Tehran's research reactor. He also said 3,000 more centrifuges had been added to his country's uranium enrichment effort.

Officials said new-generation centrifuges had been installed at Iran's Natanz nuclear facility that are able to produce three times more enriched uranium.

The developments underlined Tehran's determination to forge ahead with its nuclear activities despite increasingly tough sanctions from the West -- and speculation that Israel or the United States could be months from launching military strikes against it.

Iran portrayed the advances as evidence it was only interested in peaceful nuclear goals, under the slogan "nuclear energy for all, nuclear weapons for none."

But the steps challenged the basis of four sets of UN sanctions and a raft of unilateral US and EU sanctions designed to halt a programme much of the West fears masks a drive for atomic weapons.

Israel, which is the region's sole but undeclared nuclear power and feels its existence is threatened by a nuclear Iran, is widely held to have been carrying out clandestine acts against its arch foe.

Those acts have included the murder of four Iranian scientists by unidentified motorbike assailants in the past two years and the deployment of a highly sophisticated computer virus, Stuxnet, which damaged many of Iran's centrifuges. Israel has neither confirmed nor denied its involvement in those acts. But it has accused Iran of targeting its diplomats in different countries after bomb attacks or plots uncovered in India, Georgia and Thailand this week.

One Israeli diplomat in New Delhi was gravely hurt when a bomb attached to her car blew up. In Bangkok, two Iranians were in custody. One of them lost his legs after he unsuccessfully tried to throw a bomb at police as he fled.

Iran has denied any role in those incidents.

Observers, though, see possible payback occurring and believe Iran and Israel could now be caught up in a cycle of retribution that each has condemned as "terrorism" by the other side.

Attempts to defuse the soaring tensions through dialogue appear to be making little headway.

Iran has repeatedly said it is ready to resume talks with world powers that collapsed a year ago.

And on Wednesday, it said had finally replied to a letter sent nearly four months ago by EU foreign policy chief Catherine Ashton proposing a return to the talks.

"Iran welcomes the readiness of the P5+1 group to return to negotiations in order to take fundamental steps toward further cooperation," chief nuclear negotiator Saeed Jalili wrote in the letter, according to the official IRNA news agency.

The P5+1 consists of the five permanent UN Security Council members -- Britain, China, France, Russia and the United States -- and Germany.

Thus far, Russia and China have stood by Iran, criticising the Western sanctions on it as a barrier to the talks and refusing to comply with them.

But there were indications that the support was weakening, at least from Russia.

"We are concerned that the distance that separates Iran from the hypothetical possession of technologies to create nuclear weapons is contracting," Russian Deputy Foreign Minister Sergei Ryabkov said in an interview published on Wednesday through his ministry's website.

"The Iranian side is indeed making progress in its nuclear programme," he told the specialised journal Security Index.

The International Atomic Energy Agency, the UN's nuclear watchdog, is to send a high-level team back to Tehran next week to discuss suspicions Iran is working towards atomic weapons.

IAEA officials were last in Tehran at the end of January but their talks were inconclusive. As one diplomat at IAEA headquarters in Vienna said, the Iranians "quite cleverly stonewalled for three days".

In the meantime, Iran's economy was showing the strains of the West's economic sanctions.

The country's currency, the rial, was trading around 35 percent higher against the dollar in black market exchanges than the official fixed rate.

The prices of imported goods have soared, worsening high inflation -- officially put at 21 percent and unofficially around 30 percent -- and making food and staples more costly.

Iran said on Wednesday it was considering cutting oil sales to six EU countries -- France, Greece, Italy, the Netherlands, Portugal and Spain -- in retaliation for an EU ban on Iranian oil that was being phased in over the next four months.

But it would not do so "at the moment," Iran's Arabic-language broadcaster Al-Alam reported, quoting foreign ministry officials.

Unperturbed European officials said they were looking for other suppliers anyway, mainly Saudi Arabia, which has promised to make up any shortfall in the market from curbed exports from Iran.

Iran is the second-biggest producer in OPEC, behind Saudi Arabia. It pumps some 3.5 million barrels a day, of which 2.5 million are exported.

Iran has reacted furiously to the stance by Saudi Arabia, a US ally and longtime rival in the Middle East, saying such a move to compensate for its oil would be viewed as "unfriendly."

Agencies Add: Iran proclaimed advances in nuclear know-how on Wednesday, including new centrifuges able to enrich uranium much faster, a move that may hasten a drift towards confrontation with the West over suspicions it is seeking the means to make atomic bombs.

Tehran was driving home its resolve to pursue a nuclear program its hardline Islamic clerical leaders see as a pillar of power, protection and prestige despite Western sanctions that are inflicting increasing damage on its oil-based economy.

Iran also aimed to show that the tightening sanctions noose has failed to stop it making progress in nuclear technology and to firm its hand in any renewed negotiations with world powers.

"The era of bullying nations has past. The arrogant powers cannot monopolize nuclear technology. They tried to prevent us by issuing sanctions and resolutions but failed," President Mahmoud Ahmadinejad said in a live television broadcast.

"Our nuclear path will continue."

However, Iran's Arabic-language Al Alam television said the government had handed a letter to EU foreign policy chief Catherine Ashton expressing readiness to "hold new talks over its nuclear program in a constructive way."

An Ashton spokeswoman confirmed receipt of the letter, saying she was evaluating it and would consult with the United States, Russia, China and other partners among the big powers.

Iranian officials have long refused to negotiate curbs on its program, saying it aims solely to produce electricity for booming domestic demand in OPEC's No. 2 oil-exporting state.

The most recent talks between world powers and Iran collapsed in January 2011 when they could not agree an agenda.

The United States and Israel have not ruled out military action against Iran if diplomacy and sanctions are ultimately judged futile in reining in its nuclear activity.

Underlining the high stakes and at times nervous confusion arising from the nuclear stand-off, Iran's Oil Ministry denied a state media report that it had cut off oil exports to six European Union states. Brent crude oil prices jumped up $1 a barrel to $118.35 in reaction to the announcement.

"We deny this report ... If such a decision is made, it will be announced by Iran's Supreme National Security Council," a spokesman for the ministry told Reuters.

Iran's English language Press TV said Tehran had halted oil deliveries to France, Portugal, Italy, Greece, Netherlands and Spain -- its biggest EU customers -- in retaliation for an EU ban on Iranian crude due to take effect in July.

"It is not really surprising that we are seeing this chaos as it reflects the fractured political process in Iran," said Nic Brown, head of commodities research at Natixis in London.

"You have the oil ministry responsible for revenues while other parts of the government are trying to make political statements. At the end of the day, they need revenues and they will remain dependent on the Europeans if they cannot place their oil elsewhere. Iran remains absolutely dependent on income from its oil exports," Brown told Reuters.

The Islamic Republic is the world's No. 5 oil exporter, with 2.6 million barrels going abroad daily, and the EU consumes around a fifth of those volumes.

With Western sanctions now spreading to block Iran's oil exports and central bank financing of trade, Tehran has been resorting to barter to import staples like rice, cooking oil and tea, commodities traders say.

The most recent talks between world powers and Iran failed in January 2011 because of Tehran's unwillingness to discuss transparent limits on enrichment, as demanded by several U.N. Security Council resolutions passed since 2006.

The nuclear achievements proclaimed by Tehran involved a new line of uranium enrichment centrifuge and the loading of its first domestically produced batch of fuel into a research reactor that is expected to soon run out of imported stocks.

Tehran has for some years been developing and testing new generations of centrifuges to replace an outdated, breakdown-prone model. In January it said it had successfully manufactured and tested its own fuel rods for use in nuclear power plants.

Ahmadinejad said the "fourth generation" of centrifuge would be able to refine uranium three times as fast as previously.

If Iran eventually succeeded in introducing modern centrifuges for production, it could significantly shorten the time needed to stockpile enriched uranium, which can generate electricity or, if refined much more, nuclear explosions.

Last year, Iran installed two newer models for large scale testing at a research site near the central town of Natanz.

But it remains unclear whether Tehran, under increasingly strict trade sanctions, has the means and components to make the more sophisticated machines in industrial quantity.

"We have seen this before. We have seen these announcements and these grand unveilings and it turns out that there was less there than meets the eye. I suspect this is the same case," said Shannon Kile at the Stockholm International Peace Research Institute (SIPRI).

France said Tehran's latest moves again demonstrated that it would rather ignore international obligations than cooperate. "These statements are an extra concern for the international community," said deputy foreign ministry spokesman Romain Nadal.

"The Iranian military nuclear program constitutes one of the most serious threats to peace not only in the world but in the region. We are convinced that Iran continues to develop this program. (Today's) announcements reinforce that conviction."

But Russia said global powers must work harder to win concessions from Iran, warning that Tehran's preparedness for compromise was waning as it makes progress toward the potential capability of building nuclear warheads.

Making a case for a renewed dialogue, Deputy Foreign Minister Sergei Ryabkov said U.N. sanctions and additional measures introduced by Western nations had had "zero" effect on its nuclear program.

Iran has threatened retaliation for any attack or effective ban on its oil exports, suggesting it could seal off the main Gulf export shipping channel, the Strait of Hormuz, used by a third of the world's crude oil tankers.

State television aired live footage of Ahmadinejad loading Iranian-made fuel rods into the Tehran Research Reactor and called this "a sign of Iranian scientists' achievements."

The Tehran reactor produces radio-isotopes for use in medical treatments and agriculture.

Iran says it was forced to manufacture its own fuel for the Tehran reactor after failing to agree terms for a deal to obtain it from the West to replenish imported Argentinean stocks that will run out in the near future.

In 2010, Iran alarmed the West by starting to enrich uranium to a fissile purity of 20 percent for the stated purpose of reprocessing into special fuel for the Tehran reactor.

In boosting enrichment up from the 3.5 percent level suitable for powering civilian nuclear plants, Iran moved significantly closer to the 90 percent threshold suitable for the fissile core of a nuclear warhead.

Analysts remained doubtful that Iran would be able to operate the research reactor with its own special fuel.

"As usual, the announcement surely is exaggerated. Producing the fuel plates ... is not so hard. But the plates have to be tested for a considerable period before they can be used safely in the reactor," said Mark Fitzpatrick of London's International Institute for Strategic Studies.

"If Iran is really running the reactor with untested fuel plates, then my advice to the residents surrounding the building would be to move somewhere else. It will he unsafe."

Spent fuel can be reprocessed into plutonium, the alternative key ingredient in atomic bombs. But Western worries about Iran's nuclear program have focused on its enrichment program, which has accumulated enough material for up to several bombs, in the view of nuclear proliferation experts.

Analysts say the fuel rod development itself will not put Iran any closer to producing nuclear weapons, but could be a way of telling Tehran's adversaries that time is running out if they want to find a negotiated solution to the dispute.

Iran appears to have overcome one serious recent obstacle to nuclear development by succeeding in neutralizing and purging the "Stuxnet" computer virus from its nuclear machinery, European and U.S. officials and private experts told Reuters. Many believe Israel planted the virus.Iran said on Wednesday it was considering cutting oil sales to six EU countries but would not do so "at the moment," while unperturbed European officials said they were looking for other suppliers anyway.

State broadcaster IRIB reported on its website that the ambassadors of France, Greece, Italy, the Netherlands, Portugal and Spain were called to the foreign ministry in Tehran and warned that "Iran will revise its oil sale to these countries."

The warning was in retaliation to an EU ban on Iranian oil imports that is being phased in as existing contracts expire up to July 1.

But after world oil prices spiked -- in part because Iran's English-language Press TV had reported Iran had already "cut" oil exports to those countries -- media reported that no steps had yet been taken to reduce EU oil exports.

"Due to humanitarian reasons and the cold weather in the continent, it (Iran) will not do so at the moment," Iran's Arabic broadcaster Al-Alam said.

"We came to a conclusion to send a strong and serious message to the Europeans about our oil contracts," IRIB quoted a foreign ministry official, Hassan Tajik, saying.

"Our message is that we can immediately replace our oil customers," he said.

A diplomat from one of the EU embassies involved in the discussions with the Iranian foreign ministry said his ambassador had received no notification at all of any cut in Iranian oil sales.

"There was nothing like that," he told NEWSMEN.

The European Commission said that, even if Iran did cut its sales to the European Union, it would make little difference as EU buyers were already switching suppliers.

"Oil is something you can get on the international markets, and Saudi Arabia said they would increase their production," said Marlene Holzner, spokeswoman for EU energy commissioner Guenther Oettinger.

"What we hear from member states is that they will switch to other suppliers," she said.

Iran is the second-biggest producer in OPEC, behind Saudi Arabia. It pumps some 3.5 million barrels a day, of which 2.5 million are exported.

The EU imported some 600,000 barrels of Iranian oil per day in the first 10 months of last year, mainly into Italy, Spain and the battered Greek economy, which benefits from advantageous terms.

Iran has previously threatened to cut off oil supplies to EU countries.

MPs last month initially threatened to pass a law cutting the exports at once, but backed away as parliamentary committees and other officials weighed into the matter.

Iran has reacted furiously to a promise by Saudi Arabia -- a US ally and longtime rival in the Middle East -- that it will step in to pump more oil to compensate for any loss to the market from curbed Iranian exports.

Such a move would be viewed as "unfriendly," Tehran has warned.

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