Top U.N. inspectors in Iran talks on atom bomb accusations

TEHRAN (Reuters) - Senior U.N. inspectors arrived in Iran on Monday to push for transparency about its disputed nuclear program and several European states halted purchases of Iranian oil as part of Western moves to pile pressure on a defiant Tehran.

Iran denies Western accusations that it is covertly seeking the means to build nuclear weapons and has again vowed no nuclear retreat in recent weeks, but also voiced willingness to resume negotiations with world powers without preconditions.

The five-member International Atomic Energy Agency team, led by chief IAEA inspector Herman Nackaerts, planned two days of meetings in another attempt to get answers from Iran regarding intelligence suggesting its declared civilian nuclear energy program is a facade for researching ways to make atom bombs.

Nackaerts said on departure from Vienna that he wanted "concrete results" from the talks. His delegation was expected to seek, among other things, to question Iranian nuclear scientists and visit the Parchin military base believed to have been used for high-explosive tests relevant to nuclear warheads.

But Foreign Minister Ali Akbar Salehi dampened speculation about increased IAEA access when he told the student news agency ISNA that the agency officials would not be going to any nuclear sites. "No. Their work has just begun," Salehi said.

DIPLOMATIC IMPACT

Diplomats doubted that the talks would bring a breakthrough.

"I believe most are rather skeptical concerning the outcome because, well, Iran had a chance at the last meeting and didn't seize it," a senior Western official said, referring to the last trip by the senior IAEA team to Tehran at the end of January.

Referring to last week's announcements by Iran of new nuclear advances, he said: "They send out the wrong signals that Iran is really willing to cooperate... We will wait and see what will come out of this meeting but we should be prepared that Iran might try some technical steps ... to appear cooperative without really providing the necessary cooperation."

The outcome of the discussions will have diplomatic repercussions because it could either deepen a stand-off that has stoked fears of war or provide scope to reduce tensions.

In a sign of Iranian concern about possible, last-resort air strikes by arch-enemies Israel or the United States, Tehran on Monday began a four-day military exercise in protecting its nuclear sites, according to Iranian media.

"(It) will practice coordination between the Revolutionary Guards and regular army and air defense units in establishing a defense umbrella over our vital centers, particularly nuclear facilities," the labor news agency ILNA said.

The European Union enraged Tehran last month when it decided to slap a boycott on its oil from July 1. On Monday, the European Commission said Belgium, the Czech Republic and the Netherlands had already stopped buying Iranian oil, while Greece, Spain and Italy were cutting back on their purchases.

In retaliation for oil sanctions, Iran, the world's fifth-largest crude exporter, has threatened to close the Strait of Hormuz, conduit for a third of the world's seaborne oil, and the United States signaled it would use force to keep it open.

On Sunday, Iran's oil ministry announced a retaliatory halt in oil sales to French and British companies, although that step will be largely symbolic as those firms had already greatly reduced purchases of Iranian crude.

The spiking tension over Iran's nuclear activity, which Iranian officials say is solely for electricity generation, has put upward pressure on oil prices.

Deputy Oil Minister Ahmad Qalebani suggested the Western crackdown would backfire, saying that in targeting Iranian oil the West had achieved only a surge in crude prices from $103 a barrel to $120, "and it will reach $150".

In remarks carried by the official news agency IRNA on Monday, Qalebani also said that if other EU states continued "their hostile behavior towards Iran, we will cut our oil exports to those countries ... Fortunately demand for Iran's crude has not decreased. Instead it has increased."

But the EU could cope with an abrupt halt by Iran of its oil exports as buyers of Iranian oil are already adjusting to the EU's forthcoming ban on Iranian shipments, an International Energy Agency (IEA) official said on Monday.

China, in rare criticism of one of its major oil suppliers, rebuked Iran over the move to bar sales to Britain and France.

"We have consistently upheld dialogue and negotiation as the way to resolve disputes between countries, and do not approve of exerting pressure or using confrontation to resolve issues," Foreign Ministry spokesman Hong Lei told a news briefing when asked about the matter.

China buys around 20 percent of total Iranian oil exports.

Debt-ridden Greece is most exposed to Iranian crude disruption among EU countries. [ID:nL5E8DJ088]

MILITARY ACTION?

Iran says its nuclear program is wholly peaceful but its refusal to curb uranium enrichment, which can have both civilian and military ends, while shifting a key part of it to a remote mountain bunker protected from air strikes and continuing to restrict IAEA access, has raised suspicions. [ID:nL5E8D33E6]

The United States and Israel have not ruled out using force against Iran if diplomacy and sanctions fail to rein it in, and there has been intense public discussion in Israel about whether it should attack Iran to stop it "weaponizing" enrichment.

The top U.S. military officer said on Sunday that a military strike would be premature as it remained unclear whether Tehran would put its nuclear capabilities to developing a bomb, saying he believed the Tehran government was a "rational actor". [ID:nL2E8DJ0IG]

Chinese Foreign Ministry spokesman Hong said using force would be the wrong answer. "Attacking Iran militarily would only worsen the confrontation and lead to further upheaval in the region," he said.

Israeli Deputy Prime Minister Dan Meridor, who also holds the intelligence portfolio, said the sanctions regime had been toughened to the point of causing "hysteria" in Iran.

"All this shows the pressure which this regime is under, but they have not yet decided to shut down their nuclear effort, so the struggle is on," Meridor told reporters in Jerusalem. "I think there is a chance of success (for sanctions) if it they are done with determination, persistence and leadership."

The West has expressed some optimism at the prospect of new talks with Tehran, particularly after it sent a letter to EU foreign policy chief Catherine Ashton last week promising to bring "new initiatives" to the table with six world powers without stating preconditions. [ID:nL2E8DH6UT]

"In these negotiations, we are looking for a way out of Iran's current nuclear issue so that both sides win," Iranian TV quoted Foreign Minister Salehi as saying on Sunday. The last round of talks collapsed in January last year.

Oil is a pillar part of Iran's export revenues and an important lifeline for its increasingly isolated economy. Tehran has little refining capacity and must import about 40 percent of its gasoline needs for domestic consumption.

Tighter sanctions, combined with high inflation, have squeezed the ability of working-class Iranians to feed themselves and their families, and this uncertainty will cloud a parliamentary election on March 2.

"Everything's become so expensive in the past few weeks," said Marjan Hamidi, a shopper in Tehran. "But my husband's income stays the same. How am I going to live like this?"

(Additional reporting by Ramin Mostafavi in Tehran, Susan Cornwell in Washington, Fredrik Dahl in Vienna and Crispian Balmer in Jerusalem; Editing by Mark Heinrich)

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UN inspectors arrive in Iran for nuclear talks

TEHRAN (Reuters) - Senior U.N. inspectors arrived in Tehran on Monday for talks on Iran's disputed nuclear program, a day after the Islamic state responded defiantly to tightened EU sanctions by halting oil sales to British and French companies.

The European Union enraged Tehran last month when it decided to impose a boycott on its oil from July 1. Tensions rose as Iran, the world's fifth-largest oil exporter, threatened to close the Strait of Hormuz, the main Gulf oil shipping lane, and the United States signaled it would use force to keep it open.

On Sunday, its oil ministry went a step further, announcing Iran has now stopped selling oil to French and British firms, although the move will be largely symbolic as France or Britain had already greatly reduced purchases of Iranian crude.

"Exporting crude to British and French companies has been stopped ... We will sell our oil to new customers," spokesman Alireza Nikzad was quoted as saying on the ministry website.

China, in rare criticism of one of its major oil suppliers, rebuked Iran over the move. "We have consistently upheld dialogue and negotiation as the way to resolve disputes between countries, and do not approve of exerting pressure or using confrontation to resolve issues," Foreign Ministry spokesman Hong Lei told a news briefing when asked about the matter.

China buys around 20 percent of total Iranian oil exports.

Iran, which denies Western allegations that it is covertly seeking the means to build nuclear weapons, has ramped up its rhetoric in recent weeks while also expressing willingness to resume negotiations on its nuclear project.

The five-member team from the International Atomic Energy Agency, led by the chief of its global inspectorate Herman Nackaerts, will have two days of talks in another effort to extract explanations regarding intelligence pointing to military dimensions to Iran's declared civilian nuclear program.

Asked if the IAEA delegation would visit Iran's nuclear facilities, Foreign Minister Ali Akbar Salehi told the student news agency ISNA: "No. Their work has just begun."

DIPLOMATIC IMPACT

Diplomats played down any chances of a breakthrough.

"I believe most are rather skeptical concerning the outcome because, well, Iran had a chance at the last meeting and didn't seize it," a senior Western official said, referring to the last trip by the senior IAEA team to Tehran at the end of January.

Referring to last week's announcements by Iran of new nuclear advances, he said: "They send out the wrong signals that Iran is really willing to cooperate... We will wait and see what will come out of this meeting but we should be prepared that Iran might try some technical steps ... to appear cooperative without really providing the necessary cooperation."

The outcome of the discussions will have diplomatic repercussions because it could either deepen a stand-off that has stoked fears of war or provide scope to reduce tensions.

The European Commission says the EU would not be short of oil if Iran stopped crude exports as it has enough stock to meet the bloc's needs for around 120 days.

Industry sources said European oil buyers were already making big cuts in purchases from Iran months in advance of EU sanctions.

French and Anglo/Dutch oil majors Total and Shell have been big buyers of Iranian crude but Total had already stopped buying from Iran and traders said last week that Shell had scaled back sharply.

Shell, which has declined comment on its trade with Iran, was one of the biggest consumers of Iranian crude globally, taking about 100,000 barrels daily into Europe and about the same amount to its Japanese subsidiary, Showa Shell.

Latest EU data, for the third quarter of 2011, shows that oil sales into Britain fell to zero and France imported 75,000 bpd, accounting for just 6 percent of its crude oil imports.

Debt-ridden Greece is most exposed to Iranian crude disruption among EU countries.

MILITARY ACTION?

Iran says its nuclear program is entirely peaceful but its refusal to curb uranium enrichment, which can have both civilian and military ends, while shifting a key part of it to a remote mountain bunker protected from air strikes and continuing to restrict IAEA access, has raised concerns.

Western powers have not ruled out using force against Iran if diplomacy and sanctions fail to rein it in, and there has been intense public discussion in Israel about whether it should attack Iran to stop it "weaponizing" enrichment.

The top U.S. military officer said on Sunday that a military strike would be premature as it was not clear that Tehran would put its nuclear capabilities to developing a bomb.

"I believe it is unclear (that Iran would assemble a bomb) and on that basis, I think it would be premature to exclusively decide that the time for a military option was upon us," said General Martin Dempsey, chairman of the U.S. military's Joint Chiefs of Staff.

He said he believed the Islamic Republic's government was a "rational actor."

Chinese Foreign Ministry spokesman Hong said using force would be the wrong answer. "Attacking Iran militarily would only worsen the confrontation and lead to further upheaval in the region," he said.

The West has expressed some optimism at the prospect of new talks with Tehran, particularly after it sent a letter to EU foreign policy chief Catherine Ashton last week promising to bring "new initiatives" to the table without stating preconditions.

"In these negotiations, we are looking for a way out of Iran's current nuclear issue so that both sides win," Iranian TV quoted Foreign Minister Salehi as saying on Sunday.

Oil is a pillar part of Iran's export revenues and an important lifeline for its increasingly isolated economy. Tehran has little refining capacity and must import about 40 percent of its gasoline needs for domestic consumption.

Tighter sanctions, combined with high inflation, have squeezed the ability of working-class Iranians to feed themselves and their families, and this uncertainty will cloud a parliamentary election on March 2.

"Everything's become so expensive in the past few weeks," said Marjan Hamidi, a shopper in Tehran. "But my husband's income stays the same. How am I going to live like this?"

(Additional reporting by Parisa Hafezi and Ramin Mostafavi in Tehran, Susan Cornwell in Washington and Fredrik Dahl in Vienna; Writing by Maria Golovnina; Editing by Mark Heinrich)

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UN nuke inspectors arrive for key talks in Tehran

TEHRAN, Iran (AP) — U.N. nuclear inspectors arrived in Iran on Monday in the latest push to hold key talks with Iranian officials about how far the country's controversial nuclear program has come.

The trip is the second in less than a month by the International Atomic Energy Agency team, reflecting growing concerns over alleged weapons experiments — something Iran has so far both denied and refused to discuss.

Herman Nackaerts, a senior U.N. nuclear official, said in Vienna before the team departed on Sunday that he hoped for progress in the talks but his careful choice of words suggested little expectation the meeting will be successful.

The West suspects Iran's nuclear program is geared toward making weapons, a charge Iran denies, insisting it's for peaceful purposes only, such as power generation.

Iran's state TV said the IAEA team arrived early Monday morning for a two-day visit. The state radio, meanwhile, said the inspectors hope to meet Iranian nuclear scientists and pay a visit to the Parchin military complex.

The radio said the IAEA had requested to visit Parchin, an Iranian military base and conventional weapons development facility outside of Tehran. The site has also been suspected of housing a secret underground facility used for Iran's nuclear program, a claim denied by Iranian authorities.

IAEA inspectors visited the site in 2005, but only one of four areas of potential interest within the grounds. The nuclear watchdog did not report any unusual activities, and has not mentioned Parchin in its reports since 2008.

"Whatever the reasoning of the agency is, it proves the IAEA is not loyal to its previous commitments," the radio said. The tone of the commentary suggested the visit to the military complex would likely be denied.

The IAEA visit comes as Iran last week announced what it described as key advancements in its nuclear program, inserting the first domestically made fuel rod into a research reactor in Tehran and installing a new generation of Iranian-made centrifuges at the country's main uranium enrichment facility in the central town of Natanz.

Beyond concerns about the purported weapons work, Washington and its allies want Iran to halt uranium enrichment, which they believe could eventually lead to weapons-grade material and the production of nuclear weapons. Iran has been enriching uranium up to 20 percent, while uranium enriched to more than 90 percent can be used for a nuclear warhead.

The IAEA team wants to talk to key Iranian scientists suspected of working on an alleged weapons program. They also hope to break down opposition to their plans to inspect documents related to nuclear work and secure commitments from Iranian authorities to allow future visits.

Iran has denied alleged weapons experiments for nearly four years, saying they are based on "fabricated documents" provided by a "few arrogant countries" — a phrase authorities in Iran often use to refer to the U.S. and its allies.

The IAEA summarized its information last November in a 13-page document drawing on 1,000 pages of intelligence. It stated then for the first time that some of the alleged experiments can have no other purpose than developing nuclear weapons.

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Associated Press writer George Jahn in Vienna contributed to this report.

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Iran announces nuclear advances but offers new talks

TEHRAN (Reuters) - Iran proclaimed advances in nuclear know-how, including new centrifuges able to enrich uranium much faster, a move that may heighten its confrontation with the West over suspicions it is seeking the means to make atomic bombs.

Tehran's determination to pursue a nuclear program showed no sign of wavering despite Western sanctions that are inflicting increasing damage on its oil-based economy.

"The era of bullying nations has passed. 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 television broadcast on Wednesday.

"Our nuclear path will continue."

But 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 the United States, Russia, China and other partners among the big powers.

Iran has long refused to negotiate curbs on its nuclear program, saying it is intended purely for civilian uses, including producing electricity for booming domestic demand.

The United States and Israel have not ruled out military action against Iran if diplomacy and sanctions fail.

Washington played down Iran's announcement, saying the advances were neither new nor very impressive. "We frankly don't see a lot new here. This is not big news. In fact it seems to have been hyped," a State Department spokeswoman said.

IRAN DENIES BANNING OIL EXPORTS TO EU

Iran's Oil Ministry denied a state media report that it had cut off oil exports to six EU states. "We deny this report ... If such a decision is made, it will be announced by Iran's Supreme National Security Council," a ministry spokesman said.

Iran's English language Press TV had 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.

The Islamic Republic is the world's No. 5 oil exporter, with 2.6 million barrels going abroad daily, about a fifth of it to EU countries.

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

The Obama administration is putting pressure on the European Union and SWIFT, the global organization that facilitates most of the world's cross-border payments, to expel Iranian banks from its network, a new step in the push to deprive Iran of funds, a U.S. official said on Wednesday.

Expelling Iranian banks from the Belgium-based Society for Worldwide Interbank Financial Telecommunication would cut off one of Iran's few remaining avenues to do business abroad.

European banking regulators may meet SWIFT's board on Thursday to discuss the issue, two sources familiar with the matter said. SWIFT has said previously it is working to resolve the issue but is just a messaging system for its 10,000 users.

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 centrifuges and the loading of its first domestically produced batch of fuel into a research reactor that is expected to run out of imported stocks soon.

Tehran has for some years been developing and testing new generations of centrifuges to replace its outdated, erratic "P-1" model. In January it said it had successfully manufactured and tested its own fuel rods for use in nuclear power plants.

"FOURTH GENERATION" CENTRIFUGE

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

If Iran 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, produce 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).

However, Ahmadinejad said Iran had increased the number of centrifuges at its main enrichment site at Natanz to 9,000.

In its last report on Iran, in November, the U.N. nuclear watchdog said there were 8,000 installed centrifuges at Natanz, of which up to 6,200 were operating.

France said Tehran's latest moves again demonstrated that it would rather ignore international obligations than cooperate.

A British Foreign Office spokesman said: "(This) does not give any confidence that Iran is ready to engage meaningfully on the international community's well-founded concerns about its nuclear program. Until it does so we'll only increase peaceful and legitimate pressure on Iran to return to negotiations."

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

Deputy Foreign Minister Sergei Ryabkov said U.N. sanctions and additional measures introduced by Western nations had had "zero" effect on Iran's 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.

NEW FUEL FOR RESEARCH REACTOR

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 medical use and agriculture. Iran says it was forced to manufacture its own fuel for the reactor after failing to agree terms for a deal to obtain it from the West.

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

A 3.5 percent level is enough to power nuclear power plants, and the move to 20 percent purity brought Iran significantly closer to the 90 percent needed for 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 be 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 several bombs, in the view of nuclear proliferation experts.

Analysts say the fuel rod development does not bring Iran any closer to producing nuclear weapons, but could be a way of telling its enemies that time is running out for 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 Israeli operators planted the virus.

(Additional reporting by Mitra Amiri, Ramin Mostafavi in Tehran, Fredrik Dahl in Vienna, Steve Gutterman in Moscow, John Irish in Paris, Dmitry Zhdannikov and Adrian Croft in London; Editing by Tim Pearce)

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