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 and were capable of producing 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 P51 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 P51 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."
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 and were capable of producing 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 P51 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 P51 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."
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