Iran preparing to start nuclear enrichment: diplomats

VIENNA- (Reuters) - Iran is pushing ahead with plans to enrich uranium in defiance of international pressure to give up sensitive nuclear technology to ease fears it is seeking a nuclear bomb, diplomats and intelligence sources say.

Such plans could jeopardise a Russian attempt to head off a confrontation over Iran, through a compromise proposal under which Tehran would maintain a civilian nuclear programme but transfer enrichment to Russia under a joint venture.

Enrichment is the most sensitive stage of the nuclear fuel cycle. It can be used to make fuel for bombs or power plants.

"I think they want to do it soon," a European diplomat told Reuters. "The million-dollar question is when."

Diplomats and intelligence officials, speaking on the sidelines of a meeting of the International Atomic Energy Agency (IAEA) this week, said Iran was preparing to start enrichment at its underground plant in Natanz.

The United States and other Western countries say Natanz is at the heart of a covert nuclear weapons programme, and have threatened to refer Iran to the U.N. Security Council for possible sanctions. Iran says its nuclear programme is purely for generating electricity.

A 4-page confidential intelligence report given to Reuters cited a "senior Iranian foreign ministry source" as saying that on October 24 the secretary of Iran's Supreme National Security Council, Ali Larijani, called an emergency meeting of current and former members of Iran's nuclear negotiating team.

"One of the cardinal issues raised at the meeting was the timing for activating the centrifuge site at Natanz. The former and current negotiating teams weighed the various options for the timing of the Natanz operation," the report said.

The report, given to Reuters by a diplomat on condition of anonymity, did not say when work at Natanz would start.

Participants at the meeting discussed the technical measures needed to be taken before the plant went on line and what to do once the move had been announced, the report said.

"They are not going to do this secretly," the diplomat said. "They will do it openly as they did with Isfahan."

"SHAKY LEGAL GROUNDS"

Iran resumed conversion of uranium ore at its Isfahan plant in August, leading to the collapse of talks with France, Germany and Britain, the so-called EU3, who had been trying to convince Tehran to give up all sensitive nuclear technology.

Under the compromise proposed by Russia, Iran would be allowed to continue to process uranium ore at Isfahan but ship the gas produced there to Russia for enrichment. The Natanz plant would remain mothballed.

The proposal had won backing from the United States, and diplomats had said talks could resume in December with the EU3 if Iran were ready to discuss the Russian proposal.

The IAEA board agreed on Thursday it was better to explore Russia's compromise plan than to vote on referring Tehran to the U.N. Security Council.

However, western nations on the IAEA board would be likely to push for an immediate referral to the Council if Iran moved openly towards enriching uranium. Such a referral would likely be opposed by Russia, China and most developing countries.

Officials in Tehran were not immediately available for comment and Iranian officials in Vienna did not return calls. Iran however has repeatedly said it has a sovereign right to a full civilian domestic nuclear programme, including enrichment.

More than half a dozen diplomats at the IAEA interviewed by Reuters said the intelligence report was credible.

The EU and Washington say that since Iran hid its nuclear programme for many years, it needs to give up all sensitive nuclear technology to prove it is not seeking atomic bombs.

But a senior diplomat close to the IAEA said that the demand that Iran give up enrichment "is on very shaky legal grounds".

"As far as we can tell, the Iranians are not willing to give up enrichment," he told Reuters. "It's a legal activity as long as it's been declared and we can't just go in there and tell Iran not to do that. We don't hold many cards."

Former U.N. weapons inspector David Albright, who heads the Washington-based Institute for Science and International Security think-tank, said it was likely Iran would start work at Natanz to see how Western powers reacted.

"I don't see a Natanz start-up as inevitable, that we've reached the point of no return. At the same time, Iran will test the will of the international community," he said.

A senior diplomat close to the IAEA said Iran appeared determined to start a small enrichment centrifuge cascade -- a group of machines that purify uranium by spinning at supersonic speeds -- and would probably begin with 168 centrifuges.

Such a small cascade would take many years to produce enough fuel for a bomb. But it would enable the Iranians to begin mastering the technology.

One senior European diplomat said few were optimistic that Iran would accept the Russian proposal.

"The U.S. is just waiting for the Russian proposal to fail and then they'll go to the Security Council," he said.