Iran warns over nuclear impasse

CNN:

IAEA board will meet Thursday to discuss proposed resolution

VIENNA, Austria (CNN) -- An Iranian official has warned European countries against "coercive" measures in the diplomatic standoff over its nuclear program as Tehran removed the U.N. watchdog agency's seals from its Isfahan nuclear processing facility.

The International Atomic Energy Agency's governing board is scheduled to meet Thursday afternoon to discuss the issue after Iran announced it would resume operations at its Isfahan uranium conversion plant.

Cyrus Nasseri, Iran's chief delegate to the watchdog agency, told CNN that European countries should "think twice" before taking any action that might be considered "coercive."

"That would be a course of action that would lead to a situation where everyone would lose," he said.

In talks Wednesday, Nasseri dropped a not-so-veiled hint that Iran could push world oil prices higher if the West tried to block its nuclear program, according to a Western diplomat who attended discussions in Vienna.

The Iranians also hinted that they could help ease -- or worsen -- trouble spots in Iraq, Afghanistan and Syria, the diplomat said.

The threat came on a day when crude oil futures hit a new high of nearly $65 a barrel in trading in New York.

Iran, which has extensive oil deposits, says its nuclear program is meant to generate civilian nuclear power, but the United States and other countries have raised concerns that Tehran is concealing a nuclear weapons program.

At the United Nations, Secretary-General Kofi Annan urged Iran and European Union countries to keep talking and avoid "any steps that would lead to further escalation."

"I have indications from both sides that they are prepared to continue the search for a solution," Annan said.

He told reporters he spoke to Iran's new president, Mahmoud Ahmadinejad, to urge "restraint and continuation of dialogue."

Iranian technicians removed the IAEA seals from equipment at the Isfahan plant, opening the facility for full operation. The plant processes uranium ore, a step towards producing enriched uranium.

IAEA spokesman Mark Gwozdecky told CNN the nuclear watchdog agency would have preferred that Iran not take that step, but said the plant "is fully monitored" and does not produce enriched uranium -- which can be used in nuclear power plants or, in higher concentrations, in nuclear weapons.

Iran removed the seals on the plant only after the IAEA had an inspection team in place, Gwozdecky said.

The country's Natanz uranium enrichment facility remains frozen, and Iranian officials "have indicated it will remain that way," he said.

The IAEA's board of governors, which began holding talks Tuesday, is to meet at 3 p.m. (9 a.m. ET) Thursday to discuss a resolution on Iran's latest steps, an agency official told CNN. The official provided no details.

Iran voluntarily suspended its nuclear program in October 2003 under immense international pressure.

But last week, it rejected a package of proposals from Britain, France and Germany that promised long-term support for a nuclear energy program in exchange for guarantees not to develop nuclear weapons.

U.S. and European officials warned they might take the issue to the U.N. Security Council for possible sanctions if Iran did not agree to the deal.

Western intelligence sources have told CNN that Iran would be five to 10 years from being able to build an atomic weapon, even if it restarted its entire nuclear program today.

Iran's supreme leader, Ayatollah Ali Khamenei, issued a religious decree Thursday declaring the "production, stockpiling and use of nuclear weapons" to violate the tenets of Islam.

"The leadership of Iran has pledged at the highest level that Iran will remain a non-nuclear-weapon state party to the NPT (Non-Proliferation Treaty) and has placed the entire scope of its nuclear activities under IAEA safeguards and additional protocol, in addition to undertaking voluntary transparency measures with the agency that have even gone beyond the requirements of the agency's safeguard system," Khamenei said in the statement.

Strained relations

But Matthew Boland, a spokesman for the U.S. mission to international organizations, said that Iran's action Wednesday "is yet another sign of Iran's disregard for international concerns."

"We strongly support the EU-3's efforts to convince Iran to stop its dangerous activities," he said. "We urge Iran to give serious consideration to the EU-3's proposals."

IAEA board members appear sharply divided on a response, ranging from calls for tough sanctions from the United States, Canada, Australia and New Zealand to another chance from non-aligned nations such as Malaysia.

The United States initially wanted Iran to give up its entire nuclear program but has since fallen more in line with the EU-3 in search of guarantees Iran will not produce weapons. (Full story)

Gwozdecky told CNN he was confident the board members would come to a consensus in this week's talks -- but he said the larger issue at hand was "Iran's relationship with the rest of the world."

That ultimately would require the United States -- which has no diplomatic relations with Iran -- to enter the European-led negotiations, he said.

"I think this is a concern, but ultimately the bigger question for us and the global community is how to normalize a relationship with Iran that's been strained for almost 25 years," Gwozdecky said.

Under the Non-Proliferation Treaty, member nations are allowed to develop nuclear energy under the watchful eyes of the IAEA. The IAEA says that although it is making progress, Iran's past lack of candor about its program has left some doubt about its current work.

The only states that have declared they have nuclear weapons but have not signed the NPT are India and Pakistan.

Israel is also not a signatory: It neither confirms nor denies having nuclear weapons but is widely believed to have a significant arsenal.

-- CNN Senior International Correspondent Walter Rodgers and journalist Shirzad Bozorgmehr contributed to this report.