IAEA: Dialogue on stalled Iran atom deal goes on

The UN nuclear agency chief said on Friday dialogue was continuing on a draft deal on enriched uranium between Iran and world powers despite Tehran's rejection of terms meant to prevent the material being used for atomic bombs.

Western diplomats have said Iran has effectively turned down the IAEA-brokered proposal and the United States and major European allies are pursuing broader UN sanctions against the Islamic Republic over its disputed nuclear activity.

"The proposal is on the table. Dialogue is continuing," said Yukiya Amano, director-general of the International Atomic Energy Agency, in his first public remarks on the standoff since he succeeded Mohamed ElBaradei two months ago.

Amano, who was attending the World Economic Forum, gave no further details to reporters.

Diplomats told Reuters last week Iran's envoy to the IAEA had notified Amano that it could not accept the deal's central provision for Tehran to ship most of its enriched uranium abroad in one go in exchange for fuel for nuclear medicine.

This followed months of dismissive or ambiguous remarks by Iranian officials made through the media.

The United States quickly dismissed Tehran's reply as "inadequate." In response, an IAEA spokeswoman said the proposal was still on the table, apparently cautioning the West not to write off the deal or more diplomacy to salvage it.

Western powers fear Iran's nuclear program could be used to build atomic bombs. Iran says it is a peaceful project for power generation, but Amano said 20 years of undeclared Iranian nuclear work had undermined international trust.

The IAEA was struggling to maintain oversight of the Iranian program because of restrictions on inspections, he said.

"Comprehensive safeguards should be fully implemented. That is what we are struggling (with) now," he told a panel on nuclear proliferation in Davos.

Hope for Agreement

"I hope agreement will be reached (on the fuel plan) and I continue to work as intermediary. This will ... help increase confidence in the (Iran) nuclear issue," Amano said.

Russia and China have also called for more negotiations, opposing further punitive sanctions which they believe may hinder a peaceful solution. Neither sees Iran as an imminent nuclear threat, unlike Western powers.

Under the draft plan, Tehran would transfer 70 percent of its low-enriched uranium (LEU) to Russia for further processing and then to France for conversion into special fuel rods to keep a Tehran nuclear medicine reactor running.

The arrangement, which envisaged Iran getting the fuel about a year after parting with LEU, aimed to cut Iran's LEU reserve below the quantity needed for the fissile core of a nuclear weapon, if the material were refined to a high degree of purity.

Western negotiators said Iran accepted the scheme in principle at Geneva talks with six world powers in October, only to back off after ElBaradei fleshed out details at a follow-up meeting at IAEA headquarters in Vienna.

Iranian officials have subsequently demanded amendments which would entail swapping its LEU for reactor fuel only in small, phased amounts and only on Iranian soil - to avoid a significant reduction in the LEU stockpile.

Tehran has also said it will enrich LEU to a higher degree itself if the powers do not accept its conditions for the deal, raising concerns since it lacks technology required to turn the material into fuel rods for the medical isotope reactor.