Sunday, March 06, 2005

Iran: Back off or suffer oil shock

The Australian: - Oil-rich Iran has raised the stakes in the standoff over its nuclear program, warning that any attempt to impose sanctions on its activities would lead to an energy crisis in the US and Europe.

Referring the Islamist state to the UN Security Council, as the US had urged, would be "playing with fire", Iran's top nuclear official said yesterday.

"The first to suffer will be Europe and the US themselves," Hassan Rowhani said at a Tehran conference on nuclear technology and sustainable development. "(It) would cause problems for the regional energy market, for the European economy and even more so for the US."

Britain, France and Germany are leading efforts to try to convince Iran to dismantle nuclear fuel work – which the US claims is part of a covert weapons development program – in return for economic and political rewards.

Tehran insists it wants to enrich uranium for purely civilian purposes such as power generation and argues that such work is authorised by the nuclear Non-Proliferation Treaty.

The US says Tehran is manipulating a loophole in the treaty, and has threatened to take the matter to the Security Council to seek international sanctions.

If Washington did take the matter to the UN, Mr Rowhani said yesterday, Iran would "retract all the decisions it has made and the confidence-building measures it has taken".

He said Iran's leaders "could be called upon to make new decisions", but did not provide any details on what that would involve.

"The stability in the region would become fragile and the US would be the first to suffer," he said.

The European Union is seeking a permanent halt to uranium enrichment, a process that can both provide nuclear fuel for civilian power plants and be used in the making of nuclear weapons.

In return for a permanent halt, the EU is offering Iran a package of incentives covering trade, security and technology.

But Mr Rowhani said that while Iran agreed in November to suspend enrichment, it would not agree to a permanent halt.

He insisted that the controversial construction of a heavy-water reactor in Iran was only for research purposes and would not be used to produce plutonium for a nuclear bomb.

"The goal is research – it's a peaceful goal," he said. "We are not seeking to produce plutonium for military use."

The IAEA asked Iran last year to refrain from building the reactor, amid concerns about the proliferation risk, as the reactor could produce 8-10kg of plutonium annually, enough to make at least one nuclear bomb a year.