Financial Times: Senior British officials warned last night that talks with Iran over its nuclear ambitions were on the point of collapse and that it risked referral to the United Nations Security Council. Financial Times

By Christopher Adams, Political Correspondent

Senior British officials warned last night that talks with Iran over its nuclear ambitions were on the point of collapse and that it risked referral to the United Nations Security Council.

Western diplomats said yesterday's statement by a top Iranian official that it would resume "in the next few days" activity related to uranium enrichment was a "serious" development.

Iranian hardliners seeking to provoke an international crisis had gained the upper hand in Tehran, they suggested.

"The Iranians do seem serious about going ahead and, if they do go ahead, they will be in breach of the Paris agreement and we wouldn't be able to continue our negotiations with them," said a British official.

Britain, France and Germany, the so-called EU3, have been leading talks with Iran aimed at securing guarantees that it will give up its nuclear ambitions. Tehran had suspended enrichment of uranium, a process that could lead to development of a nuclear weapon, under an agreement reached in Paris last year, but the talks have since made no progress.

According to Tehran's official IRNA news agency, Mohammad Saeedi, deputy head of Iran's Atomic Energy Organisation, told a university conference yesterday: "We will lift the first stage of our suspension, that of our UCF [uranium conversion facility"> project in Isfahan, in the next few days."

The Isfahan plant is used to convert raw uranium into a gas. The gas can be fed into enrichment centrifuges for purification into a fuel that can be used in nuclear power reactors or, if purified further, into bomb-grade material. British officials said last night that, by taking such a move, Iran risked referral to the council, which in turn could lead to economic sanctions being imposed.

Mr Saeedi said Iran wanted to continue the negotiations and insisted it was not resuming actual enrichment immediately. It would wait for European Union reaction before proceeding.

But the British official insisted: "Iran is fully aware of the implications if they were to start any part of the nuclear fuel cycle."

An EU diplomat told Reuters that resumption of the work would lead to problems and that the EU3 would support a referral to the security council.

The latest comments out of Tehran were now believed to be a statement of intent, not merely a threat. An official said: "We've had extensive contact with the Iranians over the last week and there is clearly an argument going on in Tehran. Those who want to resume their enrichment related activities have got the upper hand on this."

Iran has denied US accusations it is trying to build atomic weapons and says its facilities will only be used in a civilian energy programme. The US has refused to rule out military action.

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