But nearly nine months on, diplomats are cannily admitting their bid to strip Iran's ruling clerics of gaining A-bomb potential is falling apart. And perhaps more alarmingly, there does not appear to be a great deal that they can do about it.

The problem, say diplomats who were close to hammering out the "Tehran declaration", lies not so much with Iran's recent backing away from certain technical aspects of it, but with its firm rejection of the accord's more ambitious premise.

"We wanted the same kind of agreement with Iran as what we had with Libya. Iran had an opportunity to abandon its more sensitive nuclear work, and in return win greater trade and better relations with the West," recalled the senior diplomat.

This was an effort to get around the inherent weakness of the nuclear Non-Proliferation Treaty (NPT) -- a text of good intention in so far as member states are allowed to master the entire nuclear fuel cycle for peaceful purposes as long as they commit themselves not to take the relatively easy next step to military usage.

"Iran is a special case. There was a pattern of years of deception, so we needed to go beyond the NPT," explained another EU diplomat working on the nuclear dossier.

"We wanted Iran to give up the nuclear fuel work in exchange for guaranteed supplies of fuel from overseas, as well as improved trade and diplomatic relations."

But for Iran's 25-year-old Islamic regime, it was an existential leap too far.

While careful to repeat denials of any nuclear weapons ambitions, officials have described the fuel cycle as an "inalienable right", while supreme leader Ayatollah Ali Khamenei has said it is "essential".

Iran may be only interested in generating nuclear power for now, but having a full fuel cycle under its belt means that having a nuclear deterrent would become a feasible strategic option -- and a tempting display of muscle if the present regional climate does not cool.

Last October Iran did agree to suspend uranium enrichment pending the completion of UN inspections, but it is still working full throttle on other key parts of the fuel cycle -- a uranium conversion facility in Isfahan, a heavy water reactor in Arak and now centrifuge construction and testing.

Officials are also threatening to resume enrichment too, if things do not go Iran's way at the International Atomic Energy Agency (IAEA) -- the UN's nuclear watchdog and guardian of the NPT.

And to add insult to injury, Tehran is saying it is the Europeans who have failed to meet their side of the agreement.

So what now for Europe's so-called "big three"?

In diplomatic circles, the three are drawing unflattering jokes that compare their mission last October to British prime minister Neville Chamberlain's attempted appeasement of Adolf Hitler in the fateful Munich agreement of 1938.

"Ah yes, we have in our hand a piece of paper," laughed one European diplomat when asked to reflect on Jack Straw, Joschka Fischer and Dominique de Villepin's convergence on Tehran last year.

The bottom line, he said, is that the deal "has not brought peace in our time. In fact it is falling apart, and Iran has been gaining time."

There are several options, none of which are tempting.

The most extreme -- declaring war against Iran by launching air strikes on nuclear facilities -- could only serve to galvanise the regime, and spark a host of retaliatory measures in an already explosive region.

What's more, unless IAEA inspectors manage to turn up a "smoking gun" here, they still have no concrete proof that Iran is seeking nuclear weapons -- meaning they will have to again tackle the uncomfortable debate on "pre-emptive" attacks that so badly split the international community ahead of the war with Iraq.

In addition, analysts point out, regional developments are working against them: Iraq is still unstable and Saudi Arabia's predicament means that few have the will to pick yet another fight.

One oft-cited option could be to side with the United States and send the dossier to the UN Security Council -- even if gaining a consensus there on tough sanctions may be impossible given Russia's attachment to its lucrative contract to build Iran's first nuclear power plant in the southern city of Bushehr.

Such a move could bring Iran back into line.

But it also send Tehran the other way -- chastised by the IAEA, Iran's now-dominant hardliners could abandon the NPT altogether and adopt the so-far effective diplomacy of "axis of evil" bedfellow North Korea.

The EU has already frozen talks on a Trade and Cooperation Agreement, but even that has a hollow ring.

European firms have been queuing up for contracts here -- Total and ENI among others in Iran's oil and gas sector, and giants such as Renault and Volkswagen in the car industry.

The next IAEA meeting is in September.

Iran looks unlikely to be satisfied by seeing its case taken off the agenda, and for the Europeans -- still chewing over their uncomfortable options -- it may very well result in yet more "wait and see".

All rights reserved. Copyright 2003 Agence France-Presse. Sections of the information displayed on this page (dispatches, photographs, logos) are protected by intellectual property rights owned by Agence France-Presse. As a consequence, you may not copy, reproduce, modify, transmit, publish, display or in any way commercially exploit any of the content of this section without the prior written consent of Agence France-Presse.

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