Iran has refused to allow cameras into the hall where centrifuges are being installed to enrich uranium, a process which can make fuel for civilian nuclear reactors or material for atom bombs.

Iran wants to install 3,000 centrifuges, which could make enough highly enriched uranium for a bomb in less than a year.

Iran has more than 300 centrifuges already turning, but lacks the uranium gas feedstock needed to enrich, and has installed a similar number.

Schulte and IAEA officials have said that camera monitoring is mandated under the nuclear Non-Proliferation Treaty (NPT) once the number of operating centrifuges exceeds 500.

"My government requests the Director General inform the board immediately should Iran install 500 centrifuges," Schulte said.

Iran has failed to heed a call by the UN Security Council call, based on findings by the IAEA, to halt its uranium enrichment work.

"Iran is instead expanding activities that the Council has required Iran to suspend and is failing to provide the IAEA with the cooperation required by the Council," Schulte told a meeting of the IAEA's board of governors.

He cited an IAEA report that Iran has not halted construction at Arak of a heavy water reactor which can make plutonium, also an atom bomb material.

Schulte also said the United States was "troubled" about Iran's rejections of inspectors proposed by the IAEA.

Iran has asked the IAEA to "remove 38 currently designated inspectors" and refused to accept "the designation of 10 new inspectors," Schulte said.

The United States calls on the IAEA secretariat "to report to the IAEA board immediately if issues concerning inspector designation are impeding the implementation of safeguards in Iran."

The IAEA is the monitoring arm of the NPT.

EU offers olive branch to Iran on nuclear issue
The European Union urged Iran on Wednesday to take up an offer to suspend its nuclear enrichment in return for suspending sanctions on Tehran. "We therefore urge Iran to take up the offer of double suspension, as endorsed recently by the director general," French ambassador Francois-Xavier Deniau said, speaking for the three EU powers mediating in the nuclear standoff.

He was referring to an offer from International Atomic Energy Agency (IAEA) chief Mohamed ElBaradei, who made the offer of simultaneity in January to make it easier for Iran to swallow a December 23 UN Security Council resolution that imposed sanctions in order to get Iran to unilaterally suspend enrichment. But Iranian ambassador to the IAEA Ali Asghar Soltanieh said Iran has not found "any reason" to suspend enrichment, which it claims as a right under the nuclear Non-Proliferation Treaty (NPT).

Uranium enrichment makes fuel for civilian nuclear reactors but also what could be atom bomb material.

Iran has refused to stop enriching uranium but says it is ready to talk without preconditions, thus rejecting both the UN resolution and any compromise.

Soltanieh said the West was deceiving the international community by saying the matter must be handled by the Security Council.

He said Iran has mastered enrichment.

"I know that Americans do not want the world to know this reality. They have to swallow this reality."

As the EU offered an olive branch, the United States made a hardline call on the IAEA to give immediate notification if Iran moves ahead on enriching uranium at a huge underground site where it could do weapons-related work.

US ambassador Gregory Schulte told the IAEA's 35-nation board of governors meeting in Vienna since Monday that ElBaradei should inform the board "immediately... should Iran introduce nuclear material into any centrifuges in its underground plant" in Natanz.

Iran has refused to allow cameras into the hall where centrifuges are being installed to enrich uranium, a major expansion on a smaller research site already refining uranium above-ground.

Iran wants to install 3,000 centrifuges, which could make enough highly enriched uranium for a bomb in less than a year, in Natanz by May, and then eventually expand this to over 50,000 centrifuges.

Iran has more than 300 centrifuges already turning underground, where they are protected from air attacks, but has not yet inserted the uranium gas feedstock needed to enrich. It has installed a similar number which are not yet turning their rotors.

Schulte and IAEA officials have said that camera monitoring is mandated under the NPT once the number of operating centrifuges exceeds 500.

But Soltanieh said this was not true.

Iran has failed to heed the call by the UN Security Council, based on findings by the IAEA, to halt its uranium enrichment work.

"Iran is instead expanding activities that the Council has required Iran to suspend and is failing to provide the IAEA with the cooperation required by the Council," Schulte said.

The IAEA is the monitoring arm of the NPT.

The UN atomic agency was set Thursday to ratify drastic cuts in technical aid to Iran, as debate on this failed to conclude Wednesday.

Also Wednesday, Western states as well as Japan and non-aligned countries welcomed an upcoming trip by ElBaradei to North Korea and urged Pyongyang to swiftly dismantle its own nuclear weapons programme, according to an international agreement reached February 13.

Gulf businessmen wary of US calls to shun Iran
Gulf business leaders on Wednesday dismissed as unrealistic a request by the United States to scale back dealings with Iran, saying that would only be achieved if their own governments demanded it.

"I urge you to consider whether it is wise for your company to focus its efforts on doing business with Iran," said Stuart Levey, the US Undersecretary for Terrorism and Financial Intelligence at the Treasury Department.

He was addressing a business conference in Dubai.

"What the Americans are asking is unrealistic. The economic and social ties between the Arab states in the Gulf and Iran are too strong and intertwined," a Saudi businessman, who declined to be named, told AFP.

The United States has been seeking to isolate Iran, claiming that its nuclear programme could be used to build atomic weapons and that it funds Shiite militant organisations such as Lebanon's Hezbollah and militias in Iraq.

Tehran strongly denies the allegations.

Levey called on the Gulf Arab business community to follow what he termed the lead of global firms and institutions by reducing their dealings with Iran.

"It is clear that many businesses are taking it upon themselves to scale back (dealings with Iran)," he said, citing the example of Swiss-based bank UBS in 2006 cutting ties with Iran.

"HSBC, Standard Chartered, Commerzbank and many other financial institutions have also indicated they have limited their exposure to Iranian business," he added.

Many of the 200 delegates attending the meeting appeared unconvinced.

The Dubai-based Iranian Business Council (IBC), which aims to foster economic ties between the oil-rich United Arab Emirates and Iran, doubts Levey's message would have much impact.

"I don't think businessmen in the region will pay much attention to what he (Levey) asked," IBC vice president Nasser Hashempour told AFP.

"Businessmen in the region will not stop trading with Iran unless their own governments tell them not to."

Hashempour estimated trade between the UAE and non-Arab Iran would be worth 10 billion dollars this year and this figure would likely rise by 20-25 percent in 2008.

The United Nations Security Council agreed a sanctions resolution in December that targeted Iran's nuclear programme and ballistics industry.

Ambassadors from the council's five permanent members plus Germany are mulling new sanctions on Iran over its refusal to suspend uranium enrichment operations.

But the Saudi businessman said that even if further sanctions were imposed on Tehran, trade would go on "under the table".

Levey said Washington had already enforced its own set of targeted financial sanctions against Iran. Bank Saderat, Iran's largest state-owned bank, had its access cut to the US financial system in 2006 over allegations it transferred money to militant organisations.

But a senior Gulf banker attending the conference echoed the view of Hashempour saying the US desire for businesses to roll back dealings with Iran would largely be ignored unless governments in the region added their backing.

"Something like this can only be achieved through agreements between governments," he said, also asking not to be named due to the political sensitivity of the issue.

"There are substantial regional business interests in Iran and I'm sure these will go on somehow."

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