The announcement from Ahmadinejad dovetails with the discovery of highly enriched uranium residue by United Nations (UN) nuclear watchdog inspectors from the International Atomic Energy agency (IAEA) of some of Iran’s enrichment equipment.

"Any offer which requires us to halt our peaceful nuclear activities will be invalid," Ahmadinejad was quoted as saying by the state news agency IRNA Sunday.

"If they want to decide things that concern us in a place where we are not present, then that body does not have any legal validity or credibility in decision-making," Ahmadinejad said, referring to on-going talks between western diplomats in Brussels over the nuclear standoff with Tehran.

President Ahmadinejad spoke on state television after returning from Indonesia, where he was warmly welcomed and won developing nations’ support for the peaceful production of nuclear energy.

European Union (EU) members Britain, France and Germany are considering offering a new bundle of wide-ranging incentives to Iran in return for a guarantee that it will suspend its uranium-enrichment activities, which the West suspects of being part of a covert atomic weapons programme. Ahmadinejad’s remarks were clearly aimed at European Union foreign ministers meeting taking place Monday in Brussels, Belgium.

Washington and its European allies’ earlier efforts have sought to push a UN Security Council resolution that would oblige Iran to halt all uranium enrichment work or face possible sanctions.

Russia, China reluctant on UN Security Council resolution

But Russia and China, which have energy interests in Iran, have resisted the sanctions. Washington agreed to let Britain, France and Germany—the so-called EU3—devise a package of benefits for Iran in return for cooperating, pushing back a decision on a possible resolution, diplomatic sources said.

"The aim is to come up with a very attractive package to make it difficult for the Iranian government to refuse," a senior envoy from one of the EU3 countries told Bellona Web in a telephone interview.

A draft statement for Monday’s EU meeting obtained by Bellona Web stated the group was ready to help Tehran develop "a safe, sustainable and proliferation-proof civilian nuclear programme" while insisting it halt all enrichment on its own soil. Russia had previously offered—in an effort to de-fuse the stand-off between Iran and the EU3—to enrich Iranian uranium in Russia, but was rebuffed.

EU officials said it was undecided if help could include letting Western firms build nuclear power stations in Iran, an offer sources said was in an earlier package rejected by Iran last August, and which also stipulated an end to enrichment, Reuters reported.

The EU’s new offer
The foreign ministers of the EU3 countries were meeting in Brussels on Monday to work out technical, trade and political sweeteners that would be offered to Iran in exchange for allaying Western fears that Tehran is seeking to produce an atom bomb, notably by halting uranium enrichment.

But European officials said no major progress on a final proposal could be expected at the Brussels meeting. The plan would be held in reserve until after talks among non-proliferation officials from the five permanent members of the EU Security Council on Friday in London.

Afghanistan has also offered to mediate between Washington and Tehran, Afghan Foreign Minister Rangeen Dadfar Spanta was quoted on Sunday as saying, the Associated Press reported.

Spanta told Germany’s Bild am Sonntag newspaper that he and Afghan President Hamid Karzai planned to travel to Tehran at the end of May to assess the "room to manoeuver" for a peaceful resolution to the conflict.

Would Iran scrap industrial uranium fuel producton?
Several Iranian officials have recently focused on saying Iran must be allowed to keep at least an enrichment research programme, suggesting Tehran might be ready to scrap plans for industrial-scale production of uranium fuel as part of a deal.

"We should first see what the (EU) proposal is. Anyway, we will not abandon our rights. (Nuclear) research and development will remain on Iran’s agenda," Foreign Ministry spokesman Hamid Reza Asefi told a weekly news conference.

But Washington has said all such work must stop and the draft EU proposals rules out even enrichment for research.

Western diplomats say keeping even a small-scale enrichment programme at home would enable Iran to master a technology that could quickly be expanded for military purposes in the future if Tehran chose.

Iran’s Response
"These masters believe that they are still living in the colonial era, and so their decisions are not valid for us," said Ahmadinejad.

Asefi also vowed: "We will not back down on our rights." Any offer to Iran must recognise the rights of Iran and guarantee the means to exercise those rights," he told reporters.

Civilian nukes in Iran
At present, Iran has no functioning civilian nuclear programme, though it is in the works. Russia took over the building of a light water reactor in the Iranian port town that was begun by Siemens of Germany, but abandoned during the Islamic revolution.

Russia plans to have the reactor online later this year or early next year and is also seeking contracts for as many as five more reactors in Iran—a thorn in the side of many western negotiators, most notably the United States.

According to President Ahmadinejad, the "best incentives" for cooperation from Tehran would be the implementation of parts of the nuclear Non-Proliferation Treaty (NPT) which recognises the right of signatory states to do research on and produce nuclear energy for peaceful purposes—Iran, unlike other countries such as India and Israel to which the Bush Administration has lent nuclear support, is an NPT signatory.

The West’s conditions
Ahmadinejad’s purported view to a peaceful nuclear industry in Iran is not held by the Western powers, which are also pushing for a UN Security Council resolution that would make a suspension of enrichment legally binding. Iran has vowed to ignore any such resolution.

Although the United States has repeatedly said it wants to see the crisis resolved through diplomacy, US administration officials have refused to rule out the option of military action against Iran.

Washington reasons that the EU3 have already tried but failed to use incentives to coax Iran into agreeing to a moratorium on fuel work, according to a western diplomat.

Iran said Sunday it has also already enriched uranium to 4.8 percent—higher than its announcement last month made to great local fanfare stating that it had enriched uranium to 3.5 percent—which is sufficient to make nuclear fuel for a power station, progress that it argues the Western world needs to accept.

Highly enriched uranium
Iran also showed its determination not to step down when the Foreign Ministry’s Asefi on Sunday dismissed a report two days earlier that IAEA inspectors had found traces of highly enriched uranium on some of Iran’s nuclear equipment.

“It’s insignificant. It’s not important. Previously, things like this were said but later inspectors arrived at the right conclusions,” Asefi told reporters.

It was the second time the IAEA inspectors found traces of highly enriched uranium at Iranian facilities. The first discovery was later traced to equipment from Pakistan that Iran allegedly bought on the black market during nearly two decades of clandestine activity.