Citing the contents of a confidential report on Iran’s nuclear capabilities compiled by the Vienna-based agency, an Iranian official told Bellona Web that the watchdog report indicated that US suspicions about Tehran’s intentions were “baseless.”

Western leaders have been on edge since April of this year, when Iran announced it had reached “industrial level capacity” in its enrichment of uranium.

The report, according to officials familiar with it, praises Tehran for “a significant” step forward in explaining past nuclear activities in the country that have raised worrying flags throughout the international community.

The assessment will likely blunt efforts by the United States to rally support for a new third round of UN Security Council sanctions against Iran.

Enrichment and Plutonium production not a threat
Yet, the report confirmed that Iran continued to expand its uranium enrichment programme, reflecting the Islamic Republic’s defiance of the UN Security Council, which has twice ordered the nation to stop enriching an imposed moderate sanctions. Still, UN officials said, both enrichment and the building of a plutonium-producing reactor was continuing more slowly than expected.

Iran promptly touted the report as supporting Iran’s stand that the U.S.-led calls for a third round of UN Security Council sanctions on Iran over its refusal to halt uranium enrichment were unjustified.

International Atomic Energy Agency Deputy Director General Olli Heinonen, who brokered the cooperation deal with Iran, highlighted the importance of Iran’s agreement shed light on its programme, noting that Tehran’s past refusal to answer the IAEA’s questions triggered Security Council sanctions in the first place, he told reporters.

But he cautioned that Iran still needed to fully implement its commitments.

”The key is that Iran … provides the information that we need” in a time frame that results in clarity about Iran’s past suspicious activities by year’s end, he told reporters.

The IAEA report further indicated the agency could open future inquiries into Iran’s atomic activity if new suspicions arose, even after Tehran answers questions about the programme under the transparency deal Heinonen reached this month.

US still unimpressed
The United States – which threatened military action should Iran not cooperate with IAEA officials – played down the reports of progress. Officials reiterated that Iran’s pursuit of uranium enrichment is proof positive it is trying to produce nuclear weapons.

”I don’t see anything, at this point, in this report, that changes the basic facts. … Iran has refused to comply with its international obligations, and, as a result of that, the international community is going to continue to ratchet up the pressure,” State Department spokesman Tom Casey said.

Gregory Shulte, America’s chief delegate to the IAEA was also skeptical, telling the Associated Press that: “ ”If Iran’s leaders truly want to close the nuclear file, they would (…) suspend activities that are not necessary for civil purposes but are necessary for building bombs.”

France, a close US ally on Iran, said cooperation by Tehran was not enough to eliminate the threat of new UN. penalties. On Monday, French President Nicolas Sarkozy said Iran faced attack if it pursued its nuclear ambitions further. He did not say if France would participate in or endorse such an attack.

French Foreign Ministry spokeswoman Pascale Andreani said in Paris that: ”As long as there is not a clear … decision from Iran about the suspension of activities linked to enrichment, we will pursue (…) looking into a third sanctions resolution,” AP reported.

Iran says US ‘deceiving the world’
Iran immediately praised the U.N. agency for ”its professional approach toward the case.”

”This report ended all the baseless U.S. accusations against Iran,” Mohammad Saeedi, deputy head of Iran’s Atomic Energy Organization, said.

”Once again the agency confirmed validity of Iran’s stances,” he said, adding that ”the US had deceived the world over Iran’s nuclear activities by claiming that Iran was reprocessing plutonium.”

Drawn up by IAEA chief Mohamed ElBaradei, much of the confidential report – passages of which were shown to Bellona Web – focused on the already publicised plan finalised just a few weeks ago between the agency and Iran, restating progress in some areas and time frames for Iran to respond to additional questions.

In that plan, Iran agreed to answer the final questions from agency experts by November.

Could Iran’s file be closed at the IAEA? Not if the US can help it
If that and all other deadlines are met and Iran provides all the information sought, the agency should be able to close the file on its more than four-year investigation of Tehran’s nuclear activities by year’s end, a senior UN official said.

He and other UN officials – all speaking on condition of anonymity because they were not authorized to comment to media – declined to comment, however, on whether a clean bill that banishes suspicions about Iran’s former nuclear programs and experiments would be enough to derail the threat of new UN sanctions.

The United States and its closest allies said still more sanctions were needed because of Tehran’s defiance of council demands that it suspend its uranium enrichment programme and stop building a plutonium-producing reactor near the cit of Arak. Both can create the product that can serve as the fissile component of nuclear warheads.

But the report – which will be considered at a meeting of the IAEA’s 35-nation board that will begin on September 10th – said the agency felt information provided by Iran on past small-scale plutonium experiment had “resolved” the issue.

Just how far has Iran come?
The construction of the Arak plutonium reactor has slowed significantly in recent month because of design difficulties, supply and component availability, fuel shortfalls and possibly political considerations, the senior IAEA official said.

According to the IAEA report, Iran is also far from the feared “industrial scale” enrichment of uranium. Iran had just under 2,000 centrifuges divided into 12 cascades, or interlinked units, of 164 machines each refining uranium at its underground Natanz plant as of August 19th, the report said.

A 13th cascade was being run test-run empty, another was stationary undergoing tests under vacuum and two more cascades were being assembled, said the report.

"Iran made a fast start but then there was a leveling off," said another senior UN official who knows the IAEA’s findings. "We don’t know the reasons, but the slow pace continues."