A new IAEA report that Iran may be seeking to develop a nuclear-armed missile only underscores the importance of upgrading pressure on Iran and convincing Tehran that a military option is a real possibility if it doesn’t stop pursuing nuclear arms, Israeli government sources said on Monday.

The officials were responding to a confidential document leaked over the weekend that signaled the UN body’s growing frustration at Iran’s lack of cooperation.

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The report made clear Tehran’s determination to press ahead with sensitive atomic activity despite four rounds of UN sanctions since 2006, saying the country had informed the IAEA it would soon start operating a second uranium enrichment plant.

Israeli officials said that while stepped-up military and economic pressure was necessary, the only thing likely to stop the Iranians was their belief that the West had a credible military option, and would be willing to use it.

Prime Minister Binyamin Netanyahu has conveyed this message in recent days during private meetings, including one on Sunday with a congressional delegation. If there is a credible military option, he said, the chances that it will have to be used are, paradoxically, reduced.

The IAEA report comes at a time of concern in Jerusalem that the rapid and dramatic developments in the region are diverting the world’s attention from the Iranian nuclear program, with all eyes focused on Tunisia, Egypt and Libya, but not Iran.

The report may provide the United States and allies with additional arguments for further tightening sanctions on the Islamic Republic, after talks in December and January failed to make any progress toward resolving the dispute.

However, Israeli officials said momentum for a fifth round of sanctions seemed unlikely at the present time, since Russia, China and even some European countries were believed to be opposed. The officials were satisfied, however, that the IAEA report revealed to the world the degree to which Iran was not cooperating.

“Iran is not engaging with the agency in substance on issues concerning the allegation that Iran is developing a nuclear payload for its missile program,” the report read.

For several years, the IAEA has been investigating Western intelligence reports indicating Iran has coordinated efforts to process uranium, test explosives at high altitude and revamp a ballistic missile cone in a manner suitable for a nuclear warhead.

An official with knowledge of the IAEA’s investigation said the new information, if it turned out to be correct, concerned both Iran’s past and more recent activities.

The report said that based on an analysis of “additional information which has come to its attention since August 2008, including new information recently received, there are further concerns which the agency... needs to clarify with Iran.”

In a surprise development, the report said the Islamic Republic had said it “would have to unload fuel assemblies” from the core of the Russian-built Bushehr reactor, which Iranian officials had previously said would soon start generating electricity.

Iran is believed to have told the IAEA that a broken pump was forcing it to remove fuel from its first nuclear reactor, in a fresh setback for the $1 billion project, experts familiar with the issue said on Monday.

They said it was a potentially serious problem that could cause months of further delays for the Bushehr plant, which has yet to start injecting power into Iran’s national grid.

Iran has said Bushehr, the first in a planned network of nuclear power plants, would start producing electricity early this year.

One independent expert said the problem apparently concerned an old back-up pump in the reactor.

“I think what happened is that the pump failed, but it didn’t just fail, it broke up, so that... there are pieces of metal that are now circulated throughout the primary cooling system,” the expert told Reuters.

If not fixed, it could ultimately have led to a small radioactive leakage into the reactor’s cooling water.

“They are probably very happy it happened before it went critical [the plant starting to operate] because now they can inspect the fuel a lot more easily,” the expert added.

Fuel was loaded into the reactor four months ago, but a January deadline for it to start producing electricity was missed.

Further woes could be an embarrassment not only to Iranian politicians who have made Bushehr the show-piece of Tehran’s nuclear ambitions, but also for Russia, which would like to export more of its nuclear know-how to emerging economies.

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