Iran plans to start setting up thousands of uranium enriching centrifuges this year even as it negotiates with Russia on scrapping such domestic activity - a possible pathway to nuclear arms, the UN atomic watchdog said Monday.
The International Atomic Energy Agency, in a confidential report made available to The Associated Press, also suggested that unless Iran drastically increased its cooperation with an IAEA probe, the agency would not be able to establish whether past clandestine activities were focused on making nuclear arms.
The report, prepared by IAEA head Mohamed ElBaradei for a March 6 meeting of the agency's 35-nation board of governors, could help determine what action the UN Security Council will take against Iran.
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A February 4 board meeting already reported Tehran to the council over concerns it might be seeking nuclear arms. But further action was deferred until the end of next week's meeting on the insistence of veto-wielding council members Russia and China, which have close ties to the Islamic republic.
The 11-page report emphasized that a more than three-year probe has not revealed "any diversion of nuclear material to nuclear weapons or other nuclear explosive devices."
Still, it declared that - because of lack of sufficient cooperation from the Iranian side - the IAEA remained unable "to conclude that there are no undeclared nuclear materials or activities in Iran."
The finding was essentially an admission that the agency cannot establish whether Iran is hiding aspects of its nuclear program that it is obligated to report to the agency under the Nuclear Nonproliferation Treaty.
Also disturbing was evidence showing Iran's intention to embark on full-scale uranium enrichment - despite intense international pressure to scrap all such activities domestically.
The development appeared to jibe with news of lack of progress in talks between Moscow and Tehran meant to move Iran's nuclear enrichment program to Russia in an attempt to defuse concerns it might be misused to make nuclear warheads instead of fuel.
Earlier in the day, Russian officials played down reports of a deal, reminding Tehran it must freeze its domestic uranium enrichment - something Iran has so far refused to do.
"It seems there has been no decisive progress," German Foreign Minister Frank-Walter Steinmeier said.
And US State Department spokesman Adam Ereli described news of the agreement as "more chaff being thrown up by the Iranians ahead of the Board of Governors meeting" next week.
The Russian offer to host Iran's uranium enrichment program has been backed by the United States and the European Union.
But the report made available Monday showed Iran pressing ahead with enrichment at home by going from testing a lone centrifuge - a machine that spins uranium gas into enriched uranium - to actually introducing the gas into 10 centrifuges and beginning enrichment between February 11 and February 15.
Furthermore, the report said Iran began final maintenance of an additional 20 centrifuges a week ago, reflecting determination to further expand enrichment though it would leave Iran still far short of the thousands of centrifuges it needs to enrich substantial amounts of uranium.
Just a few months down the road, "commencement of the installation of the first 3,000 ... (centrifuges) is planned for the fourth quarter of 2006," the report said.
Experts estimate that Iran already has enough black-market components in storage to build the 1,500 operating centrifuges it would need to make the 20 kilograms of highly enriched uranium needed for one crude weapon.
The report also repeated appeals for Iran to cooperate that have been a staple of the more than a dozen documents produced by ElBaradei on the status of the probe into Tehran's nuclear program.
Detailing some of Iran's foot-dragging over the past month, as well as new findings of concern, the report said:
_ "Iran again declined to provide" a copy of a document located earlier by IAEA inspectors showing how to cast fissile uranium into the shape to fit a warhead.
_ There were "inconsistencies" in tests of plutonium isotopes provided the agency to help it look into plutonium separation experiments in the mid 1990s, suggesting that not all plutonium had been accounted for.
_ Iran dismissed information based on US intelligence documenting links between the so-called "Green Salt Project" - a precursor of uranium enrichment - with nuclear-related high explosives and warhead design as "based on false and fabricated documents."