Iran, facing almost certain referral to the UN Security Council, threatened retaliation Thursday, and the head of the International Atomic Energy Agency said the dispute over Teheran's nuclear program was "reaching a critical phase." Ahead of a decision in Vienna by the IAEA's 35-nation board, US and European delegates turned to behind-thescenes diplomacy to try to build the broadest possible support for reporting Iran to the council over concerns it is seeking nuclear weapons. Cuba, Venezuela, Syria and a few other nations at odds with Washington remained opposed. India, a key opinion leader among board nations, was said to be leaning toward supporting referral. Diplomats accredited to the Vienna meeting said backing for Iran had shrunk among the UN nuclear watchdog's board since Russia and China swung their support behind referral at an overnight meeting with America, France and Britain - the other three permanent council members - earlier in the week. In Washington, State Department spokesman Sean McCormack said the number of nations expected to vote against referral was in the "low to single digits." Israel, meanwhile, was keen on seeing the issue sent to the Security Council as soon as possible. According to the Israeli position, time is of the essence, since Iran may have all the technical know-how to build a bomb in a year. Even if it would then still take some time to actually build nuclear weapons, all that would be necessary would be a decision in Teheran to do so. Israel's support for referring the issue to the UN has been based on the position that the Iranians must understand that the development of a nuclear program in the face of international opposition is not a "cost-free exercise." It is widely assumed in Jerusalem that if sanctions were applied, they would be applied gradually. They are expected to begin with an attempt to impress upon Iran's leaders that "life cannot go on as usual." This means that high-level visits to Iran from around the world would be cancelled, Iran's participation in various international competitions would be placed at risk and an unfriendly business environment would be created to scare investors out of Iran. It was also expected in Jerusalem that these sanctions would target those in government and involved in the nuclear program, denying them visas to travel abroad. Eventually the sanctions could be stepped up to ban both oil exports from, and imports to, Iran, a move that could bring traffic in Teheran to a standstill since Iran does not refine its own oil products. Israeli officials were heartened by US President George W. Bush's comments Wednesday that the US would come to Israel's defense if it were attacked by Iran. Referring to Iranian President Mahmoud Ahmadinejad, Bush said during an interview, "I am concerned about a person that, one, tries to rewrite the history of the Holocaust, and two, has made it clear that his intentions are to destroy Israel. "Israel is a solid ally of the United States, we will rise to Israel's defense if need be. So this kind of menacing talk is disturbing. It's not only disturbing to the United States, it's disturbing for other countries in the world as well." Asked if he meant the US would rise to Israel's defense militarily, Bush said: "You bet, we'll defend Israel." Sources in the Prime Minister's Office said that Bush's comments were a testament to the strong strategic relationship that exists between the US and Israel, a strategic relationship which Prime Minister Ariel Sharon did much to cultivate. There was also some speculation among diplomatic officials that these strong statements were "compensation" for Hamas's victory in the Palestinian Legislative Council elections, elections that the US pushed Israel to allow. While Israel was pleased that it seemed the Iranian dossier was going to the Security Council, diplomatic officials said there was concern in the security establishment that this could lead to a spike in terrorist attacks inside Israel or along the northern border, as Iran would show its displeasure by using terrorism to try to destabilize the region. Iran, meanwhile, remained defiant. Teheran's chief nuclear negotiator told IAEA chief Mohamed ElBaradei on Thursday that his country would severely curtail agency inspections of its atomic program and resume uranium enrichment if reported to the council. Ali Larijani, in a letter, said such a move would leave his country no choice but "to suspend all the voluntary measures and extra cooperation" with the IAEA - shorthand for reducing IAEA monitoring authority over its nuclear activities. Furthermore, "all the peaceful nuclear activities being under voluntary suspension would be resumed without any restriction," said the letter, suggesting a resumption of work on full-scale uranium enrichment, a process that could lead to nuclear arms. Iran has made such threats previously. But this time, the warnings - significantly - were in the form of a formal notification to the head of the IAEA. As the meeting adjourned Thursday, US and European diplomats intensified efforts to widen support for a European draft resolution calling for referral. A vote was expected Friday or Saturday. Countries opposed have the choice of directly voting against the text or abstaining. If the board approves referral as expected, it will launch a protracted process that could end in Security Council sanctions for Teheran. But no action is expected for weeks, if not months. Moscow and Beijing support referral only on the condition that the council do nothing until at least March, when the board next meets to review the status of an IAEA probe into Iran's nuclear program and recommends further action.