The UN nuclear agency's 35-nation board on Thursday denied Iran technical help in building a plutonium-producing reactor, but left room for Tehran to resubmit its request. Defiant Iranian officials said construction would continue.
As the International Atomic Energy Agency's governing board made its decision, IAEA chief Mohamed ElBaradei chided Iran for not fully cooperating with agency experts trying to establish that its nuclear program is not being used to make weapons.
"We have reached a period of standstill," he told reporters.
But he said that Iran had recently compromised on two issues - agreeing to provide access to the operating records of its pilot uranium enrichment plant at Natanz and allowing inspectors to take more samples from a facility that had yielded suspicious traces of enriched uranium.
ElBaradei described the concessions as important, saying it would allow the agency to gain further understanding of how successful Iran's enrichment efforts were and possibly determined the origin of the uranium traces.
Expressing hope that Iran's moves were the "beginning of a series of cooperative measures," he said full cooperation - and Iran's compliance with a Security Council demand to stop uranium enrichment - would remove the threat of UN sanctions hanging over Tehran.
Uranium enrichment and plutonium reprocessing can both produce fissile material for nuclear warheads. While Iran says it only wants to generate energy and needs the plutonium-producing Arak plant to make nuclear isotopes for medical use, there is concern because both programs could be used to make weapons.
On Arak, the board waived a decision on Tehran's request for aid. That, in effect, denied IAEA help - at least for the next two years, after which new requests will be considered and the Arak project may be resubmitted.
The board accepted a text approving all requests for IAEA technical aid - "with the exception of" Arak.
That wording allowed both the United States and Iran to claim victory.
Gregory L. Schulte, the chief US delegate to the IAEA, said Arak was "removed entirely from the program, not just deferred," adding: "Never has Iran been so isolated."
"The US and the IAEA are not prepared to help countries build nuclear bombs," he told reporters.
But Ali Ashgar Soltanieh, the chief Iranian representative, said his country would not be deterred, telling reporters: "The Iranian government is determined to continue the construction of this heavy water reactor."
Disputing Schulte's view, he said the ruling means "that this project was not deleted ... and therefore we are expecting as soon as possible the decision be made" to provide the requested aid.
In Tehran, Iranian Foreign Minister Manouchehr Mottaki said the IAEA was legally required to provide technical assistance to Iran, a signatory to the Nuclear Nonproliferation Treaty.
"It is the duty of the IAEA to help. If they help, we will appreciate it. If not, we will do it on our own," Mottaki said.
The board also reviewed a report on the latest stage of a nearly four-year IAEA investigation into Iran's nuclear activities.
That report says that the agency has been unable to make headway in determining whether suspicions that Tehran intends to make nuclear weapons are well founded. On Thursday, ElBaradei said his inspectors had "not been able to make any progress" in their investigation.
"This is essentially due to the decision by Iran to limit its cooperation," he said, calling this "a matter of serious concern." He also called North Korea's nuclear test last month a "matter of deep regret and concern" and urged the country to give up its arms program.
Still, the Arak dispute was the main focus of the meeting.
Technical aid requests are normally approved without discussion - but since Monday, suspicions that Iran might be seeking to make nuclear weapons led to diplomatic jostling on what to do about Arak, which will produce enough plutonium for two bombs a year once completed within the next decade.
Past IAEA resolutions have urged Iran to stop building the Arak reactor, which Iran says it needs to produce radioactive isotopes for medical purposes.
Arak is one of seven or eight projects submitted by Iran - lists circulated at the meeting have conflicting numbers. The non-Arak submissions ask for help in developing nuclear capabilities for medical use, or for legal, administration or safety aspects of nuclear power.
Rebuffing Iran's Arak request would not affect its construction and would also have no effect on the country's other potential avenue to weapons production - uranium enrichment.
Still, it would maintain at least symbolic pressure while the UN Security Council is deadlocked over how to sanction Iran for ignoring demands to stop enriching uranium.