Iran now controls the entire cycle for producing nuclear fuel with the opening of a new facility to produce uranium fuel pellets, the Iranian president said Saturday. Mahmoud Ahmadinejad made the speech two days after the inauguration of a facility that produces uranium oxide pellets for a planned 40-megawatt heavy-water nuclear reactor near the town of Arak, in central Iran. Production of nuclear fuel pellets is the final step in the long, complicated chain of nuclear fuel cycle. The US and its allies have expressed concern over Iran's developing nuclear program for fear it masks a nuclear weapons program - a charge Iran denies. Heavy-water reactors use a different process than light-water ones, but have their own nuclear proliferation concerns. The West fears Iran could eventually reprocess spent fuel from the heavy-water reactor to produce plutonium for a warhead. "Today, with the grace of God, Iran is a country controlling the entire nuclear fuel cycle," Ahmadinejad said on state television. Ahmadinejad has announced several times in the past that Iran has the knowledge necessary to produce its own fuel, but with the opening of the new facility, the Islamic republic says it now has the capability on an industrial scale. Heavy-water reactors do not need enriched uranium for fuel and instead uses the more easily produced uranium oxide pellets. To produce the enriched uranium for the more powerful light-water reactors, Iran's scientists would need to change the facility's technical specifications - something they eventually plan to do. Iran has also been making strides in its effort to enrich uranium. On Thursday, officials said the number of centrifuges at Iran's uranium enrichment facility in Natanz, central Iran, have increased to 7,000 - up from 6,000 announced in February - and that a new, more advanced type of centrifuge had been tested. Highly-enriched uranium, however, can also produce a nuclear bomb, something that has the West very concerned. Iran maintains its program is strictly to make energy. Ahmadinejad said the next step for Iran was to achieve proficiency in building nuclear power plants without help from foreign countries. Iran is putting the finishing touches on a nuclear power plant with Russian help in Bushehr, in southern Iran, but the uranium fuel to power it is imported. Teheran also plans to build a 360-megawatt light-water nuclear power plant in Darkhovin, in the southwestern Khuzestan province, which it will power with its own fuel. "With the construction of [indigenous] nuclear power plants, all of Iran's nuclear energy needs will be met locally," Ahmadinejad said. Earlier Saturday, Ahmadinejad accused Europe and the US of condemning his country because Teheran "defends the rights of the Palestinian people," and not because his country allegedly supports terror or is pursuing a military nuclear program. "Do you think it is right that some European countries and the United States support the occupying regime and the unnatural Zionist state, but condemn Iran, merely because we are defending the rights of the Palestinian people?" the Iranian leader was quoted as saying in interview with the German Der Spiegel. Ahmadinejad reportedly claimed it was important to get to the root of the Middle East problem, which, he explained was that Israel was "the result of World War II," a war that had nothing to do with the Palestinian people or with the Middle East region. "If one doesn't consider the causes, there can be no solution," he said. When asked if "getting to the root of the problem" meant wiping out Israel, Ahamdinejad replied "It means claiming the rights of the Palestinian people." The Iranian president stressed that Teheran was defending "more than the basic rights of oppressed Palestinians" and laid out an Iranian proposal for resolving the Middle East conflict, by allowing the Palestinians to determine their future "in a free referendum." Ahmadinejad avoided speaking about the Holocaust, which he has denied publicly many times, and told the German reporter that he believed "that the controversy over the Holocaust is not an issue for the German people." Regarding statements calling on Iran to stop supporting terror, Ahmadinejad denied that his country commits terror and, furthermore, claimed Teheran did not want to build a nuclear weapon. "We do not commit terror, but we are victims of terror. Our faith forbids us from engaging in terrorism," he was quoted as saying. "We have no interest in building a nuclear weapon. We have sent the IAEA thousands of pages of reports and made thousands of hours of inspections possible. The IAEA cameras monitor our activities," he said. "Who is dangerous, and whom should the inspectors distrust? Those who secretly built the bomb, or us, who are cooperating with the IAEA?" Ahamdinejad asked. The Iranian leader went on to express his "distrust" and "concern" with the UN, and stated that "were [things] done fairly in the world, Iran would also have to be a member of the Security Council." "We do not accept the notion that a handful of countries see themselves as the masters of the world. They should open their eyes and recognize real conditions," said Ahmadinejad. When asked about the shift in American policy and US President Barack Obama's repeated statements on his commitment to dialogue with Iran, Ahamdinejad said he is "neither obstinate nor gullible" regarding the prospects of improving the relations between Washington and Teheran. While "we cannot expect to see problems that have arisen over more than half a century resolved in only a few daysâ€¦solutions can be found" if steps were taken by the US to change the atmosphere, Ahmadinejad said. "Great things are happening in the United States," said the Iranian president, stressing that he expected "fundamental changes" on part of the Obama administration. Ahmadinejad explained that he his country was waiting for Obama to announce his plans so that they could be analyzed.