Tuesday, August 29 2006 15:26 Hrs (IST) - World Time -

Tehran: Iran is facing a critical juncture the UN Security Council has given it until Aug 31 to suspend its uranium enrichment programme or face sanctions and further political isolation. The inauguration of a heavy-water reactor over the weekend in Arak, southeast of Tehran, was anything but a positive signal to New York.

While Iranian officials said it would mainly be used for medical research, the plant can also produce plutonium used for nuclear warheads. President Mahmoud Ahmadinejad has since clarified the current Iranian position - negotiations yes, concessions no. In other words, Iran is ready to talk to the West about details of its nuclear programme and is open to new proposals. But the Islamic state rejects the main demand of the Security Council: the immediate suspension of the uranium enrichment process. For Ahmadinejad, who has regularly played up the nuclear dispute on the national stage, backing down now would not only damage his credibility in front of his own people but also within the Islamic world. Observers believe that if sanctions were implemented by the UN after Thursday's deadline, Iran will be pushed into further extremes, not only revising its commitment to the Nuclear Non-Proliferation Treaty (NPT) but also its cooperation with the International Atomic Energy Agency (IAEA). Iran has also warned that sanctions would lead to an oil crisis and even suggested that Iran would block the Strait of Hormuz, the regional gateway for global oil supply in the Persian Gulf.

Such a move could send oil prices beyond $100 per barrel. Teheran still hopes that its strategic allies in the Security Council - China and Russia - would not support UN sanctions, although the country has proclaimed to be prepared even for the worst scenario. "If the West went into extremes, then we would react accordingly. In that case it will not only be Iran getting harmed," chief nuclear negotiator Ali Larijani warned the West. But Iranian officials have also several times stressed that they are not set on a confrontation. A reform activist said Iran did not want to turn into a second North Korea. Therefore efforts were on to reach a decent - and preferably secret - deal through negotiations. Such signals have come from Iranian Foreign Minister Manouchehr Mottaki. "Let's return to the negotiation table and then we could discuss everything," Mottaki said, also putting uranium enrichment suspension on the agenda. Larijani has even declared the country's readiness to negotiate with its archenemy the US, which suspended diplomatic relations in 1980. Iran had until now rejected direct US involvement in the nuclear talks. Iran, however, also has another trump card up its sleeve in its backing of Lebanon-based militant group Hezbollah. "The Iranian influence within Hezbollah is well known, so are the related problems for the West," an Arab diplomat in Tehran said. Observers believe that last week's remarks by Larijani, in his meeting with envoys of the five veto-wielding UN powers plus Germany, were not just rhetoric but carefully chosen. "Iran, as a country fully aware of its international responsibilities, is ready to play a constructive role with regard to regional security issues," Larijani said while presenting Iran's response to a series of incentives offered by the international community. Ahmadinejad, who has caused a stir with a number of anti-Semitic remarks, has also sounded more conciliatory of late. "Out atomic programme is no military threat against any country, not even against the Zionist regime (Israel)," he said.