Iran to reply to atomic offer

By Edmund Blair

TEHRAN (Reuters) - Iran's Supreme Leader Ayatollah Ali Khamenei said on Monday Iran would press ahead with its pursuit of nuclear energy, indicating it will not heed a UN demand it stop enriching uranium or face possible sanctions.

Khamenei, who has the final word, did not mention enrichment by name but senior officials have repeated in recent days that it would not be stopped, with the deputy head of Iran's Atomic Energy Organisation joining the chorus on Monday.

"Considering the technical advancement of Iranian scientists, the suspension of uranium enrichment is not possible any more," Mohammad Saeedi was quoted as saying on Iran's Fars News Agency.

Saeedi said Iran would formally reply on Tuesday to a nuclear package offered by six world powers, in return for an end to enrichment, that is aimed at allaying the West's fears that Iran wants atomic bombs.

Khamenei said Iran would pursue its nuclear plans.

"The Islamic Republic of Iran has made its decision and, in the issue of nuclear energy, will continue its path powerfully ... and it will receive the sweet fruits of its efforts," state television quoted him as saying.

The United States, Russia, China, Britain, France and Germany presented the package in June, offering Iran economic and other incentives if it first halted uranium enrichment, a process that has both military and civilian uses.

The U.N. Security Council has demanded Iran halt enrichment by August 31 or face possible sanctions.

Iran has suggested it will not give a simple 'yes' or 'no' to the package but said the reply would be "multi-dimensional".

Iranian officials say they want more talks, but Western diplomats say Iran must halt enrichment first.

Anything short of that that is likely to be considered a rejection of the offer in Western capitals.

Iran's Foreign Minister Manouchehr Mottaki, visiting South Africa, repeated a call for negotiations to end the dispute.

Iran has not said precisely how it will give its formal reply. One Iranian official suggested it could deliver a letter to European Union foreign policy chief Javier Solana, who handed the package to Tehran. But this could not be confirmed.

Solana said in a statement that he had spoken by phone with Iran's chief nuclear negotiator, Ali Larijani, on Sunday.

"We both agreed on our openness, under the right circumstances, to further contacts with the aim of establishing confidence in the purely civilian nature of the Iranian nuclear programme," he said without mentioning a deadline for a reply.

Solana's office gave no reaction to Khamenei's statement, only saying Solana expected a reply from Larijani. "The Larijani-Solana channel is the one that counts," an EU diplomat said.

The world's fourth largest oil exporter insists it has the right to enrich uranium under international treaty and says it will use the technology to produce electricity.

Western diplomats say Iran must first prove its aims are entirely peaceful to enjoy that right but the UN nuclear watchdog, the International Atomic Energy (IAEA), says questions must be answered before it can give Iran a clean bill of health.

Washington has said it expects the United Nations to act swiftly if Iran refuses to stop the sensitive atomic work. But last month's resolution does not include an automatic trigger for sanctions, so any such move could take weeks or more.

Iran may calculate that UN divisions mean it faces only modest measures such as asset freezes or travel restrictions on officials, which it feels it can tolerate, analysts say.

Western leaders regard Iran as an urgent risk to peace, while Russia and China, key trade partners of Tehran, do not.

Some Iranian analysts say Iran may feel strengthened after Lebanon's Iranian-backed Hizbollah scored what the group and Tehran called a victory in its conflict with Israel.

Although the United States has called for a diplomatic solution, it has refused to rule out military action.