Bush talks diplomacy, Iran sees psychological war

WASHINGTON - President George W Bush said today there was still time for diplomacy to halt Iran's nuclear ambitions, but a Russian deal to provide the Islamic republic with nuclear fuel in defiance of the United States was likely to rekindle fears of confrontation.

Iran accused its long-time foe Washington of using a brief worldwide scare over an explosion on Wednesday near its only nuclear reactor to unleash "psychological warfare. "

The explosion - first reported by Iranian television as a possible airplane missile strike but later said to have been an errant construction site blast - rattled an anxious world.

Washington has accused Iran of trying to develop nuclear weapons, and it is seeking to halt any potential weapons-related work.

Iran, rich in oil but struggling to provide power for a growing population, denies that it is developing nuclear arms and says its programme is solely for generating electricity.

"As you know, the Iranian issue hasn't even got to the (UN) Security Council yet. And so there's more diplomacy, in my judgment, to be done," Bush told a news conference called to present his new US intelligence czar.

Bush's remarks suggested that any moves toward military action would wait at least until after the matter goes before the United Nations for possible sanctions.

Vice President Dick Cheney recently raised the possibility that Israel, Washington's close ally, might take matters into its own hands and bomb suspected Iranian nuclear sites.

Bush in 2002 grouped Iran with North Korea and Saddam Hussein's Iraq into what he called an "axis of evil. "

However, he told the news conference that Iran was different from Iraq, which the United States invaded over allegations of weapons development but only after years of diplomacy. Bush said he would discuss Iran during a trip to Europe next week.

Iran, meanwhile, announced a deal, to be signed later this month, for fuel from Washington's former superpower rival Russia for its reactor, in the southern city of Bushehr.

Russian Atomic Energy Agency chief Alexander Rumyantsev, confirming the accord, said ways of accelerating the reactor's start-up would be discussed during his visit to Tehran next week, Russia's Interfax news agency reported.

The 1000-megawatt reactor is due to reach full capacity in 2006.

Under the announced deal, spent fuel would be sent back to Siberian storage units after about a decade of use - a condition Russia thinks should allay US concerns that Iran could use the material to make weapons.

Word of the Russian agreement came one day after Iranian state television shook world markets - already worried about any possible US or Israeli intervention - by reporting an explosion near the Russian-built nuclear power plant.

The explosion was later attributed to work during dam construction, but only after reports of the blast were flashed around the world.

Iran's chief nuclear negotiator, Hassan Rohani, saw a calculated campaign by the United States and the Western media. "Reports of a strike were false and are psychological warfare," against Iran's legitimate nuclear programme, he said.

Tehran has accused the United States of using satellites and other means to spy on its nuclear sites and threatened to shoot down any surveillance craft.

The European Union, represented by France, Britain and Germany, has been trying to persuade Iran to scrap any weapons-related activities in return for economic incentives.

However, the Islamic republic has repeatedly said it will never permanently end its nuclear activities - a policy that enjoys widespread support across a broad range of domestic political, social and religious factions.

Israel said on Wednesday that Iran was just six months away from having the knowledge to build nuclear weapons.

In the past, Israel has warned of possible pre-emptive military attacks on its nuclear facilities, similar the attack on Iraq's Osiraq reactor in 1981.

Bush did not repeat his vice president's suggestion of possible Israeli air strikes, but he used his press conference to reiterate strong backing for the Jewish state.

"Iran has made it clear they don't like Israel, to put it bluntly. And the Israelis are concerned whether or not Iran develops a nuclear weapon, as are we, as should everybody, " Bush said.

"In that Israel is our ally, and in that we've made a very strong commitment to support Israel, we will support Israel if their security is threatened," Bush said.

- REUTERS