KEY POINTS:
Iran's announcement yesterday that it has started enriching uranium on an industrial scale further raises the stakes in its confrontation with the United States and the United Nations Security Council and brings it closer to a possible military showdown with Washington.
In an initial reaction, the White House said it was "very concerned" at the latest development and accused Tehran of defying the international community instead of complying with UN demands to suspend enrichment - which the US and its allies suspect is part of a secret programme to develop a nuclear weapon.
Coming just two weeks after a UN resolution that increased sanctions, the move will be interpreted as a deliberate sign that Tehran is committed to accelerating its programme whatever the cost. The 12-day confrontation with Britain over its capture of sailors and Marines now looks deliberately calibrated to demonstrate this resolve.
Making matters worse is Iran's decision to cut back its already limited co-operation with the International Atomic Energy Agency, the UN's nuclear watchdog. This was "unacceptable," Gordon Johndroe, spokesman for the National Security Council, said during a trip yesterday by President George W. Bush to Arizona.
At the State Department, too, the news was greeted as another sign Iran has decided to press ahead with enrichment, come what may.
The transition to industrial-scale enrichment amounted to "a missed opportunity" and sent "another signal that Tehran is defying the international community", said Sean McCormack, spokesman for Secretary of State Condoleezza Rice.
Iran's announcement was made at an extraordinary ceremony to celebrate its now-annual "Nuclear Technology Day". President Mahmoud Ahmadinejad said: "I proudly announce that as of today Iran is among the countries which produce nuclear fuel on an industrial scale."
At a televised ceremony, top Cabinet and security officials sat in front of a large dais at the end of the hall, where an orchestra played first the national anthem and later a rousing "nuclear symphony".
A poem was recited extolling the glories of God's creation - religious code for scientific progress. When purple and green spotlights illuminated a popular singer crooning about national history, the turbans of clerics at the front of the hall were lit up like a row of marshmallows.
Even before this latest challenge, relations between Washington and Tehran were more fraught than usual.
The US accuses unspecified elements in Iran of providing sophisticated explosive devices that are being used by insurgents against US troops in Iraq. For the last three months it has been holding five Iranians seized in Arbil, despite Iranian demands for their release.
The Bush Administration's position remains that all options - including the use of force - remain on the table. Though Defence Secretary Robert Gates and other top officials deny there is a specific plan for military action, the Pentagon has long had contingency plans for air strikes against Iranian nuclear sites.
Despite the massive strains imposed on the US military by the Iraq war, rumours persist that Bush will order an attack within the next few weeks.
Rice says she is willing to hold talks with her Iranian counterpart at a foreign-ministers-level meeting of regional countries, aimed at stabilising the situation in Iraq and tentatively scheduled for next month. But, says the White House, any such contacts will be limited to Iraq.
As matters stand, Iran has until the end of next month to comply with the latest UN demand for a suspension of enrichment activities or face "further appropriate measures".
That deadline was part of the March 24 Security Council resolution curbing aid to Tehran, blocking all Iranian arms exports and freezing the foreign assets of officials and institutions involved in Iran's nuclear and ballistic missile programmes.
But within minutes of its passage, Iranian officials were denouncing the measures as "illegal". As if to mock the Security Council - and divide its veto wielding members at the same time - Tehran separately announced yesterday that a senior official had just made a visit to Russia without the slightest problem, despite a theoretical UN ban on such travel.
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