US Secretary of State Condoleezza Rice demanded on Saturday that Iran abandon a suspected quest for atomic weapons but Tehran's new president said his country would defend its right to enrich uranium.
Rice told the UN General Assembly that Iran's nuclear programme was a real threat to global security and the Security Council must deal with it unless Iran ended sensitive activities and resumed talks with the European Union.
"Iran should return to negotiations with the EU3 and abandon forever its plans for a nuclear weapons capability," she said. "When diplomacy has been exhausted, the Security Council must become involved."
However, State Department spokesman Sean McCormack later quoted Rice as saying: "There is still time for diplomacy but it's up to the Iranians to seize the opportunity."
Iranian President Mahmoud Ahmadinejad said in a television interview that his country's programme was entirely legal. He attacked what he called "nuclear apartheid" that would permit some countries to enrich fuel, but not others.
"The first point is stressing the right of the Islamic Republic of Iran to pursue and have the nuclear (fuel) cycle," he told CNN.
Speaking through an interpreter, Ahmadinejad called for a UN committee to control the spread of nuclear weapons technology and did not rule out triggering an oil price rise if the West hauled Iran to the top UN body for sanctions.
"Any intelligent, healthy smart human being should use every resource in order to maintain his or her freedom and independence," he said when asked about the oil weapon. Iran "has the means to defend and obtain its rights," he added.
Ahmadinejad gave few details of proposals he was to outline to the General Assembly later aimed at allaying international concerns about Iran's nuclear ambitions.
The Islamic Republic swears its program, concealed from the International Atomic Energy Agency for 18 years, is purely for civilian energy purposes.
BRINKMANSHIP UN Secretary-General Kofi Annan warned the world in his opening address that the consensus underlying the nuclear Non-Proliferation Treaty was badly frayed while nations pointed fingers at each other rather than working for solutions.
"We face growing risks of proliferation and catastrophic terrorism, and the stakes are too high to continue down a dangerous path of diplomatic brinkmanship," he said.
Iran last month spurned a European package of economic, security and technology incentives for it to abandon sensitive nuclear work and reactivated a factory converting uranium ore into gas, prompting the European Union to break off talks.
Diplomats at IAEA headquarters in Vienna said Ahmadinejad was expected to revive a proposal to turn Iran's uranium enrichment program into an international joint venture, which European countries had rejected in earlier negotiating rounds.
Rice and EU ministers left open the timing of a decision to refer Iran to the Security Council, but diplomats said the West was determined to press for a vote this month.
European diplomats said the three European powers that have been negotiating with Iran - Britain, France and Germany - had adopted a softer tone to be seen as giving Ahmadinejad a chance and to win over waverers on the IAEA board.
They said Washington and the EU3 believed they had the support of at least 20 countries on the 35-member board, which meets beginning on Monday. One option being considered was to put forward a resolution but hold off a vote for two or three weeks to give Iran a final chance to halt uranium conversion.
Nuclear powers Russia, China, India and Pakistan are all reluctant to back a referral and diplomats say Iran, the world's second-biggest oil producer, is convinced it has the upper hand and has little to fear from the Security Council.
Russian President Vladimir Putin said after discussing Iran with US President George W. Bush on Friday that diplomacy was far from exhausted and there was still room for negotiation.
The council has the power to take action against Iran ranging from a verbal slap on the wrist to a total trade ban. But sanctions are a very remote prospect.
IAEA chief Mohammed ElBaradei has urged the Western powers to wait but the diplomats said delay would only embolden Iran to push on toward nuclear fuel enrichment, having "got away" with the precursor phase of uranium conversion.
In addition, the diplomatic arithmetic will get tougher when more non-aligned nations join the IAEA board later this month.