In a blunt response to international concern about Iran’s nuclear ambitions, Ali Larijani, the chief negotiator on atomic issues, said that Tehran was ready for a showdown with world powers when the matter was taken up by the UN Security Council this month.

“We will expand nuclear technology at whatever stage it may be necessary and all of Iran’s nuclear technology including the [centrifuge] cascades will be expanded,” he said in Tehran.

The announcement was regarded not simply as another rhetorical outburst from Tehran but rather the precursor of a formal reply to the West which will be delivered in full on August 22.

In June the Iranians were offered a package of incentives if they agreed to suspend uranium enrichment, the process used to make nuclear fuel for atomic power stations but which can also be diverted to produce highly enriched uranium for an atomic bomb.

The package included promises to build up trade, diplomatic and other relations with Tehran, including the first formal face-to-face talks with America in nearly three decades. Iran would be allowed to build light-water reactors to produce nuclear power but the nuclear fuel would be imported, probably from Russia. In return Iran would have to cease its uranium enrichment.

The Iranians failed to reply to the offer and on July 31 the UN Security Council passed a resolution demanding that Iran cease its enrichment work by the end of this month or face sanctions.

Mr Larijani said yesterday that Iran had a right under the nuclear Non-Proliferation Treaty (NPT) to build a civilian nuclear programme. He said Iran was planning to expand its operations at the heavily-guarded Natanz facility in central Iran, where the authorities hope to have 3,000 centrifuges — which enrich uranium by spinning it at supersonic speeds — operating by the end of this year. “We will expand nuclear activities where required. It includes all nuclear technology including the string of centrifuges,” he said. ”We won’t accept suspension.”

Mr Larijani also served warning that Iran would retaliate if the world imposed sanctions. “We will react in a way that would be painful for them. They should not think that they can hurt us and we would stand still without a reaction.

“We do not want to use the oil weapon. Do not force us to do something that will make people shiver in the cold. We do not want that,” he said.

Experts are divided over whether Iran would carry out its threat to withhold oil sales as a political weapon. The dispute with Iran is already responsible for pushing crude oil prices up to record levels.

As Iran is the fourth largest Opec exporter, a freeze on oil sales could push up prices even further and could trigger an energy crisis.

Iran would, however, also suffer greatly.

Oil accounts for 80 per cent of the country’s export earnings and the local economy would collapse if crude exports were halted indefinitely.

In the past Iran has cleverly managed to divide the permanent members of the UN Security Council, using China and Russia, which has large commercial interests in Iran and is building the main nuclear power station at Bushher, to avoid sanctions.

The international mood has hardened, however, not least because of Iran’s support for Hezbollah in its war with Israel.

Possible sanctions against Iran include a ban on all sales of nuclear equipment, an arms embargo and other measures intended to isolate the regime and punish it for its defiance.

Concerns about Iran’s nuclear ambitions have been heightened by a UN report prepared last month which alleged that an illegal shipment of uranium was intercepted in Tanzania last October en route from Congo to an Iranian port.

Mr Larijani yesterday denied the allegations, insisting that Iran had its own uranium mines and that the report was part of an American “psychological war” against Iran.

ROAD TO STAND-OFF

• November 14, 2004 Iran’s chief nuclear negotiator announces a voluntary temporary suspension of its uranium enrichment after pressure from the UK, France, and Germany
  
• August 3, 2005 Mahmoud Ahmedinejad becomes President of Iran Within a week the Iranian government resumes its conversion of uranium
  
• February 4, 2006 International Atomic Energy Agency votes to report Iran to the UN Security Council
  
• April 11, 2006 President Ahmedinejad announces that Iran has successfully enriched uranium
  
• June 01, 2006 The UN Security Council agrees a carrot-and-stick plan to persuade Iran to halt uranium enrichment. Iran fails to reply
  
• July 31, 2006 Security Council passes resolution calling for Iran to suspend all uranium enrichment and related activities by August 31 or face sanctions

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