Saudi Arabia today revealed details of an ambitious offer to Tehran, aimed at defusing the growing crisis over Iran’s controversial nuclear programme.

Speaking at the end of the state visit to London by King Abdullah of Saudi Arabia, his Foreign Minister Prince Saud al-Faisal said that every effort must be made to avert what many fear could turn into a military confrontation between the United States and Iran.

Washington and Tehran again attacked each other over the issue today. Nicholas Burns, the US under-secretary of political affairs, said that America was pushing to impose new sanctions on Iran. In Tehran, President Mahmoud Ahmadinejad threatened retaliation against Europe if it followed America’s lead.

At the heart of the problem is Iran’s uranium enrichment plant at Natanz. Iran insists that enriched uranium will be used purely as fuel for its nuclear reactor at Buhsher. America and other Western nations suspect that the Iranians want to produce highly enriched uranium for use as a warhead in an atomic bomb.

Prince Saud said that to defuse the row, Saudi Arabia and a consortium of Arab Gulf states had invited Iran to produce enriched uranium jointly, where the plant could be properly monitored by international observers.

“We have proposed a solution, which is to create a consortium for all users of enriched uranium to do it in a collective manner that would distribute (nuclear fuel) according to need,” he said. “We hope the Iranians will accept this proposal.”

He said that the proposed plant would be built in a neutral third country, like Switzerland.

While the offer provides an imaginative solution to the crisis in the Gulf, Iran has so far not replied and in its public statements Tehran seems determined to press ahead with the construction of its own nuclear programme.

Tomorrow senior diplomats from America, Britain, China, France, Germany and Russia will meet in London to discuss the next move by the international community.

Washington, London and Paris all want existing United Nations sanctions tightened against Tehran, but the moves have been blocked at the UN Security Council by Moscow and Beijing, who both have lucrative trade arrangements with Iran.

A decision is expected later this month when the International Atomic Energy Agency (IAEA), the UN’s nuclear watchdog, is due to deliver its latest report on Iran.

America has already tightened unilateral sanctions against Iran and is pressing the European Union to follow suit if no action is taken at the UN. The EU is Iran’s largest trading partner, accounting for 40 per cent of the country’s imports.

Speaking during a visit to a petrochemical complex in southern Iran, Mr Ahmadinejad said that sanctions did not work and that Europe had more to lose than Iran.

“You, Europeans, know well what will happen in the economic sphere if Iran takes a serious move in this matter,” he said. “You Europeans need us more...”

In the region there are fears that if the crisis escalates without a solution President Bush may carry out his threat to use force against Iran before it acquires a nuclear bomb.

Prince Saud said that another conflict in the region, which produces most of the world’s energy, would be a disaster for everyone.

“The escalation going on that could lead to conflict will benefit no one,” he said. “War in the area would be terrible.”

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