Iran vowed yesterday to press ahead with a controversial nuclear reactor after the United Nations atomic watchdog refused to offer any technical aid in its construction.

In the latest round of the battle between the West and Tehran over its nuclear ambitions, the International Atomic Energy Agency (IAEA) said that it would not help the Iranians to complete the Arak heavy water reactor, where they have asked for help in “security” expertise.

“The decision is that the [Arak] project will be definitely put on hold,” Mohamed ElBaradei, the IAEA director, said. “If matters [with Iran] move in a different direction in future, the board might consider to revisit the decision.”

Manoucher Mottaki, the Iranian Foreign Minister, insisted that the IAEA had a legal obligation to provide technical assistance to member states constructing civilian nuclear projects.

“It is the duty of the IAEA to help,” he said. “If they help, we will appreciate it. If not, we will do it on our own.”

At issue is the 40-megawatt reactor inaugurated in August near the town of Arak, 200 miles (320km) southwest of Tehran. The complex is in a remote mountain region and protected by anti-aircraft batteries. Part of the site is being built underground.

Iran insists that it needs to build the Arak reactor to produce plutonium for use in medical nuclear isotopes. It hopes to complete the project by 2009.

Western experts fear that Iran wants to divert the project and use the plutonium to build an atomic warhead. It is estimated that the reactor could produce enough fissile material for two nuclear bombs a year.

Yesterday’s setback for Iran was regarded as a diplomatic coup for the West. To win the approval of the 35 member states on the board of governors, it needed the backing of non-aligned countries, which have publicly supported Iran. All other requests for aid in projects submitted by member states were approved.

Gregory Schulte, the American representative to the IAEA, hailed the decision as a victory over the Iranians. “The US and the IAEA are not prepared to help countries build nuclear bombs,” he said.

Experts believe that the Iranians nevertheless will complete the project.

Most Iranian efforts are concentrated on uranium enrichment at the Natanz complex. They are attempting to master the nuclear fuel cycle, which experts believe could enable them to produce large quantities of highly enriched uranium — an alternative fissile material used as the core of a nuclear bomb.

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