TEHRAN - Iran formally responded to a U.N. draft nuclear fuel deal on Thursday, proposing big changes that could sink the plan, including sending its low-enriched uranium abroad in stages instead of all at once, Iranian media reported.

Tehran submitted its answer to the head of the International Atomic Energy Organization (IAEA), according to al Alam state television. There was no immediate confirmation from the U.N. nuclear watchdog, which had demanded a reply by last Friday.

Nor did Iran's IAEA ambassador, Ali Asghar Soltanieh, confirm the move when asked by reporters at the Vienna-based IAEA. He would only say that Iran's stance was positive.

The pro-government daily Javan, in an unsourced report, said Iran wanted phased shipments of low-enriched uranium (LEU) for conversion into fuel for a Tehran research reactor, as well as simultaneous imports of higher-enriched fuel for the same plant.

The conditions were likely non-starters for Western powers which suspect the Islamic Republic covertly seeks nuclear arms capability. Tehran says its program is only for electricity. Under the draft drawn up by IAEA chief Mohamed ElBaradei in talks last week with Iran and three big powers, Tehran would transfer about 75 percent of its known 1.5 tons of LEU in one consignment to Russia for further enrichment by the end of this year, then to France for conversion into fuel plates.

These would be returned to Tehran to power the U.S.-built reactor that produces radio-isotopes for cancer treatment.

The U.S. role in the deal would entail upgrading safety and instrumentation at the plant, Iranian officials said.

Western powers were likely to rebuff Tehran's proposed amendments because their priority is to reduce the stockpile of Iranian LEU to ward off the danger that Iran might turn it into the highly-enriched uranium needed for an atom bomb.

Sending most of the LEU abroad would buy about a year for talks on halting enrichment in Iran in return for incentives to forge a long-term solution to the nuclear dispute.

The powers will see Iran's counter-offer involving nuclear fuel imports as problematic because U.N. sanctions ban trade in nuclear materials, including enriched uranium, with Tehran.

Iran views such sanctions as illegal and unjust.


Iran will risk rekindling demands for harsher sanctions unless it acts on the fuel plan and other nuclear transparency measures before the end of the year, Western diplomats said.

Iranian President Mahmoud Ahmadinejad reiterated on Thursday that Iran would not retreat one iota on its right to a sovereign nuclear program. But, fortunately, conditions have been prepared for international cooperation in the nuclear field, he said in a speech in the northeastern city of Mashhad.

We welcome cooperation on nuclear fuel, power plants and technology and we are ready to cooperate. He did not say whether Iran would accept the deal or demand changes.

The draft fuel deal emerged from talks that followed an October 1 meeting in Geneva, where Iran also told six big powers it would open a newly disclosed enrichment site to U.N. inspectors.
Four senior IAEA inspectors returned to Vienna on Thursday after a first visit to the site and the team chief said we had a good trip but would not elaborate. Details are likely to come in the IAEA's next quarterly report on Iran in mid-November.

We visited the Fordo enrichment plant. Now we are going to analyze the data, team leader Herman Nackaerts told reporters.

A senior diplomat close to the IAEA said the four inspectors carried out a full visit to the nascent plant, which Iran expects to start operating at the end of next year.

The inspectors wanted full access and documentation to verify that the site under construction bunkered beneath a mountain was designed to enrich uranium only to low purity needed for electricity, not the high level suitable for bombs.

Iran's tentative concessions at the Geneva talks have come under fire from Iranian hardliners and also from Mir-Hossein Mousavi, a losing candidate in a June vote he says was rigged.

These are results of adventurism and are violating ... national interests, Mousavi said on his website.

These gentlemen (Iranian officials) either have a mission to destroy the country and the establishment or they are just doing something for today without thinking about consequences.

Ahmadinejad, in an apparent response, declared that Iran's resistance had forced the West to acknowledge its rights.

And now some people inside have become drastically revolutionary, he said, without naming Mousavi. We welcome (this) and we are happy that they have realized that resistance was the best way against the enemies. But we do not expect them to question the Iranian nation's victories and achievements.

(Additional reporting by Sylvia Westall in Vienna, Fredrik Dahl in Tehran and Firouz Sedarat in Dubai; writing by Alistair Lyon, editing by Mark Heinrich and Peter Millership)