Western leaders called on Wednesday for expanded sanctions against Iran over a U.N. watchdog report that it has worked to design atom bombs, but veto-wielder Russia indicated it would block new measures at the U.N. Security Council.
The report laid bare a trove of intelligence suggesting Iran is seeking nuclear weapons, including accusations of work on atom bomb triggers and computer-simulated detonations.
France said it would summon the Security Council. Britain said the standoff was entering a more dangerous phase and the risk of conflict would increase if Iran does not negotiate.
The Security Council has already imposed four rounds of sanctions on Tehran since 2006 over its nuclear programme, which Western countries suspect is being used to develop weapons but Iran says is purely peaceful.
There has been concern that if world powers cannot close ranks on isolating Iran to nudge it into serious talks, then Israel -- which feels endangered by Tehran's nuclear programme -- will attack it, precipitating a Middle East conflict.
Convening of the U.N. Security Council is called for, French Foreign Minister Alain Juppe told RFI radio. Pressure must be intensified, he said, after years of Iranian defiance of U.N. resolutions demanding it halt uranium enrichment, which can yield nuclear fuel for power stations or weapons.
If Iran refuses to conform to the demands of the international community and refuses any serious cooperation, we stand ready to adopt, with other willing countries, sanctions on an unprecedented scale, Juppe said.
But Moscow made its opposition to new sanctions clear.
Any additional sanctions against Iran will be seen in the international community as an instrument for regime change in Iran. That approach is unacceptable to us, and the Russian side does not intend to consider such proposals, Deputy Foreign Minister Gennady Gatilov told the Interfax news agency.
Russia, which has significant trade ties with Iran and built its first nuclear power station, has called for a phased process under which existing sanctions would be eased in return for actions by Tehran to dispel international concerns.
But in talks between Iran and big powers that would be needed to achieve that goal, the sides have been unable to agree even on an agenda. The last round petered out in January.
Still, Russia's Security Council, in a statement on Wednesday after a meeting with a senior Iranian security official, said Moscow re-emphasised the need to find a mutually acceptable solutions via negotiations.
Russia accepts that the West has legitimate concerns about Iran's nuclear programme but sees no clear evidence that Tehran is trying to develop nuclear warheads.
Israel urged the international community to stop Iran from getting nuclear weapons. The significance of the (IAEA) report is that the international community must bring about the cessation of Iran's pursuit of nuclear weapons, which endanger the peace of the world and of the Middle East, Prime Minister Benjamin Netanyahu's office said in a statement.
IRAN ATTACKS AGENCY
Iran has repeatedly insisted it wants nuclear energy only for electricity. On Wednesday it vowed no retreat from programme following the U.N. watchdog report, which used Western intelligence information that Tehran calls forgeries.
You should know that this nation will not pull back even a needle's width from the path it is on, President Mahmoud Ahmadinejad said in a speech carried live on state TV.
Why do you damage the agency's dignity because of America's invalid claims? he said, apparently addressing IAEA Director-General Yukiya Amano.
Russia's Foreign Ministry said: According to our initial evaluations, there is no fundamentally new information in the report ... We are talking about a compilation of known facts, given a politicised tone. It said interpretations of the report brought to mind the use of faulty intelligence to seek support for the U.S.-led invasion of Iraq in 2003.
In addition to U.N. sanctions that commit all countries, the United States and European Union have imposed extra sanctions of their own. A U.S. official said that because of Russian and Chinese opposition, chances were slim for another U.N. Security Council sanctions resolution against Iran.
Washington might extend sanctions against Iranian commercial banks or front companies but is unlikely to go after its oil and gas industry or central bank, the clearing house for Iran's energy trade, for now.
The reality is that without being able to put additional sanctions into these key areas, we are not going to have much more of an impact than we are already having, the U.S. official said.
A Western diplomatic source in Europe said there would be an effort to revive dialogue with Iran. What we are trying to do is avoid the (nuclear) bomb and bombing strikes, he said.
But he saw no window for more Security Council action. You know the climate at the Council. We are in a complex situation in the post-Libya era and we are experiencing it with Syria so with regard to Iran, (such) things would not be possible.
A rise in tension over Iran could boost oil prices, although quotes on Wednesday for Brent crude fell by up to $2.64 and U.S. crude by $1.67 to stand at $113 and $95.13 a barrel respectively by 1540 GMT because of Italy's debt worries that are dampening the global growth outlook.
Now, with the more conclusive reports that Iran might be pursuing a nuclear warhead and the increased risk that there may be an attack on those facilities which would likely disrupt their oil exports, there may be growing concerns that there may be an oil price spike on the back of such an event, said Nicholas Brooks, head of research at ETF Securities.
British Foreign Minister William Hague, in remarks that provided some support to the oil market, spoke about measures that could still be imposed on Iran and a riskier period ahead.
We are looking at additional measures against the Iranian financial sector, the oil and gas sector, and the designation (on a sanctions list) of further entities and individuals involved with their nuclear programme, Hague told parliament.
We are entering a more dangerous phase. The longer Iran goes on pursuing a nuclear weapons programme without responding adequately to calls for negotiations from the rest of us, the greater the risk of a conflict as a result.
Hague added that Iran's nuclear programme increased the likelihood that other Middle East states would pursue weapons.
Russia and China have signed up to limited U.N. sanctions but have rebuffed Western proposals for measures that could seriously curtail energy and trade ties with Iran.
Iran is the third largest supplier of crude oil to China, and overall bilateral trade between the two grew by 58 percent in the first nine months of 2011, according to Beijing data.
Foreign Ministry spokesman Hong Lei said China was studying the IAEA report and repeated a call to resolve the row through talks. In a commentary, China's official Xinhua news agency said the U.N. watchdog still lacks a smoking gun.
There are no witnesses or physical evidence to prove that Iran is making nuclear weapons, it said. In dealing with the Iran nuclear issue, it is extremely dangerous to rely on suspicions, and the destructive consequences of any armed action would endure for a long time.
Israel, widely believed to be the Middle East's only nuclear power, has said all options are on the table, including a military one, to halt an Iranian nuclear fuel production drive that is now being transferred to an underground mountain bunker better protected from possible air strikes.
(Additional reporting by John Irish, Sophie Louet and Nicholas Vinocur in Paris, Chris Buckley in Beijing, Mitra Amiri and Robin Pomeroy in Tehran, Arshad Mohammed, Andrew Quinn and Tabassum Zakaria in Washington, Steve Gutterman in Moscow, Ari Rabinovitch in Jerusalem, Adrian Croft in London; Writing by Mark Heinrich; Editing by Jon Hemming)