Ahmadinejad Says Iran Added 3,000 More Centrifuges to Nuclear Program

Iran announced new strides in its nuclear program on Wednesday, in a defiant blow to U.S. and EU pressure to rein in its atomic activities and amid signs of an increasingly vicious covert war with Israel over the issue.

President Mahmoud Ahmadinejad unveiled on state television what was described as Iran's first domestically produced, 20-percent enriched nuclear fuel for Tehran's research reactor.

He also said 3,000 more centrifuges had been added to his country's uranium enrichment effort.

And Ahmadinejad said that uranium exploration in Iran had been stepped up and a new yellowcake processing factory would be "pre-launched" next month.

Officials said new-generation centrifuges had been installed at Iran's Natanz nuclear facility that are able to produce three times more enriched uranium than previous models.

The developments underlined Tehran's determination to forge ahead with nuclear activities despite tough sanctions from the West -- and despite speculation that Israel or the United States could be months from launching military strikes against Iran.

Iran portrayed the advances as evidence it was only interested in peaceful nuclear goals, under the slogan "nuclear energy for all, nuclear weapons for none."

But the steps challenged four sets of U.N. sanctions and a raft of unilateral U.S. and EU sanctions designed to halt a program much of the West fears masks a drive for atomic weapons.

Israel -- the Middle East's sole but undeclared nuclear power which feels its existence is threatened by a nuclear Iran -- is widely held to have been carrying out clandestine acts against its arch foe.

Those acts have included the murder of four Iranian scientists by unidentified motorbike assailants in the past two years and the deployment of a highly sophisticated computer virus, Stuxnet, which damaged many of Iran's centrifuges.

Israel has neither confirmed nor denied its involvement in those acts.

But it has accused Iran of targeting its diplomats in India, Georgia and Thailand this week after bomb attacks or plots uncovered in those countries.

One Israeli diplomat in New Delhi was gravely hurt when a bomb attached to her car blew up. In Bangkok, two Iranians were in custody, including one who lost both his legs to a bomb he tried to throw at police, and another was arrested after flying to Malaysia.

Iran has denied any role in those incidents.

Observers, though, see possible payback occurring. They believe Iran and Israel could now be caught up in a cycle of retribution that each has condemned as "terrorism" by the other side.

Attempts to defuse the soaring tensions through dialogue appear to be making little headway.

Iran has repeatedly said it is ready to resume talks with world powers that collapsed a year ago.

On Wednesday, it finally replied to a letter sent nearly four months ago by EU foreign policy chief Catherine Ashton proposing a return to the talks.

"Iran welcomes the readiness of the P5+1 group to return to negotiations in order to take fundamental steps toward further cooperation," chief nuclear negotiator Saeed Jalili wrote in the letter, according to the official IRNA news agency.

Ashton's spokeswoman confirmed the letter had been received and that EU officials were "carefully studying" it and consulting with the powers concerned.

The P5+1 consists of the five permanent U.N. Security Council members -- Britain, China, France, Russia and the United States -- and Germany.

Thus far, Russia and China have stood by Iran, criticizing the Western sanctions on it as a barrier to the talks and refusing to comply with them.

But there were indications that the support could be weakening, at least in Russia.

"We are concerned that the distance that separates Iran from the hypothetical possession of technologies to create nuclear weapons is contracting," Russian Deputy Foreign Minister Sergei Ryabkov said.

"The Iranian side is indeed making progress in its nuclear program," he told the specialized journal Security Index.

The International Atomic Energy Agency, the U.N.'s nuclear watchdog, is to send a high-level team back to Tehran next week to discuss suspicions Iran is working towards atomic weapons.

IAEA officials were last in Tehran at the end of January but their talks were inconclusive. As one diplomat at IAEA headquarters in Vienna said, the Iranians "quite cleverly stonewalled for three days."

Iran's economy is showing meanwhile the strains of the West's economic sanctions.

The rial, has slumped against the dollar in black market trade, boosting costs for goods already victims of high inflation officially put at 21 percent and unofficially around 30 percent.

Iran said on Wednesday it was considering cutting oil sales to six EU countries in retaliation for an EU ban on Iranian oil being phased in over the next four months.

But it would not do so "at the moment," the Arabic-language broadcaster Al-Alam reported, quoting foreign ministry officials.

The intimation of a cut sent oil prices spiking. Brent North Sea crude rose to $119.99 a barrel, while West Texas Intermediate light sweet crude soared as high as $102.54 per barrel.

Unperturbed European officials said they were looking for other suppliers anyway, mainly Saudi Arabia, which has promised to make up any shortfall in the market from curbed exports from Iran.