updated 10/16/2004 3:34:55 PM ET 2004-10-16T19:34:55

Iran said Saturday it would reject any proposal depriving it of the right to enrich uranium for nuclear fuel, part of a package Washington's European allies are proposing to avoid a showdown over Iran's nuclear program.

The European countries notified the United States on Friday that they intend to offer Iran a package of economic concessions and technological assistance next week in the hopes of persuading Tehran to permanently give up its uranium-enrichment program. The U.S. administration withheld its approval of the overture.

"Iran will not accept any proposal which deprives it of the legitimate right to the cycle of (nuclear) fuel," state-run television quoted Hossein Mousavian, a top nuclear official, as saying.

However, Mousavian, Iran's chief delegate to the International Atomic Energy Agency, said Iran would study any proposal that would end concerns over Tehran's nuclear program as long as it respected Iran's right to enrich uranium.

Final chance to avert showdown
The key European powers agreed with the U.S. administration at a three-hour State Department meeting Friday that the package would be Iran's final chance to avert a showdown at a meeting of the IAEA, a U.S. official said.

Iran's tortured pathThe IAEA could refer the matter to the U.N. Security Council, which could impose economic sanctions. But the U.S. government has lacked the necessary votes to do that because Britain, France and Germany have been negotiating with Tehran in search of a compromise.

Diplomats close to the talks said the European package of incentives included fuel for Iran's civilian programs and a trade arrangement with the European Union.

While the Americans didn't endorse the offer to Tehran, they also did not try to stop the Europeans from going ahead with it, said the U.S. official, who spoke Friday on condition of anonymity.

IAEA demand
Last month, the IAEA's board of governors unanimously passed a resolution demanding that Iran freeze all work on uranium enrichment, including uranium reprocessing and building centrifuges used to enrich uranium. The IAEA will meet Nov. 25 to judge Iran's compliance.

Iran has said the agency has no authority to ban it from enriching uranium, a right granted under the Nuclear Non-proliferation Treaty. However, while not prohibited from enrichment, Iran faces growing international pressure to suspend such activities as a good-faith gesture.

Defying the IAEA call, Mousavian told the AP earlier this month that Iran has converted a few tons of raw uranium into a hexafluoride gas, a stage prior to actual uranium enrichment.

Uranium hexafluoride gas is the material that, in the next stage, is fed into centrifuges used to enrich uranium. Uranium enriched to a low level is used to produce nuclear fuel to generate electricity, and enriched further can be used to manufacture atomic bombs.

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