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The International Atomic Energy Agency's 35-nation governing board has repeatedly asked Iran not to pursue the Arak heavy water reactor project. Tehran has vowed to complete it and applied for IAEA expertise to ensure it meets safety standards.
Although IAEA approval of such requests is usually routine, Western board members say the Arak case must be rejected given Iran's record of evading IAEA non-proliferation inspections and its defiance of U.N. demands to stop enriching uranium.
"We cannot support providing technical assistance to a heavy water research reactor project that ... would in future produce significant quantities of plutonium and involve a significant (nuclear) proliferation risk," Finnish envoy Kirsti Helena Kauppi, speaking on behalf of the EU, told the IAEA board.
"This would not be consistent with resolutions of the board and the (U.N.) Security Council," she said.
The United States also opposes IAEA assistance for Iran on Arak but has allowed the EU to take the lead on the issue at this week's board meeting.
But developing nations say rejecting Iran's request for help would set a politicised precedent for withholding technical aid from them to peaceful atomic energy programmes.
Diplomats said the most likely outcome was a compromise to defer a decision pending guidance from the Security Council, where world powers are deliberating sanctions on Iran but are split over how tough they should be.
"Deferral is the most likely option as it would help avoid alienating developing nations on the board and buy time to see what the Security Council will do to resolve this battle elsewhere," a senior IAEA diplomat told Reuters on Monday.
Diplomats said most board members wanted to avoid a divisive vote that Iran was sure to lose and blame on Western bullying.
They said a deal was being considered under which the board would shelve the Arak item while approving seven other aid requests submitted by Iran seen as less problematic.
They include developing radiation therapy for medical ends, help in commissioning a Russian-built nuclear reactor not deemed a proliferation risk, and regulatory aspects of nuclear energy.
The Arak case, on which a board ruling was expected later in a week-long meeting, has symbolised the diplomatic crisis over the Islamic Republic's nuclear ambitions.
Tehran says these are limited to generating electricity. The United States and EU fear Iran is seeking bombs to threaten Israel and Western interests in the Middle East.
Iran says Arak will produce radio-isotopes for medical uses, replacing a smaller light-water reactor that predates Iran's 1979 Islamic Revolution and is said by Tehran to be obsolete.
Iran vows to build the reactor whether IAEA safety aid is granted or not. It is one of 820 proposals from 115 nations to be considered by a board committee Monday through Wednesday and ratified at a full board conference on Thursday and Friday.
Ana-Maria Cetto, IAEA deputy director for technical cooperation, told Monday's gathering that the agency's secretariat had no legal objections to the Arak request as it did not involve uranium enrichment-related or fuel-reprocessing activities the Security Council ordered to be suspended.
Iranian IAEA envoy Aliasghar Soltanieh, echoing criticism by some fellow members of the Non-Aligned Movement (NAM) developing nations, accused the West of politicising technical aid.
"By approving this project, the IAEA will have much more presence and supervision at Arak than before, continuously monitoring and giving safety advice," Soltanieh told reporters. Reuters