US and Iran spar ahead of Iraq report

American and Iranian leaders are boosting their belligerent rhetoric ahead of key US progress reports on Iraq, even as the UN's nuclear watchdog Thursday reported that Iran's cooperation to clear up suspicions of a weapons program marked "a significant step forward."

The report from the International Atomic Energy Agency (IAEA) in Vienna confirms that Iran is expanding uranium enrichment in defiance of the UN Security Council, though at a slower than expected pace and below capacity. The assessment comes shortly after a controversial deal was reached by the IAEA and Iran to "resolve" outstanding questions by the year's end.

The burst of rhetoric on both sides comes as Washington awaits reports from Baghdad about the affect of a months-long surge of troops into the Iraqi capital. Those reports are expected to determine future deployment and withdrawal plans.

The top US commander in Iraq, Gen. David Petraeus, and US Ambassador Ryan Crocker, are to give assessments the second week of September that will shape future US plans for Iraq.

"The US is seriously concerned about Iranian support for violence in Iraq that has killed American soldiers, and as we get close to the date of the Petraeus report, the Iran factor looms large," says Mark Fitzpatrick, an Iran expert at the International Institute of Strategic Studies in London. "It's natural that President Bush would point to that external factor as a reason not to cut and run from Iraq."

Using his strongest public language on Iran to date, President George Bush on Tuesday repeated charges that Iran is causing US deaths in Iraq by supporting and supplying weaponry to Shiite militias and saying that he had ordered US commanders to "confront Tehran's murderous activities."

Speaking just hours before in Tehran, Iranian President Mahmoud Ahmadinejad dismissed the US as an empire in decline, with failure in Iraq leaving a "huge power vacuum" that Iran was ready to fill.

"The political power of the occupiers is collapsing rapidly," said Mr. Ahmadinejad. "Occupation is the root of all problems in Iraq. It has become clear that occupiers are not able to resolve regional issues."

A separate draft report by the Government Accountability Office, described Thursday as "strikingly negative" by The Washington Post, which acquired the document, found that only three of 18 benchmarks mandated by Congress had been met in Iraq.

The arrest of seven Iranians and their Iraqi guards at the Sheraton hotel in Baghdad this week – with television footage showing them blindfolded and being led out of the hotel by US soldiers – threatened a further deterioration, akin to the arrest of five Iranians in northern Iraq in January, who remain in custody. They were released next morning, with an adviser to General Petraeus expressing "regret" after it became known the group were on official business.

Iranian spokesmen this week again denied supporting anti-US actions in Iraq and, in Vienna, warned the US and West against pushing for a third round of Security Council sanctions.

Iran says its efforts are peaceful

Iran says it aims only to peacefully produce nuclear power. The US and many in the West believe the civilian program masks a secret weapons effort.

"Iran made a fast start but then there was a leveling off," a senior UN official told Reuters. "We don't know the reasons, but the slow pace continues."

The IAEA also reported that Iran is currently enriching uranium at 3.7 percent – far from the nearly 90 percent required for a bomb. Two sets of US sanctions already target Iran. The enrichment also appears to be slower than expected.

"Ahmadinejad wants to show that he has this foreign policy success and that his robustness has worked," says Ali Ansari, author of "Confronting Iran." "He wants to maintain this mythology that Iran is a great power because it is a nuclear power, and there is this staunch belief that America is an empire in decline … and that Iraq is an indication of this decline."

The result has helped the rhetoric spiral, says Mr. Ansari, an Iran historian at the University of St. Andrews in Scotland.

"Of course, the more you talk about that, the more you raise the hackles on the side of the Americans, who say: 'You think we are in decline? We'll show you how in decline we are …' " adds Ansari. "There are elements in the US, as there are elements in Iran, who are keen to provoke a conflict."

IAEA may 'close files' on Iran

French President Nicolas Sarkozy this week declared the Iranian nuclear issue the worst crisis in the world, and called for more pressure upon Iran to "enable us to escape an alternative that I say is catastrophic: the Iranian bomb or the bombing of Iran."

Ahmadinejad brushed off Mr. Sarkozy's comments, declaring that Iran's cooperation with the IAEA was such that "from our point of view, Iran's nuclear case is closed. Iran is a nuclear nation and has the fuel cycle."

The IAEA has not yet come to that conclusion, though the agreement it struck with Iran and published this week spells out a timeline for resolving by late 2007 numerous issues that have dogged four years of inspections.

From traces of highly enriched uranium (HEU) to centrifuge designs to "alleged studies" of suspicious projects, including plans for a missile reentry vehicle, the IAEA promises to "close files" and revert to "routine" safeguard work, if Iran answers final sets of questions from the IAEA.

"This means that after receiving the questions, no other questions are left," the agreement reads. The IAEA report comes ahead of a meeting Sept. 10 of the IAEA Board of Governors, and is likely to complicate US plans to add more sanctions.

The deal has been criticized by nuclear experts. "To date, so many times the IAEA has had discussions with Iran. Iran's answers have led to more questions," says Mr. Fitzpatrick, speaking before the IAEA report came out Thursday. "It ties up loose ends before you know if there are any loose ends to tie up."

The IAEA report sought to ease those concerns Thursday, noting that only more intrusive inspections – which Iran has not permitted for more than a year – could enable verification that the program was peaceful. IAEA deputy director Olli Heinonen said. "The key is that Iran … provides the information that we need."