Diplomats in Moscow said the announcement on Thursday, made after Russian Foreign Minister Sergei Lavrov visited Iran, reflected Russia's readiness to press ahead with the project in return for Tehran's increased cooperation with the International Atomic Energy Agency (IAEA).

   

"We're done," said a spokesman for Russia's Atomic Energy Agency (RosAtom). "All we need to do now is work out an agreement on sending spent fuel back to Russia."

   

Such an agreement with Iran is designed to allay US concerns. Iran would guarantee it would return to Russia all spent nuclear fuel, which can be used to make weapons. But the signing, due last year, has been repeatedly delayed.

   

Alaeddin Boroujerdi, head of the Iranian parliament's Foreign Affairs and National Security Commission, confirmed the construction phase at Bushehr.

 

Agreement

   

"The [nuclear fuel] agreement is practically ready. If experts agree on a few remaining commercial matters, it could be signed in November," Boroujerdi said in Moscow after talks with Russian officials.

 

Lavrov (L) is pressing for Iran's
increased work with the IAEA

Tehran insists its nuclear programme is entirely peaceful.

   

RosAtom head Alexander Rumyantsev is due to visit Iran in late November. But industry sources say the signing depends on the outcome of a 25 November IAEA meeting, which could decide whether to refer Iran to the UN Security Council for possible sanctions.

   

UN Security Council permanent member Russia is under severe US pressure to ditch the $800 million Bushehr project but would have a veto on any sanctions vote.

 

Message

 

Diplomats in Moscow said the announcement may also be intended to send a message, ahead of a Group of Eight meeting of industrialised countries in Washington later this week, that Russia would firmly stand by its ally in the Middle East.

   

"All we need to do now is work out an agreement on sending spent fuel back to Russia

RosAtom spokesman

"It's no coincidence that the announcement comes right after Lavrov's visit to Tehran," one Western diplomat said.

   

"It would have been logical for [the] Russians to promise to stick to the Bushehr project in exchange for making Iran cooperate with the IAEA better."

   

Russia's stance on Iran toughened in September after Tehran threatened to defy an IAEA call for it to stop work on enriching uranium - a process that can be used to develop nuclear arms.

   

The 1000-megawatt Bushehr plant is due to be launched next year and will reach full capacity in 2006. The RosAtom spokesman said work still remained on assembling some security and control equipment.

   

Russia had been building the plant since the early 1990s.