"We will continue negotiating with them, but on the other hand we will not restrict our negotiations to being with just these three countries," Foreign Ministry spokesman Hamid Reza Asefi said on Sunday, referring to the so-called EU-3.

Widen talks

Britain, France and Germany have been engaged in close to two years of tough talks with the Islamic republic, but Asefi said that Iran has also been talking with countries such as Japan, Malaysia and South Africa.

Ahmadinejad will come out with
a new initiative

"We want to have negotiations with other countries. It is up to the Europeans not to remove themselves from the negotiations," he said, accusing the EU-3 of refusing to recognise Iran's right to the nuclear fuel cycle.

Countries from the Non-Aligned Movement - notably South Africa and Malaysia - have been more sympathetic to Iran's effort to possess nuclear fuel facilities.

"The Europeans did not live up to commitments. If the Europeans cannot live up to their commitments, we will negotiate with other countries as is our right," Asefi added.

'Change the subject'

The EU-3 have reacted to Iran's challenge, with France insisting on Friday that the trio has been working in conjunction with its 22 other EU partners as well as the IAEA's full 35-nation board of governors.

"The essence of the initiative by the president is to break the deadlock"

Ali Agha Mohammadi,
Iranian negotiator

The US State Department has also said Iran was trying to "change the subject from what the real issue is, and that is their continued pursuit of nuclear weapons".

According to Asefi, Iran's "main negotiating partner is the International Atomic Energy Agency" - the Vienna-based UN nuclear watchdog - and said IAEA chief Mohamed ElBaradei had been informed of this.

Iran is unhappy with the EU-3 after they demanded a total halt to fuel cycle work in exchange for a package of trade, security and technology incentives. Iran maintains such work for peaceful purposes is a right of any signatory of the nuclear Non-Proliferation Treaty (NPT).

IAEA reports

Iran has rejected the deal and in protest resumed uranium conversion activities, the first step in making enriched uranium, which is fuel for power reactors but can also be the raw material for atom bombs.

The resumption of this work, which Iran had suspended in November to start talks with the EU, has scuttled the negotiations and could lead to Iran being brought before the United Nations Security Council for possible sanctions.

The IAEA will issue a new report
on Iran's nuclear activities

The IAEA is due to issue a new report on Iran on 3 September, and Iran has been emboldened by agency conclusions that highly enriched uranium particles found in Iran were from imported equipment and not from Iran's own activities.

But the report will cover suspicious on Iranian work with plutonium, another atom bomb material.

"We expect the report on 3 September to clarify the remaining, minute issues because our cooperation has clarified a lot of ambiguities," Asefi said.

"I don't think Iran's case can be referred to the UN Security Council. If they want to make our case a security issue, it will cost the Europeans more than it will cost Iran," he said.

Right to fuel

Asefi also revealed further details on promised proposals from Iran's new President Mahmoud Ahmadinejad.

"They will enshrine Iran's right to have the fuel cycle. It will also have objective guarantees" that Iran will not seek nuclear weapons, Asefi said.

"It will say the main negotiating partner will be the IAEA. It will make sure the other parties will not resort to pretexts. This proposal is a way out of the current situation. I think around two years of negotiations (with the Europeans) is enough."

"The essence of the initiative by the president is to break the deadlock," Ali Agha Mohammadi, one of Iran's negotiators, told the official news agency IRNA.

"The review of the new initiative will finalised this week or next week."