"The Iranian government is standing in its own way."

If Tehran was to ignore the IAEA offer and start working on its own fuel production, it is though it would take years before Tehran will be able to turn its uranium into nuclear fuel.

Iranian 'ultimatum'

The US comments follow those by Manouchehr Mottaki, the Iranian foreign minister, who was quoted by Iranian state television as saying the West had just one month left to decide whether to accept Iran's proposal that it swap abroad its low-enriched uranium for nuclear fuel.

Iran has already rejected a December 31 deadline to accept the IAEA deal that would see Iran ship most of its low-enriched uranium to Russia and France for processing into fuel for a research reactor in Tehran.

Germany, one of six world powers engaged in United Nations-backed talks to ensure Iran's nuclear programme is peaceful, also said Tehran's ultimatum made no difference.

The "situation has not changed," a German foreign ministry spokesman was quoted by the AFP news agency.

"The proposal of the international community remains valid. Iran must seize this opportunity."

Iran is already under three sets of UN sanctions for refusing to abandon its sensitive programme of uranium enrichment, the process which produces nuclear fuel or, in highly extended form, the fissile core of an atomic bomb.

Further sanctions

The administration of Barack Obama, the US president, is said to be considering another round of more targeted sanctions since the December 31 deadline passed.

The New York Times on Saturday reported that Washington believes the domestic unrest in Iran, sparked by disputed elections last June, has made its leader particularly vulnerable to new sanctions.

 Washington believes unrest in Iran has left the government vulnerable to sanctions [EPA]
Citing unnamed officials, the newspaper said the long-discussed sanctions proposal comes as the administration completes a fresh review of Iran's nuclear progress.

Obama's strategists believe Iran's top political and military leaders have been distracted in recent months by turmoil in the streets and political infighting, and that their drive to produce nuclear fuel appears to have faltered, the report said.

A UN diplomatic source in New York said preliminary work on drafting a sanctions resolution was likely to begin in mid-January.

The UN has demanded Iran suspend all enrichment, a demand Tehran refuses, saying it has a right to develop the technology under the Non-Proliferation Treaty.

Iran has also defiantly announced it intends to build 10 new uranium enrichment sites, drawing a forceful rebuke from the UN nuclear watchdog agency and warnings of the possibility of new UN sanctions.