Diplomat close to IAEA says Iran inflates atom progress

By Mark Heinrich

VIENNA (Reuters) - Iran appears to have overstated the expansion of its uranium enrichment programme at a sensitive juncture in talks with world powers, a diplomat close to the U.N. nuclear watchdog agency said on Monday.

He said the International Atomic Energy Agency checked President Mahmoud Ahmadinejad's announcement on Saturday that Iran had more than 5,000 centrifuges running and could verify just 4,000 were installed, 3,500 of which were regularly enriching uranium.

"This is the latest, verified information the agency has, as of today," said the Vienna-based diplomat, who is familiar with the U.N. watchdog's inspections in Iran.

These figures were only marginally higher than those given in the IAEA's last monitoring report on Iran two months ago.

He said it could not be ruled out Iran indeed had greater numbers of centrifuges operating as Ahmadinejad said because Iran limits the scope and frequency of IAEA inspections, but the agency had no supporting evidence at this time.

Ahmadinejad's remarks, pointing to a rapid expansion of a secretive nuclear programme the West fears is aimed at yielding atom bombs, followed inconclusive talks with world powers that explored a possible compromise to ease a five-year standoff.

After the Geneva meeting on July 19, Western officials gave Iran two weeks to reply clearly to an offer of no further steps to wider sanctions against Tehran if it caps enrichment activity at current, agreed levels.

A senior Iranian official said Tehran would not discuss the idea, known in diplomatic circles as a "freeze for freeze", in further talks, let alone a more sweeping full suspension of enrichment to qualify for a batch of financial sweeteners.