TEHRAN - President Mahmoud Ahmadinejad said Wednesday Iran would enrich uranium to a higher level itself, apparently ruling out a U.N.-brokered deal meant to dispel fears Tehran is pursuing nuclear weapons capability.

Western diplomats said Iran two months ago accepted in principle a plan for it to send 75 percent of its low-enriched uranium (LEU) to Russia and France to be further enriched then converted into fuel for Iran's nuclear medicine program.

The West hoped that farming out much of Iran's LEU reserve for reprocessing with technology Iran lacks would minimize the risk of Tehran further refining LEU to high purity suitable for atom bombs -- a suspicion kindled by Iran's record of nuclear secrecy and stonewalling of U.N. nuclear watchdog investigations.

But Tehran has since retreated from the deal, demanding what Western diplomats call killer amendments that would keep its LEU stockpile intact. Some Iranian officials suggested Iran could enriching the LEU itself from 3.5 percent to the 20 percent level needed to turn the material into medical reactor fuel.

Ahmadinejad was more explicit. By the grace of God, the Iranian nation will produce 20 percent enriched uranium and anything it needs (itself), he said in a televised speech in the central city of Isfahan.

If it does so, Iran could deepen suspicions that its underlying nuclear goal is weapons, since it does not have the technology to create medical reactor fuel from higher-grade LEU. For bombs, the material must be enriched to the 90 percent.

Iran has become more defiant since the International Atomic Energy Agency's governing body censured it Friday for covertly building a second enrichment plant near the holy city of Qom, in addition to its IAEA-monitored one at Natanz, and demanding an immediate construction halt.

ILLEGAL RESOLUTION

Under pressure of a few superficially powerful countries ... the (IAEA) passed an illegal resolution against the Iranian nation, Ahmadinejad said, alluding to the six world powers who sponsored the IAEA resolution.

Tehran said Sunday it would build 10 more uranium enrichment sites in retaliation for the resolution, which sailed through by a 25-3 margin with rare Russian and Chinese support.

Ahmadinejad also said Israel could not do a damn thing to stop the Islamic Republic's nuclear program, which the West suspects is a front to build bombs. Iran says it is enriching uranium only for power plant fuel, not for nuclear warheads.

Israel, which Iran refuses to recognize, has said a nuclear- armed Iran would be a threat to its existence and points to Ahmadinejad's calls for Israel to be wiped off the map.

That has raised concerns that Israel, believed to have nuclear weapons, could ultimately carry out a military strike against Iranian nuclear sites if big power diplomacy to coax Iranian cooperation proves fruitless.

Ahmadinejad's remarks were likely to extend an fresh spiral in tensions between Iran and the West.

Tehran could face harsher international sanctions or even Israeli military action if it fails to restore trust in its nuclear goals, which it says are confined to power generation.

U.S. President Barack Obama said Washington wanted Iran's nuclear dispute to be resolved through diplomacy but has not ruled out other options.
Ahmadinejad said Israel could not harm Iran, ruling out any further talks with six major powers over the nuclear dispute.

The Zionist regime (Israel) and its (Western) backers can not do a damn thing to stop Iran's nuclear work, Ahmadinejad told a crowd to chants of Death to Israel and Death to America.

(Writing by Parisa Hafezi; Editing by Mark Heinrich)

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