VIENNA - Iran has not expanded the number of centrifuges enriching uranium at its Natanz nuclear site since the end of May after increasing capacity steadily over the previous three years, diplomats said.

The reason for the slowdown was unclear. The International Atomic Energy Agency is due to issue a report later this week that will influence big-power talks due to consider harsher sanctions on Iran over its disputed nuclear campaign.

Since May, Iran has been wracked by unrest over alleged election fraud that has split the conservative political establishment, a relative moderate has become head of its nuclear authority, and Western powers have said they will pursue harsh sanctions against Iran if it does not accept negotiations on its nuclear activity by the end of September.

There has been no increase in the number of centrifuges enriching uranium since the end of May, a senior Vienna diplomat familiar with the issue said, speaking on condition of anonymity because of political sensitivities.

Some diplomats and analysts said the slowed enrichment growth was more likely a technical than political issue. They noted Iranian officials had renewed defiant refusals to curb the program despite the threat of harsher sanctions.

They also said Iran could swiftly resume expansion since, in addition to just under 5,000 centrifuges refining uranium as reported by U.N. inspectors on May 31, it had already installed many more in preparation for entering the production chain.

The senior diplomat said the number of Iranian centrifuges -- cylindrical machines that whirl at supersonic speed in linked networks -- now enriching uranium was slightly lower because some had been taken down for repair and maintenance.

But the number that have been installed, though not yet brought on stream, has risen from around 2,100 in May, diplomats said. These could be added to production lines within a few weeks, if desired, according to nuclear analysts.

Once they're installed, it only takes a few weeks to test-run them under vacuum before they're ready to enrich, said David Albright, head of Washington's Institute for Science and International Security which tracks nuclear proliferation.

STALEMATE

The Islamic Republic is at odds with major powers which suspect it is secretly pursuing nuclear weapons capability.

It denies this, saying it is refining uranium only for electricity so it can export more oil, though it has no nuclear power plants to use the low-enriched material it is stockpiling.

Some analysts say Iran now has enough low-enriched uranium to convert into the high-enriched version (HEU) needed for a nuclear bomb if it wants. But there is disagreement over how soon Tehran could weaponize the enrichment process.

U.S. national intelligence chief Dennis Blair has said Iran is unlikely to be able to produce HEU before 2013, but Israel fears the timeline could prove shorter.

Iran may be slowing enrichment growth believing its uranium fuel stockpile is perilously close to crossing an Israeli red line, said Mark Fitzpatrick, senior non-proliferation fellow at London's International Institute for Strategic Studies.

Israel has hinted at the idea of military action to pre-empt a nuclear Iran.
In the meantime, Fitzpatrick said, what's most important for Iran is to increase the number of installed centrifuges, in case it ever enters negotiations that require a freeze on their number. Adding to the numbers now creates additional 'facts on the ground' that it will later argue can never be rolled back.

An IAEA spokesman declined to comment on Iran's centrifuge activity. There was no immediate comment from Iranian officials.

BIG POWER TALKS

The United States, Britain, France and Germany are expected to urge Russia and China in talks on September 2 to weigh a fourth round of U.N. sanctions possibly targeting Iran's lifeblood oil sector. The new IAEA report will underpin those discussions.

The report is also expected to elaborate on new Iranian cooperation with international demands for nuclear transparency.

But it was unclear whether these steps amounted to one-off gestures, designed to soften the IAEA report and the case for more painful sanctions, or a longer-term policy switch hinting at openness to a nuclear deal with big powers.

This month, Iran agreed to IAEA demands for upgraded monitoring at Natanz. It also restored access to a heavy water reactor under construction after blocking visits for a year.

There have been some mixed signals from Tehran since unrest broke out over alleged fraud in its June presidential election.

Ali Akbar Salehi, Iran's new atomic agency chief, said last month Tehran and the West should revive efforts to build mutual trust and end a six-year standoff. But he did not suggest Iran was ready to halt enrichment or freeze it at current levels.

Iran's IAEA ambassador, Ali Asghar Soltanieh, was reported as saying on August 18 that Tehran was ready for talks with the West on its nuclear ambitions. He later denied the comments.

(Editing by Ralph Boulton)

Israel