LONDON, June 29 (AFP) - It is still too soon to tell how EU-Iran nuclear talks will play out with hardliner Mahmood Ahmadinejad as new Iranian president but the deadlock over Tehran's enrichment of potentially weapons-useable uranium clearly remains unchanged, diplomats and analysts said.
"The fundamental dilemma is the same," non-proliferation expert Gary Samore of London's International Institute for Strategic Studies (IISS) told AFP.
"The Iranians have made it clear" that if a proposal the European Union is to make in late July or early August "doesn't include a provision for Iran to produce nuclear fuel, then the Iranians are threatening to break the suspension of uranium enrichment," which they started in November to launch the talks with the EU, Samore said.
A European diplomat said it was "still early days. We will make our assessment when we see how he addresses all our concerns," referring to Ahmadinejad.
The diplomat said: "Our position on the nuclear issue is pretty clear. We will see how the Iranians want to play it."
Ahmadinejad pledged after being elected president on Saturday to form a government of "moderation", saying Tehran would continue talks over its nuclear programme.
But US President George W. Bush said Monday that the Iranian elections had not changed his view that it would be "unacceptable" for Tehran to obtain a nuclear weapon or the ability to make one.
"The development of a nuclear weapon is unacceptable, and a process which would enable Iran to develop a nuclear weapon is unacceptable," Bush said as he met with German Chancellor Gerhard Schroeder.
The president said his administration would continue to support EU negotiators Britain, France and Germany in their diplomatic push to ensure that Tehran does not get atomic weapons.
Britain, France and Germany have said that the talks must go on, with British Prime Minister Tony Blair saying the international community was not about to "go soft" on Tehran.
Washington accuses Tehran of using a civilian atomic energy program as a cover to seek nuclear weapons and seeks a permanent halt to uranium enrichment and plutonium reprocessing activities that could be used in an arms program.
Iran denies the charge and says it has the right to the peaceful use of nuclear technology, including making atomic fuel.
This leaves the European trio and Iran in a deadlock, a deadlock that has not changed since the talks began in December.
"I think Iran still faces the same dilemma and the dilemma is that they're not prepared to accept the European demand for the cessation of fuel-making activities," Samore said.
The Europeans are offering Iran trade, technology and security benefits for abandoning nuclear fuel cycle work.
In the latest wrinkle in the UN watchdog International Atomic Energy Agency's investigation of Iran's nuclear program, IAEA inspectors were in Iran on Monday to "sort out" a controversy over plutonium experiments there, Iranian security spokesman Ali Agha Mohammadi said in Tehran.
The IAEA had said at a meeting at its headquarters in Vienna earlier this month that Iran had failed to report plutonium work that went on for five years later than Tehran had originally said.
Plutonium and uranium are the two basic materials from which atom bombs can be made and the EU wants Iran to give up the making of both of these, even as part of civilian nuclear fuel work.
Iran is however pressing ahead with work on a heavy water nuclear research reactor, of which the IAEA disapproves, which could make large amounts of plutonium.
Iran insists this is for medical isotope work but intelligence sources told AFP that Iran has set up a special committee to hide their efforts to prepare to reprocess plutonium, from both the Arak heavy water reactor which is years away from completion and from a nuclear power plant Russia is helping Iran build at Bushehr, and which could begin operation next year.
Wary of IAEA scrutiny, the Iranian "committee is currently engaged in collecting, creating and moving all the (related) documentation to a safe place in the state archives," an intelligence source said, in a report that could not be independently confirmed.
IAEA officials refused to comment on the report.
