Iran announced on 2 September that it had installed 3,000 centrifuges, the machines that enrich uranium. This is in defiance of the UN Security Council's demand for Iran to suspend all enrichment activity.
The Security Council has imposed sanctions on Iran. The US and its allies want to impose more.
Why are the 3,000 centrifuges important?
By announcing their installation, President Ahmadinejad was again signalling Iran's intention to continue with enrichment. Three thousand is not a magic number and the UN nuclear watchdog the International Atomic Energy Agency (IAEA) is not yet sure whether the centrifuges are all running properly. But if confirmed it would be a technical step forward for Iran.
Iran says that it is entitled to enrich uranium and that it intends to do so only to produce nuclear power, not nuclear weapons, for which a much higher level of enrichment is required.
What about negotiations with Iran?
There were talks between Iran and the E3 - Britain, France and Germany but these have come to a halt. Meanwhile the IAEA has reached an agreement with Iran to try to get answers to some outstanding questions about its past and present programmes. A timeline for settling these issues was agreed at the end of August.
The head of the IAEA's safeguards policy Olli Heinonen said that it was a "significant step forward". The head of the IAEA Mohamed ElBaradei said this could be Iran's "last chance" to agree full compliance. He will report to the full IAEA on 22 November.
How soon could Iran build a bomb if it decided to do so?
The latest estimate from the International Institute for Strategic Studies in London (in its 2007 annual review) says: "If and when Iran does have 3,000 centrifuges operating smoothly, the IISS estimates it would take an additional 9-11 months to produce 25 kg of highly enriched uranium, enough for one implosion-type weapon. That day is still 2-3 years away at the earliest."
The head of the IAEA Mohamed ElBaradei said on 24 May 2007 that Iran could take between 3 and 8 years to make a bomb if it went down that route.
Might the US attack Iran?
The US says it wants a peaceful solution. An attack on Iranian nuclear facilities would not only risk Iranian retaliation, it would be hard to justify legally. The US is said to have plans, but it has plans for many contingencies and it has not taken a decision. However, it has not ruled anything out.
What does the Security Council and the IAEA want Iran to do?
It has to stop all enrichment activities, including the preparation of uranium ore, the installation of the centrifuges in which a gas from the ore is spun to separate the richer parts and the insertion of the gas into the centrifuges. It also has to suspend its work on heavy water projects, notably the construction of a heavy water reactor. Such a reactor could produce plutonium, an alternative to uranium for a nuclear device.
What sanctions have been imposed on Iran?
The Security Council has imposed two rounds of sanctions. Resolution 1737 was passed in December 2006. It was written under Article 41 of the UN Charter which allows for economic measures, but not the use of military force.
It mandates all UN member states "to prevent the supply, sale or transfer... of all items, materials, equipment, goods and technology which could contribute to Iran's enrichment-related, reprocessing or heavy water-related activities or to the development of nuclear weapon delivery systems".
In March 2007, the Council passed resolution 1747, also under Article 41. This seeks to tighten the squeeze on Iran's nuclear and missile programmes by preventing dealings with the state Bank Sepah and 28 named people and organisations, many connected to the elite Revolutionary Guard. Member states have been told to exercise restraint in and to report the travel of individuals connected to these programmes.
Imports of arms from Iran are banned and member states are told to exercise restraint in selling major arms systems to Iran. Loans are supposed to be limited to humanitarian and development purposes.
Will more sanctions be imposed?
The US and its closest allies on this issue - Britain, France and Germany - are pressing for further measures in the Security Council against more individuals and organisations in an attempt to bring further pressure on Iran.
But this depends on getting the council to agree. So far, Russia and China have not agreed.
A decision has been put off until November at least.
In the meantime the US is applying pressure on its international partners to restrict their trade with Iran. The US has banned most trade with Iran itself since its diplomats were seized in Tehran in 1979.
Is it too late now to stop Iran from acquiring enrichment technology?
According to Mohamed ElBaradei, the head of the IAEA, events have overtaken the current strategy and he thinks that Iran should now be allowed to undertake limited enrichment but under strict supervision. This approach has been rejected by the US and its supporters.
What is Iran's attitude?
Under the Nuclear Non-Proliferation Treaty (NPT), a country has the right to enrich its own fuel for civil nuclear power, under IAEA inspection.
Iran says it is simply doing what it is allowed to do. It argues that it needs nuclear power and wants to control the whole process itself. It says it will not use the technology to make a nuclear bomb.
President Mahmoud Ahmadinejad has repeatedly stressed that Iran will not yield to international pressure, and he has denounced the US as "tyrannical".
"The Iranian nation will not succumb to bullying, invasion and the violation of its rights," he has said.
Why is the West so worried about enrichment?
Western powers fear that Iran wants to develop either a nuclear bomb or the ability to make one, even if it has not decided to build one right now. So they want Iran to stop any enrichment. The same technology used for producing fuel for nuclear power can be used to enrich the uranium to a much higher level for producing fuel for a nuclear explosion.
The West says that Iran cannot be trusted because it hid an enrichment programme for 18 years, which was discovered in 2003.
What deal is Iran being offered to stop enrichment?
It is being offered help to develop a civilian nuclear power programme by a group of countries, including the US. Iran would be offered light-water reactors and fuel for these would be made in Russia in a partnership with Iran.
The offer is attached as Annex II to Security Council resolution 1737. However, as a condition for any talks, Iran has to suspend enrichment. It does not accept such a pre-condition.
There are other parts to the offer, including help for Iran to join the World Trade Organisation and the possible lifting of some US sanctions in the aircraft, telecommunications and agricultural machinery sectors.
Is Iran under inspection by the IAEA?
The IAEA has access to Iranian nuclear facilities under a safeguards agreement, and in February 2007 it verified that Iran had not diverted to illegal use any material it had declared. However, Iran has not implemented a more intrusive Additional Protocol it signed in 2003, so the IAEA says it cannot verify the absence of undeclared nuclear material.
What is the background to this confrontation?
The IAEA reported in 2003 that Iran had hidden a uranium enrichment programme for 18 years, and the current dispute dates back to then.
Western members of the IAEA called on Iran to commit itself to stopping all enrichment activities permanently, but it has refused to do so and has now abandoned a temporary halt as well.
The clash with Iran escalated in February 2006, when the IAEA as a whole reported Iran to the Security Council.
A month later, the Security Council decided to take up the issue after receiving a copy of an IAEA report on Iran which said that it could not "conclude that there are no undeclared nuclear materials or activities in Iran".
Could Iran leave the NPT?
Yes. Article X gives a member state the right to declare that "extraordinary events" have "jeopardised the supreme interests of the state". It can then give three months notice to quit. That would leave it free to do what it wanted.
And, in fact, on 7 May, its parliament threatened to force the government to withdraw if the stand-off was not resolved "peacefully".
What about fears for regional conflict?
There are fears of a broader, possibly military, crisis. The US has said publicly that it will not permit Iran to develop nuclear weapons. President George W Bush has said that he wants diplomacy to solve this, but that nothing is ruled out.
There have been press reports that Israel, which bombed an Iraqi reactor in 1981, has begun planning for a possible raid. But like the US, Israel says that diplomacy is the priority.
Don't existing nuclear powers have obligations to get rid of their weapons under the NPT?
Article VI commits them to "pursue negotiations in good faith on effective measures relating to cessation of the nuclear arms race at an early date and to nuclear disarmament". The nuclear powers claim they have done this by reducing their warheads, but critics say they have not really moved towards nuclear disarmament.
Critics also argue that the US and UK have broken the treaty by transferring nuclear technology from one to another. The US and UK say that this is not affected by the NPT.
Doesn't Israel have a nuclear bomb?
Yes. Israel, however, is not a party to the NPT, so is not obliged to report to it. Neither are India or Pakistan, both of which have developed nuclear weapons. North Korea has left the treaty and has announced that it has acquired a nuclear weapons capacity.
