Russia has called on Iran to stop work on uranium conversion immediately, a day after it resumed operations at its nuclear facility at Isfahan.
Iran's main partner in its effort to develop nuclear power urged Tehran to continue co-operating with the UN nuclear watchdog, the IAEA.
The IAEA meets on Wednesday to discuss whether Iran should be referred to the UN Security Council for sanctions.
Iran has said it is ready for talks, and will put forward new proposals.
The US, the EU and the IAEA have called on Tehran to return to negotiations on its nuclear programme.
The EU and Washington want Iran to abandon its scheme, which they suspect is a cover for a nuclear weapons programme, in exchange for political and economic concessions.
Iran suspended its nuclear programme in 2004 to allow for talks, but began work at Isfahan on Monday after Iran rejected the latest EU offer.
Mounting calls
Russia is helping Iran to build its first nuclear plant at Bushehr, for which it will supply fuel.
NUCLEAR FUEL CYCLE Mined uranium ore is purified and reconstituted into solid form known as yellowcake Yellowcake is converted into a gas by heating it to about 64C (147F) Gas is fed through centrifuges, where its isotopes separate and process is repeated until uranium is enriched Low-level enriched uranium is used for nuclear fuel Highly enriched uranium can be used in nuclear weapons
However, the foreign ministry said on Tuesday that "the wise decision would be to stop work... on uranium conversion without delay".
"We are convinced that the situation that has arisen now has not gone beyond the point of no return," the statement said.
Tehran should halt activity and continue to work closely with the IAEA "to resolve remaining question over Iran's nuclear programme", it added.
In the US, President George W Bush said Iran's willingness to return to talks was a "positive sign".
But he added that he was still "deeply suspicious" that Iran was intent on developing a nuclear weapon.
Speaking on behalf of the EU, France said it was still possible to seek a negotiated settlement.
IAEA talks began on Tuesday, and are expected to take several days.
Correspondents say Washington, backed by Japan, Canada and Australia, believe the diplomatic route is now exhausted and the only next step is to refer Iran to the UN Security Council.
However, a diplomat told Reuters news agency the board of governors was not likely to call for a UN referral just yet, giving both Iran and the EU time for more talks.
Conversion process
Iran says it has the legal right under the Nuclear Non-proliferation Treaty to carry out the nuclear fuel cycle.
President Mahmoud Ahmadinejad, who took office last week, said Iran had done nothing unlawful by resuming uranium conversion. He said he would put forward new proposals for negotiation after forming a cabinet.
The Isfahan plant is Iran's main uranium conversion facility. Conversion is an early stage in the nuclear fuel cycle, turning raw uranium - known as yellowcake - into the feedstock for enriched uranium.
Uranium enriched to a low level is used to produce nuclear fuel, while further enrichment makes it suitable for use in atomic weapons.
Mohammad Saeedi, deputy head of Iran's Atomic Energy Organisation, said on Monday that work at Isfahan had resumed under the supervision of the IAEA.
He later said that work would begin on Wednesday in previously sealed-off areas of the plant, taking the conversion process further.
Are the Iranian mullahs close to acquiring the bomb? Has Iran violated the Non-Proliferation Treaty by restarting its conversion of yellowcake into uranium hexaflouride? The answer to both is no.
By a recent U.S. intelligence review, Iran may be 10 years away from a bomb. And under the NPT, Iran is allowed to enrich uranium for use in her own nuclear power plants.
Why, then, this talk of confrontation and pre-emptive strikes? Even if Iran had a weapon, to give it to a terrorist or to use it on a U.S. target would be an act of suicidal insanity by a regime that, no matter how militant, has shown no desire for war with America.
What is the worry? Just this. If or when Iran goes nuclear, she has a deterrent to intimidation. U.S. freedom of action in the Persian Gulf comes to an end. We would have to behave as gingerly with the mullahs as we do with Kim Jong Il, something intolerable to our neoconservatives and President Bush.
For the Israelis, an Iranian bomb would have the same impact as Stalin's explosion of a bomb had on us in 1949. Israel's invulnerability would come to an end. She would enter the world of Mutual Assured Destruction, like the one we had to live in during the Cold War. Thus, for Israel, the sooner the Americans pulverize Iran's infant nuclear facilities, the better. But herein lies the problem for President Bush.
Britain, France and Germany do not want to take the first step to confrontation by asking the U.N. Security Council to vote sanctions on Iran for restarting the enrichment process. And even if the Europeans agree to go to the Security Council, a resolution calling for sanctions would face vetoes by Russia and China.
If the council then rejects sanctions, but America and her NATO allies impose them, the world will be divided between Russia-China-Iran on one side and the United States and its backers on the other. It would be interesting to see how many U.S. allies are willing to support sanctions on the third largest oil producer on earth when oil is running at $65 a barrel.
Moreover, if the present negotiations end in sanctions on Iran, then, just as North Korea sped up its nuclear program when talks broke down, Iran might do the same. That would leave the United States with the final option: air and missile strikes to destroy all of Iran's known facilities for the enrichment of uranium.
But as Iran is permitted such facilities as long as it allows absolute freedom for U.N. inspectors, how could we justify such acts of war?
After all, we give a $160 billion trade surplus to China, though she is targeting our cities with nuclear missiles. President Bush cut a deal to help India develop nuclear power, though she has tested bombs. We give foreign aid to Pakistan and Israel, which had clandestine and successful programs that built atomic weapons. And we have a basket of goodies on offer to Kim Jong Il if he will shut down his nuclear facilities and hand over any bombs.
Where is the consistency here?
There is another consideration. Iran's response to any U.S. strike is unlikely to be to go limp like a peacenik demonstrator. As Michael Mazeer of the U.S. National War College writes in The New Republic, Iran's best strategy might be to lash out in retaliation.
What could Iran do? Plenty. Send Revolutionary Guards into Iraq to make that country a worse hell for the 135,000 U.S. troops. Incite Hezbollah to launch rockets on Israel to widen the war. Attack U.S. allies in the Gulf. Encourage the Shias in Iraq and Saudi Arabia to attack Americans. Mine the Strait of Hormuz. Activate Islamic loyalists to bring terror home to the United States.
In short, a U.S. attack on Iran could lead to war across the region and interruption of the 15 million barrels of oil a day that come from the Gulf, which would drive the world economy into instant cardiac arrest.
And as the United States lacks the ground forces to invade Iran and topple the regime, U.S. retaliation would be restricted to air and cruise missile strikes. But just as 9-11 united Americans behind President Bush, attacks on Iran might unite the Iranian people behind the mullahs' regime, enhancing its prestige as it fought America to protect Iran's equal right to pursue nuclear power and nuclear technology, an issue upon which almost all Iranians agree.
President Bush should think long and hard before yielding to the War Party a second time. Iran is a nation three times the size of Iraq and with three times the population. This would be no cakewalk.
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