Iran’s Envoy to the IAEA Ali Ashgar Soltanieh said last week that a delegation of the UN nuclear watchdog would visit Iran on January 29-31 “to negotiate and discuss issues raised by the IAEA.”

The IAEA delegation is led by Herman Nackaerts who is in charge of the Iran nuclear file.

The visit comes amid heightened international tensions over the Iran nuclear program.

The EU voted on Monday to ban oil imports from Iran. The move came after the Islamic Republic announced earlier this month that it had launched a nuclear enrichment program at a well-protected underground facility near the holy Shia city of Qom.

The program envisages enriching uranium to the 20-percent level, which can easily be turned into fissile warhead material.

Western nations suspect Iran, which is already under numerous international sanctions, of pursuing a secret nuclear weapons program but Tehran insists it needs nuclear power solely for civilian purposes.

Iran has threatened to retaliate by blocking the Strait of Hormuz, the main export route for supplies from the Middle East.

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The newspaper said President Barack Obama, Defense Secretary Leon Panetta and other top officials have delivered a series of private messages to Israeli leaders, warning about the dire consequences of a strike.

Obama spoke by telephone on Thursday with Israeli Prime Minister Benjamin Netanyahu, and General Martin Dempsey, chairman of the Joint Chiefs of Staff, will meet with Israeli military officials in Tel Aviv next week, the report said.

The Journal noted that the US military was preparing for a number of possible responses to an Israeli strike, including assaults by pro-Iranian Shiite militias in Iraq against the US Embassy in Baghdad.

Up to 15,000 US diplomats, federal employees and contractors still remain in Iraq.

To deter Iran, the United States is maintaining 15,000 troops in Kuwait, and has moved a second aircraft carrier strike group to the Persian Gulf area, the paper said.

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The speaker of Iran’s parliament, Ali Larijani, said on Thursday that the nuclear program was also too strong to be derailed by assassinations of nuclear scientists, a day after the fourth such killing.

As a newspaper close to the clerical establishment called for retaliatory assassinations of Israeli officials, a former U.N. inspector said a new, almost bomb-proof plant could provide Iran enough enriched uranium for an atom bomb in just a year.

Such timetables, while Iran denies all Western charges that it even wants nuclear weapons, have added to speculation that Israel and the United States could resort to a military attack on the Islamic Republic – something an aide to Russian leader Vladimir Putin said was growing more likely.

After a motorcycle hitman blew up the 32-year-old engineer during the Tehran rush hour, many Iranians directed anger over the violence, and over painful economic sanctions, at the Western powers, which have hoped to turn popular sentiment against an increasingly divided ruling elite.

Supreme Leader Ayatollah Ali Khamenei said that those behind Wednesday’s mystery killing would be punished.

Hossein Shariatmadari, whom he appointed editor-in-chief of the Kayhan newspaper, wrote: “These corrupted people are easily identifiable and readily within our reach. … Assassinations of the Zionist regime’s military men and officials are very easy.

While declining comment on allegations it carried out the bombing on Wednesday, Israel has a history of such actions and will be on the alert for possible attacks against it.

Kremlin Security Council head Nikolai Patrushev, close to Putin, was quoted blaming Israel, which says an Iranian bomb would threaten its existence, for pushing for war.

“There is a likelihood of military escalation of the conflict, towards which Israel is pushing the Americans,” he told the Interfax news agency.

Speaking to troops in Texas on Thursday, U.S. Defense Secretary Leon Panetta said: “We have some ideas as to who might be involved but we don’t know exactly who was involved.” He said Washington was “not involved in any way.

Former U.N. nuclear inspection chief Olli Heinonen said this week’s announced start of uranium enrichment at a bunker complex could provide Iran with the ability to have enough such material for one nuclear bomb early next year – although it was not clear it would yet have the ability to build one.

A high-level team from the U.N. International Atomic Energy Agency (IAEA) is expected to visit Iran around January 28.

ASIAN IMPORTERS

The United States on Thursday imposed sanctions on China’s state-run Zhuhai Zhenrong Corp, which it said was Iran’s largest supplier of refined petroleum products.

Secretary of State Hillary Clinton also imposed sanctions on Singapore’s Kuo Oil Pte Ltd and FAL Oil Company Ltd, an energy trader based in the United Arab Emirates, as part of what the State Department called a broadening international effort to target Iran’s energy sector and persuade Tehran to curb its nuclear ambitions.

Since President Barack Obama signed laws on New Year’s Eve that, by denying buyers access to U.S. dollars, aim to cripple Iran’s oil sales until it gives ground on the nuclear issue, major importers have been taking positions, torn between keeping in with Washington and quenching their thirst for Iranian oil.

Threats of disruption to the Gulf oil trade, from war or simply blockades, have kept crude prices firm. Benchmark Brent crude is up more than 4 percent this month.

On Thursday, Japan, whose economy is already deep in the doldrums after cuts in its nuclear power supply following last year’s tsunami, pledged to take concrete action to cut its oil imports from Iran in response to an appeal for support from visiting U.S. Treasury Secretary Timothy Geithner.

The U.S. Treasury chief welcomed Tokyo’s cooperation, an encouraging sign for U.S. foreign policy after China rebuffed his arguments for sanctions earlier on his Asian tour.

One issue affecting Asian governments’ willingness to follow the U.S. lead is the availability of alternatives to Iran, the second biggest exporter in OPEC after Saudi Arabia. While ready to help, it is not clear how far U.S. ally Riyadh can increase its own output and exports to make up for spurned Iranian crude.

Japan has already sought extra supplies from Saudi Arabia and the United Arab Emirates (UAE). Chinese Premier Wen Jiabao will visit Saudi Arabia, the UAE and Qatar in a trip beginning this weekend. The prime minister of South Korea, another major buyer of Iranian crude, is due to visit the UAE and Oman from Friday.

Korean minister Hong Suk-woo told Reuters that “it was too early to say” if Seoul would reduce oil imports from Iran. “Our basic stance is to cooperate with the U.S.,” Hong said.

China, the biggest buyer of Iranian crude, gave no hint on Wednesday of giving ground to U.S. demands to curb Tehran’s oil revenues.

U.S. officials sounded more optimistic, saying they would focus more on China’s actions than on its public statements.

But China has reduced crude purchases from Iran for January and February in a dispute over contract pricing terms.

India faces pressure to cut crude purchases from Iran, but policymakers and industry officials have sent mixed messages on future plans, with one unnamed cabinet minister saying on Thursday the country would continue to do business with Tehran.

EUROPEAN CONCERNS

The European Union is more sympathetic to U.S. pressure on Iran. EU foreign ministers are expected to agree on a ban on imports of Iranian crude oil on January 23.

But even Europe, whose governments largely share the concern of Israel and Washington over Iran’s nuclear ambitions, is looking for ways to limit the pain of an embargo.

“We expect a slow and gradual implementation of what will eventually become a full embargo,” said Mike Wittner from Societe Generale. “Europe has the same concerns about its fragile economy and an oil price spike as the U.S., probably even more.”

Firms in Iran’s three biggest EU oil customers, Italy, Spain and Greece, all suffering acute economic discomfort, have lately extended existing purchase deals in the hope to at least delay the impact of any embargo for months, traders told Reuters.

EU diplomats said a consensus was emerging to grant a grace period before banning new deals with Iran – six months for crude oil purchases and three for petrochemicals. Moreover, companies would be able to go on accepting Iranian oil in payment for outstanding debts – something especially helpful to Italy.

Diplomats and traders say the grace period would give European companies time to find alternative sources of crude, but the process would be far from smooth.

“Some (EU members) are saying: ‘help us find alternative suppliers and find a way to sustain the discounts we currently have’,” one diplomatic source said.

The problem of replacement supplies to Europe could be partially solved with the help of Saudi Arabia. European diplomats have spoken to the kingdom’s leadership who have signaled readiness to fill a supply gap, although concerns mount about the producer’s spare capacity nearing its limit.

But there is no reason why Riyadh would agree to supply crude at a discount to a buyer like Greece, traders said. Many in the oil market have already pulled the plug on supplies for fear that Athens might default on its debt.

The EU is also planning new sanctions on Iran’s financial sector but states have been divided over whether to include Iran’s central bank in these sanctions. Diplomats said France and Britain backed this but Germany opposed the idea – although a German diplomat denied that was the case.

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Iran’s military has told Washington not to send its aircraft carrier back to the Persian Gulf, threatening the U.S. with response measures.

“I think it reflects the fact that Iran is in a position of weakness. It’s the latest round of Iranian threats and it’s confirmation that Tehran is under increasing pressure for its continued failures to live up to its international obligation,” White House spokesman Jay Carney told reporters.

“Iran is isolated and is seeking to divert attention from its behavior and domestic problems,” he said.

“This is simply a measure of the impact that sanctions have been having on Iran and the broad international support for taking – putting pressure on Iran and isolating Iran because of its refusal to live up to its international obligations,” Carney said.

Iran’s navy, involved in the Velayat-90 military drills, discovered an American aircraft carrier nearby last Thursday. The situation around the maneuvers escalated when Iranian authorities said they might close the Strait of Hormuz – a threat the United States rejected as well.

The West accuses Iran of pursuing a secret nuclear weapons program. The Islamic Republic denies the accusation, saying its nuclear program is for civilian purposes only.

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At 12pm AEDT today, the local currency was at 100.55 US cents, down from 101.50 yesterday afternoon.

IG Markets institutional trader Chris Weston said the Australian dollar was shaped by a drop in other currencies due to growing eurozone uncertainty.

“Price action on the Aussie dollar is just mirroring what we’re seeing with the euro, which is trading on fears around what is happening with the ECB’s (European Central Bank’s) balance sheet,” he said.

“The fact that that’s gone out with a record level is a sobering reminder of the bleak outlook for EU growth, and the Aussie dollar as a proxy for global growth went along for the ride.

“The risks in the short to medium term are still skewed to the downside for the Aussie dollar.”

The ECB announced that its balance sheet had reached a record 2.73 trillion euros, due to its decision to lend more money to institutions.

Mr Weston said he did not expect much more buying ahead of a crucial Italian bond action on Thursday, which would be keenly watched.

It’s not one of those events that I see people buying in anticipation of, because to me it holds downside risks,” he said.

“We’re interested on the skew in the three and ten years – funds will be allocating a percentage to each, and depending on that skew, it will determine the risk profile of the market.

“If we see it heavily weighted towards the shorter dated paper, we are likely to see the euro and the Aussie dollar come off.”

The success of the auction could be a reflection of Italy’s potential to raise cash in the market next year, Mr Weston said.

“Italy has to raise a lot of money next year in the primary market, over three hundred billion, so if they can’t get auctions away now, they’re really going to struggle,” he said.

Since 7am AEDT the local unit has traded between 100.44 and 101.01 US cents.

Bond future prices were higher at noon.

The March 10-year bond futures contract was trading at 96.225 (implying a yield of 3.775 per cent), down from 96.180 (3.820 per cent) yesterday.

The three-year bond futures contract was at 96.880 (3.120 per cent), up from 96.850 (3.150 per cent) yesterday.

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The legislation, which was expected to face votes in both chambers this week, requires that Al-Qaeda fighters who plot or carry out attacks on US targets be held in military, not civilian, custody, subject to a presidential waiver.

The measure exempts US citizens from that fate, but leaves it to the US Supreme Court or future presidents to decide whether US nationals who sign on with al-Qaeda or affiliated groups may be held indefinitely without trial.

The negotiators, working to blend rival House of Representatives and Senate versions of a sweeping annual $662 billion defense bill, expressed hopes of having modified the detainee rules enough to avert a White House veto threat.

President Barack Obama had warned he could reject the bill over the required military custody of some suspected extremists as well as provisions he charged would short-circuit civilian trials for alleged terrorists.

“I just can’t imagine that the president would veto this bill” given the changes made in the House-Senate compromise, said Senate Armed Services Committee Chairman Carl Levin, a Democrat.

Veteran Senator John McCain, the top Republican on Levin’s panel, said the negotiators had met with key aides to Obama, including FBI Director Robert Mueller and top US Treasury Department officials.

“We feel that we were able to satisfy, we hope, most of their concerns,” he said.

The lawmakers strengthened Obama’s ability to waive parts of the detainee provisions and reaffirmed that the custody rules would not hamper ongoing criminal investigations by the FBI or other law enforcement organizations.

And they very slightly diluted the legislation’s tough new sanctions on Iran, which aim to cut off Tehran’s central bank from the global financial system in a bid to force the Islamic republic to freeze its suspect nuclear program.

“It does curtail Iran’s ability to buy and sell petroleum through its central bank and prevents foreign financial institutions that deal with the central bank of Iran from continuing their access to the US financial system,” said McCain.

“They are going to pay a bigger and bigger price should they continue to move towards nuclear weapons,” said Levin.

The measure would freeze roughly $700 million in aid to Pakistan pending assurances that Islamabad has taken steps to thwart militants who use improvised explosive devices (IEDs) against US-led forces in Afghanistan.

“We’ve had some shaky relations lately with Pakistan. We need them, they need us,” said House Armed Services Committee Chairman Buck McKeon, a Republican.

“But one of the things that has bothered me the most in this war in Afghanistan is the loss of life and limb to IEDs.”

The measure forbids the transfer of Guantanamo Bay detainees to US soil and sharply restricts moving such prisoners to third countries — steps that critics of the facility say will make it much harder to close down.

The legislation also calls for closer military ties with Georgia, including the sale of weapons that McCain said would help the country, which fought a brief war with Russia in 2008, defend itself.

And it included a measure, authored by McCain and Levin, to crack down on counterfeit electronics making their way from China into the Pentagon’s supply chain, hurting the reliability of high-priced US weapons programs.

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“September 11 was actually a game designed to influence the emotions of the human community, in order to find a pretext for attacking Islamic regions and invading Iraq and Afghanistan,” he was quoted as saying on the website of his office on the 10th anniversary of the 9/11 attacks.

It was not the first time Ahmadinejad has criticised Iran’s arch-foe over the attacks which killed nearly 3,000 people, destroyed the twin towers of New York’s World Trade Centre and plunged the country into an era of wars.

In June, during a counter-terrorism summit in Tehran, Ahmadinejad said that “the American government used the attacks as a pretext to occupy two countries, and kill, injure and displace people in the region.”

He also sparked Western fury in September 2010 when in his speech at the United Nations — four miles (six kilometres) from where the World Trade Center used to be — he said that “some people within the US government orchestrated the attacks to reverse the declining American economy.”

And in March 2010 he called the 9/11 attacks as a “big lie.”

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“Last night at 11:29 pm (1859 GMT), the Bushehr power plant was connected with 60 megawatts to the national grid,” the organisation’s spokesman Hamid Khadem Qaemi, told Al-Alam television.

The connection of the Russian-built plant in southern Iran to the national grid was originally scheduled for the end of 2010.

The Bushehr plant was started up in November 2010 but repeated technical problems delayed its operations, leading to the removal of its fuel rods last March.

“The capacity will gradually increase and it (is going through its) testing phase and on Shahrviar 21 (September 12) in a ceremony the power plant will reach its 40-percent capacity,” Khadem Qaemi said.

The deputy atomic chief in charge of power plants, Mohammad Ahmadian, told state television the plant was expected to reach full capacity at “around the end of Aban or beginning of Azar (November).”

“But it is very important for us to take these final steps with utmost safety concerns in mind. We want to have guaranteed functional operation,” Ahmadian added.

In mid-August, Iran’s atomic organisation chief Fereydoon Abbasi Davani said the plant was expected to reach “full capacity of 1,000 megawatts” in late November or early December.

Russia, which built the plant, has pinned the delays on Iran, saying its engineers have been forced to work with outdated parts. The latest delay in March was blamed on wear and tear at the plant.

Construction started in the 1970s with the help of German company Siemens, which quit the project after the 1979 Islamic revolution over concerns about nuclear proliferation.

In 1994, Russia agreed to complete the plant and provide fuel for it, with the supply deal committing Iran to returning the spent fuel to allay Western concerns over its nuclear ambitions.

Western governments suspect Iran is seeking an atomic weapons capability under the guise of its civilian space and nuclear programmes, a charge Iran vehemently denies.

Iran on Friday welcomed as a “step forward” an International Atomic Energy Agency (IAEA) report on its nuclear activities, saying it highlighted positive steps taken by Tehran towards “cooperation and transparency.”

But the UN atomic watchdog said in a confidential report, a copy of which was obtained by AFP on Friday, that it was “increasingly concerned about the possible existence in Iran of past or current undisclosed nuclear related activities involving military related organisations.”

These included “activities related to the development of a nuclear payload for a missile”, according to the report, which is due to be discussed by the IAEA’s 35-member board of governors at a September 12-16 meeting.

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“The shipments were transferred to Iran from Russia by plane in three phases on May 4, 8 and 10,” spokesman for Iran’s Atomic Energy Organization Hamid Khadem Ghaemi told al Alam state channel. He said 30 metric tons of fuel had been received.

Russia delivered the first batch of about 80 metric tons of uranium fuel rods to Iran in 2008 on December 17 as part of international efforts to persuade Tehran to halt its uranium enrichment program.

The $1 billion Bushehr plant, which was built by Russia, is the Islamic state’s first and only nuclear power plant. Russia says the Bushehr project is being built under the control of the International Atomic Energy Agency, the United Nations’ nuclear watchdog.

The United States and its allies say they believe Iran’s uranium enrichment and other nuclear activities are aimed at building nuclear weapons. Iran says it needs nuclear fuel purely to produce energy.

Bushehr has for years caused friction between Russia and Western powers pressing for restrictions on economic cooperation with Iran.

Tehran plans to build 19 new 1,000-megawatt nuclear power plants in the Islamic Republic to meet the country’s growing electricity demand.

International and U.N. sanctions have been imposed on Iran for its refusal to halt enrichment.

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A round of talks in Istanbul in January collapsed after Iran said it wouldn’t freeze uranium enrichment.

EU’s foreign policy chief, Catherine Ashton, said at the time that no new talks were planned but that world powers remained open to more discussions.

Iran’s state TV says top nuclear negotiator Saeed Jalili sent a reply to Ashton suggesting more talks.

Tuesday’s report says Jalili told Ashton the talks should be aimed at “cooperation over mutual points.” He also said they should be fair, “respect rights of nations and avoid pressure.”

The U.S. and its European allies suspect Iran is pursuing a nuclear weapon, a charge Iran denies.

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