Such a decision by the International Atomic Energy Agency (IAEA) next week could lead to strict UN sanctions against Tehran, and "escalate the issue into an international crisis," Iran's representative to the IAEA, Ali Akbar Salehi, told AFP.

Salehi said Iran would not withdraw from the nuclear Non-Proliferation Treaty (NPT), but there were steps it could take.

"There are many things Iran can do. We have a lot of leverage," he said without elaborating. Iran feels it should be rewarded for cooperating since October with the IAEA in its investigations.

Diplomats said Iran could still back away from its promise to sign an agreement allowing surprise IAEA inspections of suspect nuclear facilities.

But a diplomat close to the IAEA said the Iranians had made similar threats after the IAEA in September gave Iran until end-October to fully disclose its nuclear program. Tehran still cooperated, even suspending its uranium enrichment program.

"The Iranians want nothing more than for the international community to panic, to say watch out, we've got to handle them with kid gloves," the diplomat said.

"What actually happens is that the Iranians follow the requests of the IAEA," he said.

The Iranian warning came after withering criticism of the IAEA by the United States -- the chief proponent of referring Iran to the UN Security Council -- in which it dismissed the agency's conclusions that the Islamic republic was not trying to make atomic weapons.

John Bolton, under secretary of state for arms control and international security, said Wednesday an IAEA document flew in the face of established facts.

"After extensive documentation of Iran's denials and deceptions over an 18-year period and a long litany of serious violations of Iran's commitments to the IAEA, the report nonetheless concluded that 'no evidence' had been found of an Iranian nuclear weapons program," he said.

"I must say that the report's assertion is simply impossible to believe," he said.

"The United States believes that the massive and covert Iranian effort to acquire sensitive nuclear capabilities make sense only as part of a nuclear weapons program," Bolton said.

The IAEA Thursday flatly rejected the US charges and said it stood by its report, which is to be submitted to the agency's board of governors at a meeting in Vienna November 20.

The document was the result of eight months of investigations, including dozens of trips by inspectors to Iran and intensive laboratory analyses of samples, since director-general Mohammed ElBaradei visited Iran to check out reports of undeclared nuclear facilities.

It accused Iran of covert nuclear activities over the past 20 years, including making plutonium and enriching uranium, but said there is as yet no evidence it is trying to build an atomic bomb, according to a copy obtained by

The United States wants the IAEA board to cite Iran for its past failures to report certain nuclear activities and to refer the matter on to the UN.

"We will be facing unpredictable consequences," Salehi said. "It will not be conducive to the peaceful resolution of the issue."

But another diplomat was quick to say that Iran, unlike North Korea which has pulled out of the NPT, has a more open society and wants good international relations.

"We consider the NPT an important treaty. We think it's a cornerstone for avoiding proliferation of nuclear weapons and that it is important from our perspective," Salehi said.

Iranian President Mohammad Khatami said Wednesday that Tehran's future cooperation with the nuclear watchdog depended on the outcome of the IAEA meeting.

Some IAEA member states favor passing a non-compliance resolution, against those who support lighter reprimand that would encourage Tehran to keep cooperating.

This puts Britain, France and Germany, which struck a deal in October with Iran, on a collision course with the United States. It is unwilling to accept anything less than the UN route, a diplomat in Vienna said.

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