Last October, there was a sigh of relief when Iran bowed to pressure from the International Atomic Energy Agency (IAEA) by offering to make a full declaration on all nuclear activities, giving a green light for tougher inspections and a suspension of work on the sensitive nuclear fuel cycle.

But the deal, struck during an unprecedented visit by the foreign ministers of Britain, France and Germany, now appears to be at risk from Iranian intransigence and failure to allay United States accusations that Tehran is after more than just civilian atomic power.

The IAEA is unlikely to pass a resolution declaring Iranian violation of the nuclear Non-Proliferation Treaty (NPT) during a board of governors meeting starting Monday, but European diplomats are unanimous in saying time is running out.

"It's true that the agency will not be making a decision on the issue this time around, and will defer the issue to September," said one European diplomat here.

"But it is also true to say that we are getting tired."

The deal was seen as a breakthrough, ensuring IAEA teams could verify Iran's assertion that its nuclear programme is purely peaceful and not a cover for weapons development, as the United States and Israel allege and many others suspect.

But in the months since the smiles and the handshakes of October the deal has been stretched at the seems.

"After the promises of October, (IAEA) inspectors found Iran possessed plans for P-2 centrifuges which were not declared. And after that, we realised that they didn't only have plans, they were making parts," explained another European diplomat.

The P-2 is an advanced centrifuge design that can enrich uranium way beyond levels needed for nuclear reactors.

In addition, more traces of highly enriched uranium (HEU), possibly bomb-grade, have been found, adding more urgency to the need to verify Iran's claim the traces came into the country on imported equipment.

Iran's explanations for the embarrassing finds have also raised eyebrows -- notably the explanation that the reason the Islamic republic was seeking so many P-2 centrifuge parts on the black market was to get a better price.

Officials here also defended the continued production of centrifuge components -- which they had said stopped several months ago -- by claiming private workshops were involved and that the government had yet to compensate them for stopping work.

One European diplomat questioned "if they are taking us for fools".

With plenty of fanfare, Iran had also promised that it would suspend all enrichment-related activity. That was a key demand of the Europeans, who wanted to see fuel cycle work stopped as IAEA inspectors carried out their work.

But Iran appears to interpret "enrichment-related" in very narrow terms. So while the centrifuges may have stopped turning, a wealth of work on other parts of the fuel cycle continues -- such as research, uranium conversion and parts acquisition.

Iran also appears to desperate to resume enrichment, emphasising that it is not expressly forbidden under the terms of the NPT.

At the same time, the government appears to have made no progress in ratifying its signature of the additional protocol to the NPT, which allows tougher and more wide-ranging IAEA probes.

Above all the IAEA, dissatisfied by Iran's explanations so far, is pressing for answers on the HEU traces. Iran stubbornly says the answer can only be found in Pakistan, where it bought equipment on an international black market.

"These are the main outstanding issues," explained a European diplomat, noting that Iran seems to be profiting from US problems in Iraq and playing for time.

"Iran is benefiting from favorable political circumstances. Although that could change before September," when the IAEA is likely to sit down again and discuss Iran.

But Iran is also raising the stakes.

On Friday two of its most powerful leaders, Akbar Hashemi Rafsanjani and Hassan Rowhani, warned European governments they might regret pandering to Tehran's archfoe Washington by submitting a strongly critical draft resolution in Vienna.

And on Saturday, Foreign Minister Kamal Kharazi complained that the pressure was "unacceptable", and condemned the draft resolution drawn up by Britain, France and Germany.

"We have protested against this draft resolution, which is unacceptable unless there are changes made so that it can be acceptable for all parties," the foreign minister said.

Moreover, hardline voices are again being raised calling for Iran to pull out of the NPT altogether.

WAR.WIRE