The United States and the European Union Saturday called on Iran to go back on its decision to resume the construction of centrifuges for enriching nuclear fuel.

"I hope Iran will go back to full suspension," of uranium enrichment activities, International Atomic Energy Agency (IAEA) director general Mohamed ElBaradei told reporters on a flight from Vienna to Moscow, where he is to attend a conference on the peaceful use of nuclear energy.

He was reacting to Iran's announcement that it was reneging on a promise it made in February to Britain, France and Germany not to build and test centrifuges for producing enriched uranium, which can be used to make bombs.

This promise was part of confidence-building measures which Iran has been urged to take while the IAEA investigates US charges that the Islamic Republic is secretly developing nuclear weapons.

In a joint statement issued at an EU-US summit in Ireland, Washington and the EU said: "We are disturbed by Iran's recent announcement of its intention to resume manufacturing and assembly of centrifuges and urge Iran to rethink its decision."

ElBaradei said of the Iranian move: "I hope this is temporary."

"It does not involve the enrichment of material, nonetheless I think it would be good for Iran to go back, I hope it would be soon, to full suspension as outlined by them to us in February," ElBaradei said.

On the reaction of Britain, France and Germany, which have been leading the IAEA effort to get Iran to cooperate, ElBaradei said: "My feeling is that they will continue with their dialogue with Iran. I haven't heard that this is going to stop."

A diplomat close to the IAEA said the Iranians were planning to meet with the so-called Euro-3 in July, probably in one of their capitals rather than in Tehran.

He said that an escalation of the confrontation, with the worst case being Iran's pursuing enrichment and the West reacting by bombing the Islamic Republic, would only drive Iran's nuclear program underground, as happened in Iraq after a reactor there was bombed by Israeli warplanes.

"Among the different options, the best available long-term sustainable option is engagement by providing incentives," as the Euro-3 have already started, the diplomat said.

Iran agreed with the Euro-3 last year to suspend enrichment, hoping to get better trade and nuclear technology transfers in return for its cooperation.

But the 35-nation board of the IAEA passed a resolution on June 18 rebuking Tehran for failing to come clean about its nuclear program, deploring the level of Iranian cooperation and calling for the 15-month-old investigation into Iran's nuclear activities to be wrapped up within a few months.

Iran in turn complained that the Euro-3 had failed to keep their side of the bargain.

The US undersecretary of state for arms control and security, John Bolton, said the Iranian move to make centrifuges was "an act of defiance of the IAEA Board of Governors, it is a thumb in the eye of the international community".

The Iranian ambassador to the IAEA, Pirooz Hosseini, had said in a letter to ElBaradei Tuesday that since Iran was continuing to build international confidence -- by honoring an additional protocol to the nuclear Non-Proliferation Treaty (NPT) allowing for wider inspections of its facilities -- Iran felt free "to resume, under IAEA supervision, manufacturing of centrifuge components and assembly and testing of centrifuges as of June

ElBaradei said this move was "a way of expressing displeasure with the board resolution" criticizing Iran.

He said the suspension of the production of centrifuges remained a separate issue from IAEA verification inspections of Iranian facilities, which will include inspectors "soon" visiting a place known as Lavizan Shiyan in Tehran where the Iranians have razed several buildings and laboratories that could possibly be weapons of mass destruction development sites.

Inspections are designed to make "sure that Iran's past program, particularly the enrichment program" had been declared in full to the IAEA, ElBaradei said.

By contrast, suspension of the production of centrifuges "has to do with the future, with confidence building", he explained.

The centrifuge issue would not impact on the IAEA's goal of finishing its inspections of Iran in a few months, ElBaradei said.

He said the IAEA would be "discussing with the Iranians the implications of their letter in the next few days".

WAR.WIRE