For the first time since the International Atomic Energy Agencybegan a probe of Iran's nuclear program in February 2003, its board of governors did not adopt either a formal statement or resolution on the matter at what are regular meetings at the agency's headquarters in Vienna.

Diplomats said this was at least in part because the initiative has passed to talks taking place between the European Union and Iran to get Tehran to abandon uranium enrichment in return for trade and security benefits.

The IAEA's 35-nation board called on Iran Thursday to do more to cooperate with UN inspectors but also backed the EU-Iran talks.

In a closing statement, the board said that at this week's four-day meeting "support was expressed for the negotiations currently being undertaken between Iran, France, Germany and the UK (Britain) . . . and expressed hope that an agreement would be reached on long-term arrangements."

The EU-Iran talks resume in Geneva next week, with Washington possibly ready to sign on to the European initiative by helping the EU offer credible incentives, such as helping Tehran join the World Trade Organization (WTO) or modernize its civil aviation fleet.

But there is a fundamental sticking point.

Iran will not yield on its right and intentions to make nuclear fuel, Cyrus Nasseri, who headed the Iranian delegation here, said.

But Nasseri said he was "confident" an agreement could be reached, if the political will were there.

"We can have fuel production and we can have arrangements that will provide credible assurances to our interlocutors and to the international community that nothing (made from fuel) will be diverted" for non-peaceful purposes, Nasseri said.

Senior European diplomats told AFP however that this point was not negotiable as they, and the United States, insist Iran abandons uranium enrichment, which makes nuclear fuel but can also be the explosive core of atomic bombs.

At the board meeting, the United States and the EU both criticized Iran for its cooperation.

US ambassador Jackie Sanders said that Iran had continued to deny IAEA inspectors "the transparency and cooperation they need to perform their duties" and that Tehran was "cynically" manipulating "the nuclear nonproliferation regime in the pursuit of nuclear weapons."

Sanders said "there remain an alarming number of unresolved questions about Iran's nuclear program."

Among them are why the Islamic Republic is building a nuclear reactor that can make weapons-grade plutonium and why Iran was late in reporting on construction of "deep tunnels for storage of nuclear material" at a site that carries out the first stages of uranium enrichment.

Diplomats told AFP Thursday that the concrete foundation was already being poured for the heavy-water reactor at Arak, southwest of Tehran.

Britain, France and Germany, which lead the EU talks and have convinced Iran to agree to a temporary enrichment suspension, said they shared the US concern over Iranian failures to report fully.

They told the board that "Iran has carried out operations of cleaning and quality control on certain centrifuge components, which has caused us serious concern."

The European trio said they understood the suspension "as a voluntary commitment to suspend all, meaning each and every, enrichment related activity, without exception. We urge Iran to keep to this voluntary commitment."

The United States has called for Iran to be brought before the UN Security Council for possible sanctions and while this is on hold for now diplomats said it may come up at the next IAEA board meeting in June if the European initiative falters.

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