Iran has threatened to resume uranium enrichment activities, a process that makes fuel for civilian nuclear power plants but what can also be the explosive core of atom bombs, and has set a deadline of Monday for EU negotiators Britain, France and Germany to offer a package of incentives to be provided in return for Iran guaranteeing its nuclear program is peaceful.

Iran's outgoing President Mohammad Khatami said last week that the Islamic Republic would resume enrichment activities no matter what the Europeans propose although "we prefer to do it with their agreement."

Ahmadinejad said earlier this month that Iran is "faithful to our international obligations (in nuclear matters) but we will not allow the Iranian people to be deprived of their rights" to the peaceful use of nuclear energy.

The so-called EU-3 talks with Iran are governed by an agreement the two sides reached in Paris last November which specifies that Iran must suspend all enrichment activities.

EU-3 officials have said that if Iran breaks this agreement, it is all but certain they will push, along with the United States which has for years accused Tehran of secretly developing nuclear weapons, to bring the Islamic Republic before the UN Security Council for what could be punishing international economic sanctions.

Iran on Saturday demanded that the EU-3 submit their proposal by Monday and rejected any plans for a delay, Iranian negotiator Ali Agha Mohammadi told AFP in Tehran.

But EU diplomats said the EU-3 had only promised to make their proposal in late July or early August, and were holding to this timetable that does not set a specific date.

A diplomat from one of the three EU countries, and who asked not to be named, confirmed to AFP that the package which offers trade, technology and security benefits to Iran would be presented after Ahmadinejad takes office on Wednesday, August 3.

Ali Agha Mohammadi said that EU-3 ambassadors had sent a message to the Iranian foreign ministery informing Tehran that it would offer the incentive package by August 7.

But he said that "after studying the message, the Islamic republic decided that the European proposals must be submitted on August 1 (Monday)."

A Western diplomat said the EU-3 have "told Iran they do not accept Iran's ultimatums."

A second Western diplomat said the EU-3 have been lobbying with the International Atomic Energy Agency (IAEA) in Vienna and with other countries to tell Iran "to be patient and see what the proposal says, to act rationally and not to break the suspension unnecessarily."

The EU-3 is also "warning about the consequences of breaking the suspension and that this will lead to the matter being taken to the UN Security Council," the diplomat said.

The first Western diplomat said the proposal "will make clear that the EU-3 oppose Iran possessing a nuclear fuel cycle and will offer a range of generous benefits, like an expanded, fully safeguarded nuclear power program, if Iran agrees not to pursue the fuel cycle."

If Iran takes the "provocative" step of resuming conversion, which changes uranium ore into the uranium gas that is the feedstock for enrichment, "the EU-3 are prepared to end the process and to call for an immediate meeting of the IAEA board of governors," which could then refer the matter to the Security Council, the diplomat said.

Non-proliferation expert Joseph Cirincione told AFP by phone from Washington that "the Iranians are tough negotiators but they are in a bind, they really have nowhere to go."

"They need to have a deal with the Europeans in order to make the kind of economic progress that the government has promised its people," Cirincione said.

"I expect to see a reasonable but still incomplete proposal tabled by the Europeans and for the Iranians to react negatively and then to keep talking," said Cirincione, who works at the Carnegie Endownment for International Peace think tank.

Another Washington-based analyst Henry Sokolski said the Iranians will almost certainly point out that Washington has a "nuclear double standard" as it is helping India with its atomic program, despite India having nuclear weapons and having not signed the nuclear Non-Proliferation Treaty to which Tehran belongs.

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