"We keep advising them not to start enrichment," Alexander Rumyantsev, who is head of the Russian federal nuclear agency, said in Vienna. Enriched uranium can be fuel for nuclear reactors but also raw material for atom bombs.

"However we perfectly realize that under the Non-Proliferation Treaty (NPT), and Iran has signed the Non-Proliferation Treaty, Iran has every right for enrichment," he told reporters at a conference of the UN watchdog International Atomic Energy Agency (IAEA).

"We advise them to continue dialogue with the IAEA and the EU-3 (Britain, France and Germany). We give them friendly advice to introduce a moratorium" on nuclear fuel work, as the IAEA has requested, Rumyantsev said.

Russia, an ally of Iran, has an 800-million-dollar contract to build Iran's first nuclear reactor, expected to come online next year and for which it will supply the uranium fuel. The United States charges that Iran is using its civilian program to hide the covert development of nuclear weapons.

Rumyantsev said Russia still planned to deliver the fuel, despite the IAEA having Saturday found the Islamic Republic in non-compliance with the NPT, but would not deliver if there were an international ruling against this.

"As a law-abiding country, we carry out all the laws of the IAEA. Currently there are no grounds for termination of our cooperation with Iran," Rumyantsev said.

But Rumyantsev said he did not think there was an economic justification for Iran to make nuclear fuel.

"As long as the country does not have about 10 operating nuclear power plants, the establishment of a national fuel cycle is economically unjustified," Rumyantsev said.

He added that Iran was far away from being able to enrich uranium, a sophisticated process in which a cascade series of rapidly spinning centrifuges distill out uranium concentrated for the isotope U-235.

"Currently, Iran has no capability. There is no possible way the Iranians can enrich uranium," Rumyantsev said, even though Iran has a 164-centrifuge test cascade assembled in Natanz in the center of the country.

Iran froze its enrichment programme two years ago as a "confidence building measure" amid talks with the European Union on guaranteeing its nuclear program is peaceful.

A resumption of enrichment would escalate the crisis.

Industrial production of enriched uranium requires cascades with thousands of centrifuges. "In my assessment, Iran would need one year to assemble" such a capacity, Rumyantsev said.

Iran threatened Tuesday to retaliate over IAEA efforts to haul it before the UN Security Council by blocking tough inspections of its nuclear sites and resuming uranium enrichment activities.

Russia abstained from the vote on the resolution, a move EU and US diplomats hailed as a victory since Russia had been expected to vote against it.

The Iranian foreign ministry told the IAEA, whose 35-nation board of governors had Saturday said a report would eventually have to be filed to the Security Council due to Tehran's non-compliance, to "correct" its view of the Islamic republic.

Foreign ministry spokesman Hamid Reza Asefi said Iran would "wait a few days" to see if its demands were met before retaliating.

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