VIENNA/IRAN, 9 June 2006 — Iran is continuing uranium enrichment as well as building new production lines for the centrifuge machines that carry out the sensitive nuclear work, the United Nations nuclear watchdog said yesterday in a report.

The development dashes hopes that Tehran might be prepared to make an immediate pause in activities that can lead to the development of nuclear weapons.

“On June 6 2006, (Iran) started feeding UF6 (uranium gas) into the 164-machine cascade (line of centrifuges). Iran is continuing its installation work on other 164-machine cascades,” said the report from Mohamed El-Baradei, head of the International Atomic Energy Agency (IAEA).

The report said there had in fact been no pause in enrichment since the first batch of uranium was enriched in April, since Iran had carried out testing with two single centrifuges before re-loading the 164-machine centrifuge Tuesday.

Uranium can be enriched to produce nuclear reactor fuel. But if it is enriched to a much greater degree it can be used to manufacture atom bombs. It is enriched by centrifuges arranged in cascades in order to refine the uranium 235 isotope.

The report came just hours after Iran said yesterday it is open to nuclear talks with the West but that technology was not up for discussion, amid rising hopes for a breakthrough in the standoff over its controversial nuclear aims.

“We will negotiate about common concerns and for clearing up misunderstandings in the international atmosphere,” said hard-line President Mahmoud Ahmadinejad.

“But we will never negotiate about what kind of technology we want to use,” Ahmadinejad said in a speech broadcast on state television.

The international package — which offers trade, diplomatic and technology incentives in return for a freeze of uranium enrichment — was drawn up by Britain, France and Germany and backed by the United States, Russia and China.

British Prime Minister Tony Blair said yesterday that Iran would cause “a lot of difficulty” if it refused to suspend uranium enrichment.

“I hope very much that they don’t reject it (that condition) because if they do, that will cause a lot of difficulty,” Blair said.

“They should know that all of us are seeking a diplomatic solution to this and whether we can get one depends to an extent on them.”