The head of the UN nuclear watchdog agency expressed cautious optimism Monday on the chances of reaching an international agreement to defuse concerns about Iran's nuclear activities and make UN Security Council action unnecessary.

The International Atomic Energy Agency's 35-member board was not likely to discuss the Iran issue until Tuesday or Wednesday. But delegates said that whatever step the council might take would stop far short of sanctions.

International Atomic Energy Agency (IAEA) Director General Mohammed ElBaradei briefs the media before the beginning of a board of governors meeting at Vienna's U.N. headquarters March 6, 2006. The U.N. atomic watchdog's board of governors meets on Monday to weigh Iran's refusal to curb its nuclear activity, opening the way to possible UN Security Council action over suspicions that it wants to make atom bombs. [Reuters]

 But as the board meeting opened, IAEA chief Mohamed ElBaradei suggested the council might not need to get involved.

"I am still very much hopeful that in the next week an agreement could be reached," ElBaradei told reporters, alluding to talks between Moscow and Tehran aimed at moving Iran's enrichment program to Russia and possible further contacts between Iran and Europe.

He did not elaborate. But diplomats told the AP that recent talks have touched on the possibility of allowing Tehran to run a scaled-down uranium enrichment program, despite its potential for misuse in building atomic weapons.

That point was significant because the Europeans and the United States have for years opposed allowing Iran any kind of enrichment capability _ a stance that Russia, China and other influential nations have embraced.

Tehran has insisted on its right to conduct enrichment, saying it wants only to produce fuel for nuclear reactors that generate electricity. But enrichment also can create fissile material for warheads, and a growing number of nations share US fears that is Iran's true goal.

Russia recently has sought to persuade Iran to move its enrichment program to Russian territory, which would allow closer international monitoring.

But the US ambassador to the United Nations suggested Security Council action was necessary, saying there was an urgent need to confront Iran's "clear and unrelenting drive" for nuclear weapons.

Iran "must be made aware that if it continues down the path of international isolation, there will be tangible and painful consequences," John Bolton told a conference of the American Israel Public Affairs Committee on Sunday.

Also Sunday, Iran's government warned that putting the issue before the Security Council would hurt efforts to resolve the dispute diplomatically.

"If Iran's nuclear dossier is referred to the U.N. Security Council, (large-scale) uranium enrichment will be resumed," Iran's top negotiator, Ali Larijani, told reporters in Tehran. "If they want to use force, we will pursue our own path."
He said Iran had exhausted "all peaceful ways," and that if demands were made contrary to the Nuclear Nonproliferation Treaty, the nation "will resist."

Larijani said Iran would not abandon nuclear research or back down from pursuing an atomic program that Tehran insists is only for the peaceful purpose of generating electricity.

IAEA delegates suggested the UN agency's board would not push for confrontation with Iran, and said any initial decisions by the Security Council based on this week's meeting would be mild.

The council's most likely action, they said, would be a statement urging Iran to increase cooperation with IAEA inspectors and to resume its freeze on uranium enrichment.

Even such a mild step could be weeks down the road, but it would formally begin council involvement with Iran's nuclear file, starting a process that could culminate with political and economic sanctions.

Bolton said a failure by the Security Council to address Iran would damage the council's credibility. "The longer we wait to confront the threat Iran poses, the harder and more intractable it will become to solve."

Russia and China, which can veto Security Council actions, are for now opposed to imposing sanctions against Iran, though they share the concerns of the US., France and Britain _ the other permanent council members with veto power _ that Iran could misuse enrichment for an arms program.

Though Russia and China, which both have economic and strategic ties with Tehran, voted with the majority of IAEA board members at a February 4 meeting to report the issue to the Security Council, they insisted the council do nothing until after this week's IAEA meeting in Vienna.

Russia is unlikely to agree to strong action while it negotiates with Iran on the proposeal to move Tehran's enrichment program to Russian territory. Russian Foreign Minister Sergey Lavrov was due this week in Washington and New York to discuss the status of those talks with Bush administration officials and U.N. Secretary-General Kofi Annan.

Both Tehran and Moscow have said new talks are planned, though no dates have been announced. Iran rejected an EU proposal last year to end enrichment in return for the West providing reactor fuel and economic aid.

Past IAEA board meetings have ended with resolutions taking Iran to task for hindering investigations into a nuclear program that was kept secret for nearly 18 years and more recently urging it to reimpose a freeze on enrichment.

The February 4 resolution asked IAEA chief Mohamed ElBaradei to report those concerns and others to the Security Council and to formally hand over the complete Iran file to the council. It also asked him to provide the council with his latest report, drawn up for this week's IAEA meeting.

That report, made available to The Associated Press last week, said Iran appeared determined to expand uranium enrichment, planning to start setting up thousands of uranium-enriching centrifuges this year.

"We have not seen indication of diversion of ... material to nuclear weapons or other explosive devices," ElBaradei told reporters Monday. "However, there are still a number of important uncertainties that need to be clarified.

"Unfortunately, the picture is not very clear as to the scope of the program and as to the nature of the program," he said, alluding to past experiments and activities that could be used to develop nuclear arms.

Associated Press Writer Palma Benczenleitner contributed to this report.