Iran threatened on Friday to stop cooperating with the UN atomic watchdog, including possibly resuming uranium enrichment, if its controversial nuclear program is referred to the UN Security Council.
Foreign ministers from France, Germany and Britain have decided to move on Iran
"If the dossier is sent to the Security Council, the European countries will lose the means which are currently at their disposal, because... the government will be obliged, in conformity with the law adopted by parliament, to end all its voluntary measures of cooperation," Iranian Foreign Minister Manouchehr Mottaki was quoted as saying by the official IRNA news agency.
Iran's standoff with the international community escalated after Tehran on Tuesday resumed sensitive nuclear research linked to uranium enrichment, which produces fuel for nuclear power reactors but can also be used to make atomic bombs.
Europe's three major powers responded by calling for an emergency meeting of the International Atomic Energy Agency (IAEA), while UN chief Kofi Annan said Iran was still keen on pursuing nuclear talks with European powers.
British Foreign Secretary Jack Straw said consensus was growing among the international community, including Russia, for action but said the military option was not being considered.
"I think in current circumstances it would not be conceivable, it would not be appropriate," he said. "Iran is not Iraq, we're working with the international community to resolve this in a peaceful and diplomatic manner."
Iran in "dangerous defiance"
Iranian President Mahmoud Ahmadinejad is a controversial figure internationally
In December Iran's hardline President Mahmoud Ahmadinejad signed off on legislation that could limit UN inspections at Iran's nuclear sites if its case is taken to the Security Council.
The law obliges the government to "stop voluntary and non-legally binding measures and implement its scientific, research and executive programs" if the Security Council gets involved.
Ahmadinejad has ordered Iran's Atomic Energy Agency to be prepared to apply the law, the Fars news agency reported.
The law does not refer to specific forms of retaliation, but counter-measures could include resumption of uranium enrichment as well as refusing to adhere to the additional protocol of the nuclear Non-Proliferation Treaty, which gives increased inspection powers to the IAEA.
The additional protocol was signed by the previous reformist government but was never ratified by parliamentarians in the conservative-run parliament.
Compliance with the additional protocol is seen as being crucial to an IAEA probe into allegations that Iran is using an atomic energy drive as a cover for weapons development.
The US remains wary of Iran's nuclear motives
In Washington, US Secretary of State Condoleezza Rice accused Tehran of a "deliberate escalation" of the dispute, and said it was in "dangerous defiance of the entire international community."
While threatening to halt cooperation, Iranian officials have nevertheless signaled their willingness for negotiations to be continued, but on their terms.
Iran still interested in talks
After a telephone conversation with Iran's top nuclear negotiator Ali Larijani, Annan said Thursday that Tehran was still keen on pursuing "serious" nuclear talks with European powers.
"He affirmed to me that they are interested in serious and constructive negotiation, but within a timeframe," Annan said, quoting Larijani as saying that the previous round of negotiations "had lasted two and a half years without any results."
The head of Iran's nuclear negotiating team Javad Vaidi said on state television Thursday: "We are still hopeful that the negotiations can make progress." However, he warned that "if the Europeans want to carry out the threats, it will cause Iran's behavior to change and intensify the present situation."
Mottaki urged the Europeans to deal with Iran's nuclear activities with "discretion, patience and a rational attitude."
"We advise the Europeans to separate the question of research from producing the nuclear fuel and do not propagate around the nuclear research activities which had been unjustly suspended," he said.
"If they want to discuss making nuclear fuel we are ready to follow up with the negotiations with the EU-3," he said. If the negotiations are broken off by the Europeans "Iran will only be in contact with the IAEA to maintain its legitimate and natural rights."
Tehran has said uranium enrichment on an industrial level is still suspended but it has not made a secret of its desire to resume the activity in a near future.