Iran demanded that United Nations inspectors visit Israel to investigate its nuclear capability while Israel accused Tehran of lying in a bitter debate at an assembly of the UN atomic watchdog in Vienna on Friday.
United Nations officials at a 149-nation meeting of the International Atomic Energy Agency (IAEA) in Vienna said they had no memory of the two rival nations ever engaging each other directly at previous meetings.
The debate was sought by Arab and Islamic states after they shelved a resolution to brand Israel an atomic "threat" in the face of a likely Western maneuver to block a floor vote.
Israel is widely assumed to have the Middle East's only atomic arsenal, though it has never confirmed or denied this. It is also one of just three states to shun the nuclear Non-Proliferation Treaty, along with India and Pakistan.
Iran is under UN Security Council sanctions for refusing to halt a nuclear energy program feared by major powers to be a covert attempt to build atom bombs. Tehran's Islamist leaders have called for Israel's destruction.
During the course of the annual IAEA assembly, Arab countries and Iran railed at "persistent international double standards and silence" over Israeli nuclear exclusivity in the Middle East.
They repeatedly lambasted what they said was Prime Minister Ehud Olmert's admission of a nuclear arsenal in a German media interview last December. Israeli officials later denied Olmert said any such thing, tacitly or openly.
"Some speakers continue to lie about the statement of the Israeli prime minister, who did not say what they say he did," said Israel Michaeli, Israel's ambassador to the IAEA.
"Those who call for the elimination of Israel have no moral standing when they criticize Israeli policies aimed at defending Israel's very existence."
Iranian Ambassador Ali Asghar Soltanieh said: "This is strange; the Israeli prime minister acknowledged having nuclear weapons, now we hear that this is a lie."
"The only way for the international community to know the truth is to authorize the IAEA to send inspectors to Israel and verify the truth," Soltanieh said, his voice rising.
"We are seriously concerned about possession of nuclear weapons and non-accession to NPT. Non-aligned countries representing billions of people want an end put to this matter," he continued.
"We want the IAEA to have access to Israeli nuclear facilities and report to the international community at large," Soltanieh concluded.
There is no chance of such an IAEA move without an Israeli invitation, inconceivable given regional hostilities.
Michaeli told the week-long assembly earlier that while a nuclear arms-free zone in the Middle East was a commendable ideal, "we can have no illusions" while some Arab neighbors continue not to recognize Israel and Iran seeks its elimination.
Arab nations say a chronic imbalance of power in the Middle East caused by Israeli nuclear might breeds instability and spurs others to seek mass-destruction weaponry. Iran says its uranium enrichment program is for electricity, not bombs.
Middle East tensions have been fraying the traditional consensus culture of the 50-year-old, Vienna-based IAEA.
Closing proceedings later on Friday, member states approved a resolution to bolster IAEA safeguards, but only by a rare roll call vote forced by Arab states in protest at the measure's lack of reference to nuclear disarmament.
They resent what they regard as the slowness of nuclear weapons states to dismantle arsenals in keeping with NPT obligations, as well as Israel's cold shoulder to the treaty.
IAEA resolutions normally pass by consensus. The safeguards measure passed 80-0 with 12 abstentions, mainly by Arab nations.
Report: Germany opposes Sarkozy Iran sanctions ideaGermany opposes a French call for the European Union to impose a new round of sanctions against Iran if world powers fail to agree on fresh punitive measures next week, a German magazine reported on Saturday.
Der Spiegel magazine said Foreign Minister Frank-Walter Steinmeier was prepared for intense talks this week with the five permanent UN Security Council members on whether the United Nations would adopt new punitive measures against Iran.
If the Security Council fails to agree on a new sanctions resolution, French President Nicolas Sarkozy wants EU members to approve separate EU sanctions against the Islamic Republic, an idea Spiegel said Washington supported but Berlin opposed.
The magazine cited a senior official in Steinmeier's department in its report which it pre-released before its edition goes on sale on Monday.
The United States, Germany, France and Britain have led a diplomatic drive to punish Iran for refusing to halt its uranium enrichment program. They succeeded in persuading reluctant Russia and China to back two UN sanctions resolutions.
Despite the sanctions, which have led to a sharp decrease in Western trade with Iran, Tehran refuses to abandon a nuclear program it says is for the peaceful generation of electricity.
Germany's Foreign Office has prepared information for Steinmeier to present at the UN talks showing the amount of business several big French firms do with Iran has hardly changed despite the sanctions already in place, Spiegel said.
Germany, by contrast, had sharply cut its exports to Iran. French Foreign Minister Bernard Kouchner last Sunday raised the spectre of war but has since backed away from the comment.
Iran told Western powers on Saturday they would regret launching any attack over Tehran's nuclear activities and it rolled out a display of missiles and other hardware that underscored its warning.
Ahmadinejad: Sanctions won't stop Iran's nuclear progressOn Saturady, Iranian President Mahmoud Ahmadinejad said that sanctions would not succeed in stopping Iran's nuclear progress.
Speaking at an annual military parade to commemorate the 1980-88 Iran-Iraq war, Ahmadinejad also reiterated a call on U.S. and other foreign forces to leave neighboring Iraq, the official IRNA news agency said.
"Those who think, that by using such decayed tools as psychological warfare and economic sanctions, they can stop the Iranian nation's progress are making a mistake," he said.
As he spoke, troops, tanks, and other military hardware passed by the podium in the parade area near the tomb of Ayatollah Ruhollah Khameini, the founder of the Islamic Republic.
During the event, Iran showed off missiles including the Shahab-3, which it says can hit targets 2,000 kilometers away, putting Israel or U.S. bases in the Gulf within range.
Iran, which says its nuclear program is for peaceful purposes, has threatened to hit back at U.S. interests in the Middle East if attacked.
Iran says it has weathered a U.S. embargo for 28 years, and while many Iranians acknowledge some hardships caused by the embargo, they credit it with making them more self-reliant.
"Those who prevented Iran, at the height of the (1980-88 Iran-Iraq) war from getting even barbed wire must see now that all the equipment on display today has been built by the mighty hands and brain of experts at Iran's armed forces," Ahmadinejad said.
The officials of the five permanent Security Council members and Germany said they will keep pursuing a "dual track" approach to Iran - trying to persuade it to abandon such atomic work via negotiations while considering new sanctions.
The United States and Iran are also at loggerheads over the situation in Iraq, blaming each other for bloodshed there.
Iran has repeatedly demanded that Washington withdraw its troops from its neighbor, a call Ahmadinejad repeated.
"The nations throughout the region do not need the presence of the foreigners," he said.