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Haaretz Service

Iranian and European Union officials on Saturday were unable to reach an agreement with Iran on freezing the country's uranium enrichment program, because Iran refuses to retract its demand to continue operating 20 centrifuges for uranium enrichment, which it claims are for research and development purposes.

If an agreement is not reached between Iran and EU representatives, the International Atomic Energy Agency board of governors will announce a decision that may include the possibility of transferring the debate on Iran's nuclear program to the United Nations Security Council, which has the authority to impose sanctions. The IAEA decision may lead Russia to stop providing Iran with low-grade enriched uranium, which Iran intends to use at the nuclear reactor in Bushehr.

On Friday, diplomatic sources in Vienna told Haaretz that negotiations between European Union representatives and Iran have yielded an agreement by Tehran to completely freeze all activities related to uranium enrichment.

IAEA Director General Mohamed ElBaradei said Friday that Iran had suspended its uranium enrichment activities last Monday, in accordance with its agreement with the EU. The suspension, however, did not include the 20 centrifuges that are the main agenda in the latest round of talks.

IAEA inspectors were permitted to identify all structures, sites, and machinery that has been used for the uranium enrichment process except for the centrifuges.

Last week it was reported that Iran quickly moved to complete the first stage of uranium enrichment - where natural uranium is converted to gaseous uranium - prior to freezing the program.

According to diplomatic sources in Vienna, Iran has already managed to produce three and a half tons of gaseous uranium, an amount which enables the manufacturing of one-fourth of the 25 kilograms of enriched uranium required to produce an atomic bomb.

Iranian source says country is advancing missile development programA defense source in Iran said that his country is accelerating its development of missiles capable of carrying atomic, biological, and chemical warheads.

The senior general was quoted Friday in the Arab-language paper Al-Sharq Al-Awsat as saying that five villages in the Kurdistan and Urumiya region near the Iraqi border were evacuated in the last month to make way for Iranian military testing of the improved Shihab-3.

The source also said that Iranian president Ali Khameini authorized a transfer of $1.5 billion of the country's oil revenues for its missile program.