Iran nuclear facility in Bushehr - AP - 01012012
Iran's nuclear facility in Bushehr. Photo by AP
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Iran said on Sunday that its scientists have produced the nation's first nuclear fuel rod, a feat of engineering the West doubted Tehran was capable of.

Iran said it was compelled to manufacture fuel rods on its own since international sanctions banned Tehran from buying them on foreign markets.

Nuclear fuel rods contain pellets of enriched uranium that provide fuel for nuclear power plants.

Iran's atomic energy agency website says the first domestically made rod has already been inserted into the core of Tehran's research nuclear reactor, with IRNA saying that the rod was tested at 1,500 megawatt/hour radiation and has passed neutron tests.

It's unclear if the rod contained pellets or was inserted empty, as part of a test.

The West fears Iran's uranium enrichment program is geared toward making atomic weapons - a charge Tehran denies.

Israel, the U.S. and other Western nations say Iran is trying to build nuclear bombs under the cover of a civilian program. Tehran denies that, saying it needs nuclear technology to generate power.

The announcement of Iran's reported nuclear progress came as the Iranian students news agency cited earlier Sunday an Iranian official dismissing Washington's move to impose new sanctions on financial institutions dealing with the Islamic state's central bank over the country's disputed nuclear program.

President Barack Obama signed the bill, approved by Congress last week, which aims to reduce Tehran's oil revenues but gives the U.S. president powers to waive penalties as required.

The head of Iran's Chamber of Commerce, Mohammad Nahavandian, rejected the move as "unjustifiable", saying such sanctions would have reciprocal consequences.

"The Iranian nation and those involved in trade and economic activities will find other alternatives," said Nahavandian.

Washington and the European Union have already pushed four rounds of sanctions through the United Nations over Iran's nuclear program and imposed unilateral measures that have deterred Western investment in Iran's oil sector, making it harder to move money in and out of the country.

Imposing sanctions on the central bank would tighten that screw and make it more difficult for Iran to receive payment for exports - particularly oil, a vital source of hard currency for the world's fifth-biggest crude exporter.

Iranian officials insist that foreign sanctions have had no impact on the country's economy.

"The sanctions have raised the cost of trade and economic transactions but it has not managed to change Iran's political behavior," Nahavandian said.

So far, Iran's leaders have shown no sign of changing the country's nuclear course despite mounting international pressure to force it to stop.

U.S. financial institutions are already generally prohibited from doing business with any bank in Iran, including the central bank, so the new measure by Washington would have to be carried out with international agreement.

Nahavandian said European countries should not miss the investment opportunity in an emerging market like Iran.

"Considering the economic crisis in Europe, the European companies are after finding new markets ... political disputes should not have an impact on trade relations," he said.

Senior U.S. officials said Washington was engaging with its foreign partners to ensure the sanctions can work without harming global energy markets and stressed the U.S. strategy for engaging with Iran was unchanged by the bill.

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