President Mahmoud Ahmadinejad on Sunday instructed Iran's Atomic Energy Organization to start work on producing nuclear fuel for a Tehran research reactor, casting doubt on the prospects for a swap deal with the West.
"I (ask) Dr Salehi to start work on the production of 20% fuel using centrifuges," Ahmadinejad said in a televised speech, referring to Ali Akbar Salehi, who heads the atomic energy body.
"We are interested in cooperation with the West, but if they want to keep playing games with the Iranian nation, then we must be prepared and enrich uranium at 20% ourselves," the president said.
But he added: "The doors for interaction are still open."
Ahmadinejad also said Iran had the capability to enrich uranium using laser technology, without elaborating.
On Saturday, the United States and Germany said they saw no sign Tehran would make concessions on its nuclear program, despite upbeat comments from Iran's foreign minister over prospects for a deal.
An accord on exchanging fuel could mark a breakthrough in the long-running dispute over Iran's nuclear program, which the West fears could be used to produce an atomic bomb.
Iranian Foreign Ministry spokesman Ramin Mehmanparast told ISNA news agency on Sunday: "Iran's stance on the nuclear fuel swap has not changed. Iran is still ready to do such an exchange and if the other side is ready we can negotiate over the details of such a deal."
Dudi Cohen contributed to this report