Iranian President Mahmoud Ahmadinejad said on Tuesday talks were still going on over a proposed nuclear fuel swap and any country which tried to impose new sanctions on Iran would regret its actions.
He was speaking a day after US Secretary of State Hillary Clinton sought backing from oil giant Saudi Arabia to help win Chinese support for additional sanctions.
Meanwhile, a joint US-Russian-French letter obtained by Reuters on Tuesday said that "Iran's move to escalate uranium enrichment is unjustified because a draft nuclear deal it has snubbed lists guarantees for Tehran's benefit."
The letter to UN nuclear watchdog IAEA was a response to Iran's launch last week of higher-grade enrichment – raising suspicions of a quest for atomic bomb capability – on grounds that world powers were imposing unpalatable terms for the deal.
"(This) is wholly unjustified ... If Iran goes forward with this escalation, it would raise new concerns about Iran's nuclear intentions," the letter said. It said the plan for Iran to swap enriched uranium for nuclear medicine fuel had legal assurances it would be fulfilled, contrary to Iran's assertions.
It said the UN proposal for Iran to swap enriched uranium for nuclear medicine fuel, which would defuse the risk of Tehran using the material for nuclear bombs, contained legal assurances it would be fulfilled, contrary to Iran's assertions.
Diplomats said the February 12 letter was leaked to refute Iranian statements this week that the powers had offered a new proposal to address Tehran's complaints about the plan, brokered by the International Atomic Energy Agency on October 21.
The letter was important also as a further signal of a hardening Russian line on Iran's nuclear defiance after years of buffering an important trade partner from stringent UN sanctions long sought by Western powers.
The Kremlin said on Tuesday Iran could face harsher measures if it failed to dispel fears abroad about its nuclear programme.
The three powers' letter listed provisions that they said "provide assurances regarding our collective commitment" to carry out the deal, and Washington had offered "substantial political assurances" as well.
They said guarantees included the IAEA taking custody of Iran's nuclear material as part of the swap, a legally binding "project and supply" pact, and US-Russian-French backing for IAEA technical aid to ensure the Tehran nuclear reactor that produces isotopes for cancer treatment operates safely.
Ahmadinejad: Sanctions will not harm Iran
Clinton said Monday that a new round of sanctions should target Iran's Revolutionary Guards.
"Of course, if somebody acts against Iran our response will definitely be firm enough... (to) make them regretful," Ahmadinejad told a news conference, without elaborating.
"Sanctions will not harm Iran."
Ahmadinejad also said talks were still under way on a proposed nuclear fuel swap and the issue was not yet closed.
Western powers had hoped the proposal, brokered by the International Atomic Energy Agency, would result in Iran sending most of its low-enriched uranium abroad for processing and ease their concerns that it might build a nuclear bomb. Tehran says its nuclear program is solely to generate electricity so it can export more of is oil and gas.
"There are some talks under way over the nuclear fuel swap," Ahmadinejad said without giving details.
"The case is not yet closed...we have already announced that we are ready for a fuel exchange within a fair framework. We are still ready for an exchange, even with America."
Ahmadinejad's order last week to start production of higher-grade uranium, rather than agree to the UN-brokered fuel swap proposal, exposed Tehran to new calls for UN sanctions from Western powers.
The Kremlin said on Tuesday Iran could face sanctions if it failed to allay international fears about its nuclear program, and Israeli Prime Minister Benjamin Netanyahu, on a visit to Moscow, called for "paralyzing sanctions" on Iran.
Ahmadinejad said Iran had been willing to send its uranium abroad rather than enrich it further at home.
"But...we found that there is no goodwill in this regard and we told them that if they don't provide us (with the fuel) in due time we would start work inside (Iran)."
"And even now, if they provide us with the necessary fuel the conditions will be changed," Ahmadinejad said.
Ahmadinejad dismissed Clinton's accusations that Iran was moving toward a military dictatorship. The US military budget was 80 times larger than that of the Islamic Republic, he said.
"We don't take her comments seriously," Ahmadinejad said.
He also said Iran was not worried about sanctions targeting its gasoline imports as the country can become an exporter of the fuel in the future.
"There are several refineries under construction...and as soon as they become operational we can even export gasoline," he said.