Iranian President Mahmoud Ahmadinejad announced ambitions on Tuesday to enrich uranium on a scale that the United States warned would give the Islamic republic the capacity to produce an atomic bomb.
Despite the threat of UN sanctions hanging over Iran for its refusal to suspend uranium enrichment, Ahmadinejad unveiled long-term plans to build 60,000 centrifuges for enrichment. It currently has only 328.
"We want to produce nuclear fuel and eventually we should go for 60,000 centrifuges. We should continue along this path. We are at the beginning of the wave," Ahmadinejad told a news conference.
Iran has previously said it is looking to install 3,000 centrifuges by March 2007, in itself a massive step from the two cascades of 164 centrifuges apiece it has currently at its Natanz plant to enrich uranium on a research scale.
The United States seized on Ahmadinejad's comments as a wake-up call for any doubters that Iran's real goal was the capacity to make an atomic bomb.
"That should be a cold jolt to the rest of the world," State Department spokesman Sean McCormack said.
"What that leads to is an Iranian nuclear weapon, which would be an incredibly destabilising event in the course of Middle East history."
Experts say that 50,000 centrifuges would normally be sufficient to produce 20 kilos (44 pounds) of weapons grade uranium in under a month, but Iran vehemently denies it wants the bomb, insisting its nuclear programme is for power generation only.
Enrichment is carried out in lines of centrifuges called cascades and is used to make the fuel for civilian nuclear reactors. But in highly enriched form, the uranium can be used to make a nuclear bomb.
Building tens of thousands of centrifuges would take Iran's enrichment programme from its current research level to one where it could produce nuclear fuel on an industrial scale.
World powers wanted Iran to suspend enrichment as a prelude to full-scale negotiations over its atomic programme, a demand that has been repeatedly rejected by Iran.
"The question of a suspension has now been passed," Ahmadinejad said, shrugging off the prospect of UN sanctions against Iran over its failure to heed Security Council demands to agree one.
"If they put in place sanctions, a new financial order will be put in place."
The Iranian show of defiance comes at an awkward time for the US administration as it comes under mounting pressure to involve Iran and its regional ally Syria in talks on stabilising Iraq, after the drubbing its current policy received at the hands of voters in mid-term elections.
President George W. Bush's spokesman rejected suggestions of a growing gap with his key Iraq ally British Prime Minister Tony Blair on dialogue with Iran after the two leaders gave evidence to a study group rethinking policy on Iraq.
"You have mischaracterized his position," Tony Snow said. "Read his speech, and you'll see there is no difference between the governments."
The Iranian president said talks with the United States could only take place if it changed its "attitude" towards Iran.
"We would talk with the US government but on certain conditions, on the condition that it corrects its attitude," he said.
"And at that moment, we will talk with them as we talk with the others."
Ahmadinejad confidently announced he would soon send a personal message to the American people.
"I am in the process of preparing it," he said. "The message will elaborate upon the viewpoints of the Iranian nation, because many Americans asked me for it."
In its latest report on Iran's nuclear programme, a copy of which was obtained by AFP, the International Atomic Energy Agency said Iran was still not enriching uranium beyond the five percent level sufficient for use as reactor fuel.
From August 13 to November 2, Iran fed "a total of approximately 34 kilograms" (75 pounds) of feedstock uranium gas into centrifuges, producing a small amount of uranium enriched to low levels, the report said.
It did not detail how much uranium was produced but said enrichment levels seemed to be below five percent, nowhere near the 90 percent level needed to make atom bombs.