By Fredrik Dahl
VIENNA (Reuters) - Iran has acted to cut its most sensitive nuclear stockpile by nearly 75 percent in implementing a landmark pact with world powers, but a planned facility it will need to fulfill the six-month deal has been delayed, a U.N. report showed on Thursday.
The monthly update by the International Atomic Energy Agency , which has a pivotal role in verifying that Iran is living up to its part of the accord, made clear that Iran so far is undertaking the agreed steps to curb its nuclear program.
As a result, it is gradually gaining access to some previously blocked overseas funds. In Washington, the State Department said the United States has taken steps to release a $450 million installment of frozen Iranian funds following the issuance of the report.
In addition, Japan has made two more payments totaling $1 billion to Iran for crude imports, two sources with knowledge of the transactions said.
Under the breakthrough agreement that took effect on January 20, Iran halted some aspects of its nuclear program in exchange for a limited easing of international sanctions that have laid low the major oil producer's economy.
It was designed to buy time for negotiations on a final, long-term settlement of the decade-old dispute over nuclear activities that Iran says are peaceful but the West says may be covertly directed toward developing an atomic bomb capability.
Those talks - made possible by the election last year of a pragmatist, Hassan Rouhani, as Iranian president after years of confrontation with the West under his hardline predecessor, Mahmoud Ahmadinejad - got under way in February and are aimed at reaching an agreement by July 20. Washington has not ruled out military action against Iran if diplomacy were to fail.
The IAEA update showed that Iran had - as stipulated by the November 24 agreement with the United States, France, Germany, Britain, China and Russia - diluted half of its higher-grade enriched uranium reserve to a fissile content less prone to bomb proliferation. One of the payments from Japan, of $450 million on April 15, hinged on Iran meeting this target.
Tehran has also continued to convert the other half of its stock of uranium gas refined to a 20 percent fissile purity - a relatively short technical step from 90 percent weapons-grade material - into oxide for making reactor fuel.
Altogether, Iran has in the last three months either diluted or fed into the conversion process a total of almost 155 kg (340 pounds) of its higher-grade uranium gas, which amounted to 209 kg when the deal came into force, a bit less than the roughly 250 kg experts say would be needed for a bomb, if refined more.
This will be seen as a positive development by Western states since it lengthens the time Iran would need for any effort to amass enough fissile material for the core of a nuclear weapon. The Islamic Republic has insisted it is refining uranium to fuel only nuclear reactors, not bombs.
U.S. State Department spokeswoman Marie Harf said "all sides have kept the commitments made" under the November 24 agreement. Harf said "as Iran remains in line with its commitments," the United States and its international partners "will continue to uphold our commitments as well."
NUCLEAR FACILITY DELAY
The IAEA report also pointed to a new delay in Iran's construction of a plant designed to turn low-enriched uranium gas (LEU) into an oxide powder that is not suitable for further processing into highly enriched bomb-grade uranium.
Iran told the IAEA last month that the site would be commissioned on April 9. But Thursday's update by the U.N. nuclear watchdog said the commissioning had been put off, without giving any reason.
However, "Iran has indicated to the agency that this will not have an adverse impact on the implementation of (its) undertaking" to convert the uranium gas, the agency said.
The delay means that Iran's LEU stockpile - which it agreed to limit under the Geneva pact - is almost certainly continuing to increase for the time being, simply because its production of the material has not stopped, unlike that of the 20 percent uranium gas.
Western diplomats said earlier that this matter was of no immediate consequence as Iran's commitment concerns the size of the reserve towards the end of the deal, in late July, meaning it has time both to complete the site and convert enough LEU.
But they also say that the Islamic Republic's progress in building the conversion line will be closely monitored. The longer it takes to complete it, the more material Iran will have to process to meet the target in three months' time.
"The delay is not long enough to raise a red flag," said Iran expert Ali Vaez at the International Crisis Group think-tank. Once the plant is "up and running, Iran could retroactively convert any excess material to oxide", he said.
Mark Hibbs of the Carnegie Endowment think-tank said he believed there may be a technical reason for the postponement. "It is hard to believe that Iran would not meet that commitment it has made on the conversion in good faith," he said.
If it complies with the interim deal, Iran will get a total of $4.2 billion in revenues long frozen oversees, in eight installments over the January-July period. Including Japan's latest payments, it has received $2.55 billion. South Korea, another importer of Iranian oil, has made one payment.
(Additional reporting by Will Dunham in Washington and Aaron Sheldrick in Tokyo; Editing by Mark Heinrich)