Iran halts oil sales to UK, France on eve of talks

Iranian Oil minister Rostam Qasemi talks to journalist

(Reuters) - Iran ordered a halt to its oil sales to Britain and France on Sunday in a move seen as retaliation against tightening EU sanctions, as a team of U.N. inspectors flew to Tehran to press the Islamic Republic over its disputed nuclear program.

The European Union enraged Tehran last month when it decided to impose a boycott on its oil from July 1. Iran, the world's fifth-largest oil exporter, responded by threatening to close the Strait of Hormuz, the main Gulf oil shipping lane.

On Sunday, its oil ministry went a step further, announcing Iran has now stopped selling oil to France and Britain altogether - a powerful yet largely symbolic message since neither European nation relies on Iranian crude imports.

"Exporting crude to British and French companies has been stopped ... we will sell our oil to new customers," spokesman Alireza Nikzad was quoted as saying on the ministry website.

Iran, which denies Western allegations that it is seeking to make nuclear weapons, has ramped up its rhetoric in recent weeks while also expressing willingness to resume negotiations on its nuclear program.

A five-member team from the U.N. International Atomic Energy Agency (IAEA) flew to Tehran late on Sunday for talks, although Western diplomats have played down any hopes of a major breakthrough in the two-day meeting.

"I'm still pessimistic that Iran will demonstrate the substantive cooperation necessary," one envoy said in Vienna.

Yet the outcome of this week's discussions is important and will be watched closely because it could either intensify the standoff or offer scope to reduce tensions.

The European Commission says the bloc would not be short of oil if Iran stopped crude exports as it has enough stock to meet its needs for around 120 days.

Industry sources said European oil buyers were already making big cuts in purchases from Iran months in advance of EU sanctions. France's Total has stopped buying Iranian oil while debt-ridden Greece is most exposed to Iranian crude disruption among European countries.

MILITARY STRIKE?

Iran says its nuclear program is entirely peaceful but its refusal to curb uranium enrichment, which can have both military and civilian purposes, has raised concerns.

Western powers have not ruled out using force against Iran, and there has been an intense public discussion in Israel about whether it should attack Iran to stop it making a nuclear bomb.

However, on Sunday the top U.S. military officer said a military strike would be premature as it was not clear that Tehran would use its nuclear capabilities to build an atomic bomb.

"I believe it is unclear (that Iran would assemble a bomb) and on that basis, I think it would be premature to exclusively decide that the time for a military option was upon us," said General Martin Dempsey, chairman of the U.S. military's Joint Chiefs of Staff.

He said he believed the Iranian government was a "rational actor."

The West has expressed some optimism over the prospect of new talks with Tehran, particularly after it sent a letter to EU foreign policy chief Catherine Ashton last week promising to bring "new initiatives" to the table.

"In these negotiations, we are looking for a way out of Iran's current nuclear issue so that both sides win," Iranian TV quoted Foreign Minister Ali Akbar Salehi as saying on Sunday.

Oil is a major part of Iran's export revenues and an important lifeline for its increasingly isolated economy. It has little refining capacity and has to import about 40 percent of its gasoline needs for domestic consumption.

Tightening sanctions, combined with high inflation, have squeezed the ability of working-class Iranians to feed themselves and their families, and this uncertainty forms the backdrop to a parliamentary vote on March 2.

"Everything's become so expensive in the past few weeks," said Marjan Hamidi, an Iranian shopper in Tehran, "But my husband's income stays the same. How am I going to live like this?"

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Iranian company wants to send toy drone to Obama

Toy-Drone made by Iran

Tehran, Iran (CNN) -- An Iranian non-profit company says it will honor U.S. President Barack Obama's request that Iran return a drone that crashed there last year.

But instead of the actual drone, the company says it will send miniature toy versions. A lot of them.

"We plan to send a full squadron of 12 to the White House for President Obama as a present," said Reza Kioumarsi, a spokesman for the Aaye Art Group, a Tehran-based non-profit, non-governmental company that makes novelty items.

The company is trying to determine what Obama's favorite color is before sending the drones, which are 1/80th the size of the real drone, Kioumarsi said.

In December, Obama said the U.S. has asked Iran to return the highly classified RQ-170 Sentinel drone.

"We've asked for it back. We'll see how the Iranians respond," Obama said at the time.

This is probably not the response Obama was seeking.

Iran has said the country's armed forces had downed the drone near Kashmar, some 225 kilometers (140 miles) from the border with Afghanistan on December.

President Mahmoud Ahmadinejad gave a speech in December that seemed to suggest that Iran wouldn't return it.

"The North Americans at best have decided to give us this spy plane," Ahmadinejad said.

The RQ-170 Sentinel is one of the United States' most sophisticated drones and flies at up to 50,000 feet. It is designed to evade sophisticated air defenses.

One former intelligence official said it's "impossible to see" and discounted Iranian claims that it had been brought down by some form of electronic counter-measures. "It simply fell into their laps," he said -- after satellite communication was lost.

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Iran calls for Israel to be "punished"

(Reuters) - Major powers signaled on Friday their willingness to reopen talks about curbing Iran's suspected pursuit of nuclear weapons but said Tehran must show it is serious about any negotiations.

The focus on diplomacy follows weeks of rising tensions between the West, which is seeking to cut Iran's oil sales, and Tehran, which has threatened to close the Strait of Hormuz through which almost one-fifth of oil traded worldwide flows.

Alarmed Arab neighbors made a plea to avoid escalating the dispute over Iran's nuclear program while an ally of Iran's supreme leader called for Israel to be "punished" for allegedly killing an Iranian nuclear scientist.

The West suspects Iran is using its civilian nuclear program as a cover to develop atomic weapons and has pursued a two-track approach of sanctions and diplomacy to try to rein it in. Iran says its nuclear program is solely to produce electricity.

While major powers stressed their openness to renewed talks,

diplomats said they remain divided on their approach, notably on whether to let Iran keep enriching uranium at some level.

The group, known as the P5+1 and as the EU3+3, includes Britain, China, France, Germany, Russia and the United States.

EU foreign policy chief Catherine Ashton, who represents the group, issued a statement making clear that a diplomatic path remains open to Iran despite tougher sanctions and fresh speculation of a military strike on its nuclear facilities.

"The EU3+3 has always been clear about the validity of the dual track approach," Ashton's spokesperson said in a statement that included her October 21 letter to the Iranians laying out the possibility of talks. "We are waiting for the Iranian reaction."

The release of the statement and letter appeared to reflect frustration at Iran's statements hinting at a willingness to resume talks but Tehran's failure to formally respond to the letter and commit to discussing the nuclear program in earnest.

CONCILIATORY TONE FROM CLINTON

U.S. Secretary of State Hillary Clinton struck a decidedly conciliatory tone at a news conference with German Foreign Minister Guido Westerwelle in Washington.

"We do not seek conflict. We strongly believe the people of Iran deserve a better future," she said. "They can have that future, the country can be reintegrated into the global community ... when their government definitively turns away from pursuing nuclear weapons.

"We have to see a seriousness and sincerity of purpose coming from them."

Westerwelle said, "One thing is clear: the door for serious dialogue remains open but the option of nuclear weapons in Iran is not acceptable."

Diplomats said major powers are divided over what incentives to offer Iran if talks were to resume.

A central issue is whether the group might ask Iran to cease enriching uranium to the higher level of 20 percent but allow it, at least for a time, to continue enriching at lower levels -

a stance partly at odds with the group's past positions.

Uranium enrichment is a process that at low levels can yield fuel for nuclear power plants or, if carried out to much higher levels of purity, can generate fissile material for bombs.

To let Iran enrich at lower levels would be something of a concession by the P5+1, although it has previously offered a temporary "freeze-for-freeze" in which Iran would not expand its nuclear program and the powers would not pursue more sanctions.


IRANIAN CALLS FOR PUNISHING ISRAEL

After Supreme Leader Ayatollah Ali Khamenei paid his respects to the families of two scientists assassinated on what Tehran believes were Israel's orders, one of them just last week, a close ally demanded retribution.

"Terrorism has a long history in some countries like the Zionist regime," Ali Larijani, speaker of Iran's parliament and a former nuclear negotiator, said Israel, which views an atomic bomb in Iran's hands as a threat to its survival.

"The Zionist regime should be punished in a way that it can not play such games with our country again."

Such threats have been made before in Tehran and it is unclear how or when they might be carried out. Israel, widely assumed to have the only nuclear arsenal in the Middle East, is on guard against attacks on its borders and within, notably by Lebanon's Hezbollah movement, which is supported by Iran.

Obama's top military official, chairman of the Joint Chiefs of Staff General Martin Dempsey, briefly visited Israel and was quoted by its Defense Ministry as telling officials there that Washington was keen to coordinate on strategy.

"We have many interests in common in the region in this very dynamic time and the more we can continue to engage each other, the better off we'll all be," Dempsey was quoted as saying in a statement issued by the Israeli Defense Ministry.

The comments may reflect U.S. concerns about the possibility that Israel, which has previously bombed nuclear facilities in Iraq and in Syria, might launch an attack on Iran.

French President Nicolas Sarkozy said on Friday that time was running out to avoid a military intervention and appealed to China and Russia, veto-wielding U.N. powers who have been reluctant to tighten sanctions, to support new sanctions.

"Time is running out. France will do everything to avoid a military intervention," Sarkozy told ambassadors gathered in Paris. "A military intervention will not solve the problem, but it will unleash war and chaos in the Middle East."

"We need stronger, more decisive sanctions that stop the purchase of Iranian oil and freezes the assets of the central bank, and those who don't want that will be responsible for the risks of a military conflict," Sarkozy warned.

"We really need you," he said in an appeal to Moscow and Beijing.

With tensions, including mutual threats of disrupting the oil trade, creating worries across the region, the foreign minister of the United Arab Emirates, the wealthy, U.S.-allied state sitting across the Gulf from Iran, offered a warm welcome to a call for calm on Thursday by his Iranian counterpart.

"It's important to get far away from any escalation and we stress the stability of the region," Sheikh Abdullah bin Zayed al-Nahayan was quoted as saying by state news agency WAM.

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Iran blast kills nuclear scientist

Bomb kills Iran nuclear scientist

(Reuters) - An Iranian nuclear scientist was blown up in his car by a motorbike hitman, prompting Tehran to blame Israeli and U.S. agents but insist the killing would not derail a nuclear program that has raised fears of war and threatened world oil supplies.

The fifth daylight attack on technical experts in two years, the magnetic bomb delivered a targeted blast to the door of 32-year-old Mostafa Ahmadi-Roshan's car during Wednesday's morning rush-hour. The chemical engineer's driver also died, Iranian media said, and a passer-by was slightly hurt.

Israel, whose military chief said on Tuesday that Iran could expect to suffer more mysterious mishaps, declined comment. The White House, struggling for Chinese and Russian help on economic sanctions, denied any U.S. role and condemned the attack.

While Israeli or Western involvement seemed eminently plausible to independent analysts, a role for local Iranian factions or other regional interests engaged in a deadly shadow war of bluff and sabotage could not be ruled out.

The killing, which left debris hanging in trees and body parts on the road, came in a week of heightened tension:

Iran has started an underground uranium enrichment plant and sentenced an American to death for spying; Washington and Europe have stepped up efforts to cripple Iran's oil exports for its refusal to halt work that the West says betrays an ambition to build nuclear weapons. Iran says its aims are entirely peaceful.

Tehran has threatened to choke the West's supply of Gulf oil if its exports are hit by sanctions, drawing a U.S. warning that its navy was ready to open fire to prevent any blockade of the strategic Strait of Hormuz, through which 35 percent of the world's seaborne traded oil passes.

Secretary of State Hillary Clinton said Iran's threats to close the strait were "provocative and dangerous" and repeated the White House denial of any U.S. involvement in the killing of Ahmadi-Roshan.

In Tokyo on Thursday, Japanese Finance Minister Jun Azumi pledged after talks with U.S. Treasury Secretary Timothy Geithner to steadily reduce oil imports from Iran in support of U.S. sanctions on Tehran over its nuclear program.

Geithner welcomed Tokyo's cooperation, which could be an encouraging sign for U.S. policy after China, a big buyer of Iranian crude, and Russia rebuffed U.S. appeals to starve Iran of much-needed revenue from oil sales.

On a visit to Cuba on Wednesday, Iranian President Mahmoud Ahmadinejad said nothing about the bomb attack but flashed the victory sign and said Iran had done nothing to warrant enmity from its enemies.

"Have we assaulted someone? Have we wanted more than we should have? Never, never. We have only asked to speak about and establish justice," said Ahmadinejad.

Analysts saw the latest assassination, which would have taken no little expertise, as less a reaction to recent events than part of a longer-running, covert effort to thwart Iran's nuclear development program that has also included suspected computer viruses and mystery explosions.

While fears of war have forced up oil prices, the region has seen periods of saber-rattling and limited bloodshed before without reaching all-out conflict. But a willingness in Israel, which sees an imminent Iranian atom bomb as a threat to its existence, to attack Iranian nuclear sites, with or without U.S. backing, has heightened the sense that a crisis is coming.

"HEINOUS ACT"

The Atomic Energy Organization of Iran, which has failed to persuade the West that its quest for nuclear power has no hidden military goal, said the killing of Ahmadi-Roshan would not deter it: "We will continue our path without any doubt ... Our path is irreversible," it said in a statement carried on television.

"The heinous acts of America and the criminal Zionist regime will not disrupt our glorious path ... The more you kill us, the more our nation will awake."

First Vice-President Mohammad Reza Rahimi, quoted by IRNA news agency, said: "Iran's enemies should know they cannot prevent Iran's progress by carrying out such terrorist acts."

Iran's leaders, preparing for the first national election since a disputed presidential vote in 2009 brought street protests against 32 years of clerical rule, are struggling to contain internal tensions. Defiance of Israel and Western powers plays well with many who will vote in March.

In Washington, White House spokesman Tommy Vietor said: "The United States had absolutely nothing to do with this ... We strongly condemn all acts of violence, including acts of violence like what is being reported today."

Israel, which has a history of covert killings abroad, declined comment, though army spokesman Yoav Mordechai wrote on Facebook: "I don't know who settled the score with the Iranian scientist, but I am definitely not shedding any tears."

MOTORCYCLE HITMAN

The attack bore some of the hallmarks of sophisticated intelligence agencies capable of circumventing Iran's own extensive security apparatus and apparently taking care to limit the harm to passers-by.

While witnesses spoke of a frighteningly loud explosion and parts of the Peugeot 405 ended up in the branches of the trees lining Gol Nabi Street, much of the car was left intact. This suggested a charge designed to be sure of both killing the occupants and preventing serious injury to others.

Witnesses said the motorcycle, from which the rear pillion passenger reached out to stick the device to the side of the car, made off into the heavy commuter traffic.

Though the scientist killed -- the fourth in five such attacks since January 2010 -- was only 32, Iranian media described him as having a role overseeing uranium enrichment at Natanz underground site. The semi-official news agency Mehr said Ahmadi-Roshan had recently met officials of the U.N. nuclear watchdog, the International Atomic Energy Agency.

At the IAEA in Vienna, where a spokeswoman condemned the killing, officials could not confirm knowing of him.

Analysts say that killing scientists -- especially those whose lack of personal protection suggests a relatively junior role -- is unlikely to have much direct impact on Iran's nuclear program, which Western governments allege is seeking to enrich enough uranium highly enough to let it build weapons.

COVERT WAR

Sabotage -- like mysterious reported explosions at military facilities or the Stuxnet computer virus widely suspected to have been deployed by Israel and the United States to disrupt nuclear facilities in 2010 -- may have had more direct effects.

However, assassinations may be intended to discourage Iranians with nuclear expertise from working on the program.

Bruno Tertrais from France's Strategic Research Foundation said: "It certainly has a psychological effect on scientists working on the nuclear program."

He cautioned, however, against assuming that Israel, the United States or both were behind the latest attack.

Trita Parsi, a U.S.-based expert on Iran, said the killing might, along with the heightened rhetoric of recent weeks, be part of a pattern ahead of a possible resumption of negotiations on Iran's nuclear program; some parties may want to improve their bargaining position, others may see violence as a way of thwarting renewed negotiations altogether, Parsi said.

Last month, Iran signaled a willingness to return to a negotiating process which stalled a year ago, though Western officials say a new round of talks is far from certain yet.

SANCTIONS CAMPAIGN

Iran's decision to carry out enrichment work deep underground in the once undeclared plant at Fordow, near the holy Shi'ite city of Qom, could make it harder for U.S. or Israeli forces to carry out veiled threats to use force against Iranian nuclear facilities. The move to Fordow could reduce the time available for diplomacy to avert any attack.

The announcement on Monday that enrichment -- a necessary step to make uranium into nuclear weapons -- had begun at Fordow has given added impetus to Western efforts to impose an oil export embargo intended to pressure Tehran to halt enrichment.

Iran, a signatory to the treaty banning the spread of nuclear weapons, says it is entitled to conduct peaceful research and denies any military nuclear aims. Its adversaries say its failure to take up their offers of help with civilian technology undermine the credibility of its position.

Oil prices have firmed 5 percent since U.S. President Barack Obama moved on New Year's Eve to block bank payments for oil to Iran. The European Union is expected this month to impose a ban on its states buying oil from Tehran, and other major customers have been looking for alternative supplies.

In Iran, the new U.S. sanctions have started to bite.

The rial currency has lost 20 percent of its value against the dollar in the past week and Iran has threatened to shut the Strait of Hormuz.

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Iran Sentences American, 28, to Death

Amir Mirzaei Hekmati

TEHRAN, Iran — An Iranian court has convicted an American man of working for the CIA and sentenced him to death, state radio reported Monday, in a case adding to the accelerating tension between the United States and Iran.

Iran charges that as a former U.S. Marine, Amir Mirzaei Hekmati, received special training and served at U.S. military bases in Iraq and Afghanistan before heading to Iran for his alleged intelligence mission. The radio report did not say when the verdict was issued.

The 28-year-old former military translator was born in Arizona and graduated from high school in Michigan. His family is of Iranian origin. His father, a professor at a community college in Flint, Michigan, has said his son is not a CIA spy and was visiting his grandmothers in Iran when he was arrested.

Behnaz Hekmati, his mother, said in an email to The Associated Press that she and her husband, Ali, are "shocked and terrified" that their son has been sentenced to death. She said the verdict is "the result of a process that was neither transparent nor fair."

Under Iranian law, he has 20 days to appeal. Hekmati has a court-appointed lawyer who was identified only by his surname, Samadi, and there was no word about an appeal.

Gholam Hossein Mohseni Ejehei, spokesman for Iran's judiciary said if the verdict is appealed, it would go to Iran's Supreme Court, the official IRNA news agency reported.

Hekmati's trial took place as the U.S. announced new, tougher sanctions against Iran over its nuclear program, which Washington believes Tehran is using to develop a possible atomic weapons capability.

Iran, which says it only seeks nuclear reactors for energy and research, has sharply increased its threats and military posturing against stronger pressures, including the U.S. sanctions targeting Iran's Central Bank in attempts to complicate its ability to sell oil.

The U.S. State Department has demanded Hekmati's release.

The court convicted him of working with a hostile country, belonging to the CIA and trying to accuse Iran of involvement in terrorism, Monday's report said.

In its ruling, a branch of Tehran Revolutionary Court described Hekmati as a mohareb, an Islamic term that means a fighter against God, and a mofsed, or one who spreads corruption on earth. Both terms appear frequently in Iranian court rulings.

In a closed court hearing in late December, the prosecution asked for the death penalty for Hekmati.

The U.S. government has called on Iranian authorities to grant Swiss diplomats access to him in prison. The Swiss government represents U.S. interests in Iran because the two countries don't have diplomatic relations.

Hekmati is a dual U.S.-Iranian national. Iran considers him an Iranian since the country's law does not recognize dual citizenship.

Similar cases against Americans accused of spying have heightened tensions throughout the years-long standoff over Iran's nuclear program.

Iran arrested three Americans in July 2009 along the border with Iraq and accused them of espionage, though the Americans said they were just hiking in the scenic and relatively peaceful Kurdish region of northern Iraq.

One of them was released after a year in prison, and the other two were freed in September in deals involving bail payments that were brokered by the Gulf sultanate of Oman, which has good relations with Iran and the U.S.

On Dec. 18, Iran's state TV broadcast video of Hekmati delivering a purported confession in which he said he was part of a plot to infiltrate Iran's Intelligence Ministry.

In a statement released the same day, the Intelligence Ministry said its agents identified Hekmati before his arrival in Iran, at Bagram Air Field in neighboring Afghanistan. Bagram is the main base for American and other international forces outside Kabul, the Afghan capital.

It is not clear exactly when he was arrested. News reports have said he was detained in late August or early September.

Hekmati's father said in a December interview with The Associated Press, that his son was a former Arabic translator in the U.S. Marines who entered Iran about four months earlier to visit his grandmothers.

At the time, he was working in Qatar as a contractor for a company "that served the Marines," his father said, without providing more specific details.

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Iran to launch nuclear work in bunker in "near future"

Nuclear plant in Tehran, Iran

(Reuters) - Iran will in the "near future" start enriching uranium deep inside a mountain, a senior official said, a move likely to further antagonize Western powers which suspect Tehran is seeking nuclear weapons capability.

A decision by the Islamic Republic to conduct sensitive atomic activities at an underground site - offering better protection against any enemy attacks - could complicate diplomatic efforts to resolve the long-running row peacefully.

Iran has said for months that it is preparing to move its highest-grade uranium refinement work to Fordow, a facility near the Shi'ite Muslim holy city of Qom in central Iran, from its main enrichment plant at Natanz.

The United States and its allies say Iran is trying to build bombs, but Tehran insists its nuclear program is aimed at generating power and for medical purposes.

"The Fordow nuclear enrichment plant will be operational in the near future," the head of Iran's Atomic Energy Organization, Fereydoun Abbasi-Davani, said.

Uranium refined to purity levels of both 3.5 percent and 20 percent can be produced at the site, he added in comments carried by Iran's Kayhan newspaper on Sunday.

One Western official said with the start-up of Fordow, Iran would send a political signal to show it will not bow to international demands to suspend uranium enrichment, activity which can have both civilian and military uses.

The West has imposed increasingly tight economic sanctions on Tehran over its nuclear program, culminating with a new law signed on New Year's Eve by President Barack Obama aimed at preventing buyers from paying for Iranian oil.

"I would see it as another escalatory step on the Iranian side," the official, who declined to be named, said.

As the sanctions pressure mounts on the major oil producer, Iran has called for fresh talks on its nuclear program with the permanent members of the Security Council and Germany (P5+1), which have been stalled for a year.

CLOSER TO WEAPONS MATERIAL

Western powers have repeatedly made clear they are also ready for renewed diplomacy, but stress that Iran must show it is willing to engage in meaningful discussions and start addressing growing international concerns about its work.

"They have to demonstrate they are going to be serious," the Western official said, speaking prior to Iran's latest announcement on Fordow's planned inauguration.

Diplomats in Vienna, home to the International Atomic Energy Agency (IAEA), the U.N. nuclear watchdog, told Reuters on Friday that Iran was believed to have begun feeding uranium gas into centrifuges in Fordow in late December as part of final preparations to use the machines for enrichment.

The centrifuges and other equipment needed to start enrichment were installed at Fordow last year.

Iran is already refining uranium to a fissile purity of 20 percent - far more than the 3.5 percent level usually required to power nuclear energy plants - above ground at Natanz.

The country said last year it would move this higher-grade enrichment to Fordow, which like other Iranian nuclear sites is regularly inspected by the IAEA, and also sharply boost output capacity.

The United States and Israel, Iran's arch foes, have not ruled out strikes against the Islamic state if diplomacy fails to resolve the dispute.

Iran disclosed the existence of Fordow to the IAEA only in September 2009 after learning that Western intelligence agencies had detected it.

Tehran says it will use 20 percent-enriched uranium to convert into fuel for a research reactor making isotopes to treat cancer patients, but Western officials say they doubt that the country has the technical capability to do that.

In addition, they say, Fordow's capacity - a maximum of 3,000 centrifuges - is too small to produce the fuel needed for nuclear power plants, but ideal for yielding smaller amounts of high-enriched product typical of a nuclear weapons program.

Centrifuges spin at supersonic speeds, which enriches uranium by increasing the concentration of fissile isotopes.

Nuclear bombs require uranium enriched to 90 percent, but Western experts say much of the effort required to get there is already achieved once it reaches 20 percent purity, shortening the time needed for any nuclear weapons "break-out."

They give different estimates of how quickly Iran could assemble a nuclear weapon if it decides to do so - ranging from as little as six months to a year or more.

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Iranian president targeted by shoe thrower

Iranian President

Tehran, Iran (CNN) -- A 45-year-old textile worker who has been out of work for a year threw his shoes Monday at Iranian President Mahmoud Ahmadinejad to protest not having received unemployment benefits, an Iranian website reported.

He missed, striking a banner behind the president instead, said Ghased News, an unofficial website. CNN has not been able to confirm the report independently.

Ghased News said the incident occurred in the northern city of Sari during a memorial ceremony for a former oil minister who died last year.

Attendees beat the man until security forces intervened, the site reported. The man had been fired from his job at a weaving factory and said he had not received unemployment benefits for a year, it said.

Ghased News identified the man as Rashid S., a resident of Sari who was once jailed for throwing eggs and tomatoes at former President Mohammad Khatami.

The audience apologized to Ahmadinejad and chanted slogans in his support, Ghased News said.

Ahmadinejad's website, www.president.ir, posted a picture of the president at the event but made no mention of the flying footwear.

Throwing shoes is a sign of profound disrespect in Arab countries, but not in Iran. In December 2008, an Iraqi journalist threw his shoes at President George W. Bush during a news conference in Baghdad. He, too, missed. As he was pushed to the floor, the reporter shouted that his act was a "farewell kiss" to the "dog" who launched the 2003 invasion of Iraq.

The reporter, Muntadhar al-Zaidi, was released after nine months in jail.

Though many Iraqis hold Bush in low esteem, opinions were mixed in Iraq following the incident. Some viewed al-Zaidi as a hero, with thousands taking to the streets calling for his release; others said his act went against Arab traditions of honoring guests.

According to the CIA World Factbook, citing official government figures, Iran's unemployment rate last year was 13.2%. But many Iranians believe the true figure to be much higher.

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Iran releases video of downed U.S. spy drone–looking intact

Downed U.S. spy plane

Iran's Press TV on Thursday broadcast an extended video tour of the U.S. spy drone that went down in the country--and it indeed appeared to look mostly intact.

American officials have acknowledged that an unmanned U.S. reconnaissance plane was lost on a mission late last week, but have insisted that there is no evidence the drone was downed by hostile acts by Iran. Rather, they said, the drone likely went down because of a malfunction, and they implied the advanced stealth reconnaissance plane would likely have fallen from such a high altitude--the RQ-170 Sentinel can fly as high as 50,000 feet--that it wouldn't be in good shape.

But Iranian military officials have claimed since Sunday that they brought down an American spy drone that was little damaged. And now they have provided the first visual images of what looks to be a drone that at least outwardly appears to be in decent condition, in what is surely another humiliating poke in the eye for U.S. national security agencies.

The Pentagon declined to comment on the released images Thursday, a Defense Department spokesman told Yahoo News. But military analysts said it appeared to them to be the American drone in question.

"I have been doing this for thirty years, and it sure looks like" a stealthy U.S. drone to me," Loren Thompson, a military analyst with the Lexington Institute and consultant to the RQ-170's manufacturer, Lockheed Martin, told Yahoo News in a telephone interview Thursday. "I think we are going to face the high likelihood that Iran has an intact version of one of our most important intelligence gathering tools."

Still, Thompson went on, the intelligence "windfall" to Iran from obtaining the advanced U.S. stealthy drone may be mitigated.

"I don't think the Iranians get as much out of it as they might hope," he said. "It probably came into their hands as a result of a technical malfunction. What that means is they still don't have a real defense against the U.S. flying other vehicles that have similar capabilities, without much fear of interception."

Analysts also noted that the video of the drone released by Iran did not show the drone's underside. "Pretty intact," the Center for Strategic and International Studies' James Lewis said by email. "Interesting that they covered the underside."

The New York Times reported Thursday that--unsurprisingly--the RQ-170 was lost while making the latest foray over Iran during an extended CIA surveillance effort of Iran's nuclear and ballistic weapons program.

"The overflights by the bat-winged RQ-170 Sentinel, built by Lockheed Martin and first glimpsed on an airfield in Kandahar, Afghanistan, in 2009, are part of an increasingly aggressive intelligence collection program aimed at Iran, current and former officials say," the Times' Scott Shane and David Sanger wrote. "The urgency of the effort has been underscored by a recent public debate in Israel about whether time is running out for a military strike to slow Iran's progress toward a nuclear weapon."

Iran in turn has complained that the drone overflights represent an act of aggression and violation of its sovereignty, and summoned the Swiss envoy--who represents U.S. interests in Iran--on Thursday to lodge a protest.

However, while the images of the U.S. drone surely allowed Iran to score another public relations blow against Washington, Iran may find it tough to generate much in the way of international sympathy for being the target of U.S. surveillance.

Last week, Iranian hardliners ransacked the British embassy in Tehran, prompting the United Kingdom to recall its diplomatic staff from Tehran and order Iran's embassy in London closed. Last month, the UN atomic watchdog agency issued a report raising concerns about research Iran is suspected by some nations to have conducted before 2003 on military aspects of its nuclear program. Iran has insisted its nuclear program is for peaceful energy purposes. In October, the United States accused elements of Iran's Qods force of plotting to assassinate the Saudi envoy to the United States. The United Nations General Assembly voted last month in favor of a resolution condemning the Iranian plot.

Amid its growing international isolation, Iran, unsurprisingly, seemed intent to play up the drone incident for all it could.

"China, Russia want to inspect downed U.S. drone," proclaimed a headline from Iran's Mehr news agency Thursday.

The RQ-170 Sentinel, however, reportedly did not use the latest U.S. surveillance technology on board, in part because as a single-engine aircraft, it was thought more likely to occasionally go down.

"The basic principles of stealthy aircraft are fairly well known," Thompson said. "In terms of [the drone's] on-board electronics and information systems, it is fairly routine in combat to require authentication codes to make them hard to unlock."

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Iranian protesters storm British diplomatic compounds

Protesters in Tehran, Iran

(Reuters) - Iranian protesters stormed two British diplomatic compounds in Tehran on Tuesday, smashing windows, torching a car and burning the British flag in protest against new sanctions imposed by London.

Britain said it was outraged and warned of "serious consequences." The U.N. Security Council condemned the attacks "in the strongest terms." U.S. President Barack Obama said he was disturbed by the incident and called on Iran to hold those responsible to account.

The attacks come at a time of rising diplomatic tension between Iran and Western nations who last week imposed fresh sanctions over Tehran's nuclear program, which they believe is aimed at achieving the capability of making an atomic bomb.

Iran, the world's fifth biggest oil exporter, says it only wants nuclear plants to generate electricity.

The embassy storming is also a sign of deepening political infighting within Iran's ruling hardline elites, with the conservative-led parliament attempting to force the hand of President Mahmoud Ahmadinejad and expel the British ambassador.

"Radicals in Iran and in the West are always in favor of crisis ... Such radical hardliners in Iran will use the crisis to unite people and also to blame the crisis for the fading economy," said political analyst Hasan Sedghi.

Several dozen protesters broke away from a crowd of a few hundred outside the main British embassy compound in downtown Tehran, scaled the gates, broke the locks and went inside.

Protesters pulled down the British flag, burned it, and put up the Iranian flag, Iranian news agencies and news pictures showed. Inside, the demonstrators smashed windows of office and residential quarters and set a car ablaze, news pictures showed.

One took a framed picture of Queen Elizabeth, state TV showed. Others carried the royal crest out through the embassy gate as police stood by, pictures carried by the semi-official Fars news agency showed.

All embassy personnel were accounted for, a British diplomat told Reuters in Washington, saying Britain did not believe that any sensitive materials had been seized.

Demonstrators waved flags symbolizing martyrdom and held aloft portraits of Supreme Leader Ayatollah Ali Khamenei who has the final say on matters of state in Iran.

Another group of protesters broke into a second British compound at Qolhak in north Tehran, the IRNA state news agency said. Once the embassy's summer quarters, the sprawling, tree-lined compound is now used to house diplomatic staff.

An Iranian report said six British embassy staff had been briefly held by the protesters. British Foreign Secretary William Hague said the situation had been "confusing" and that he would not have called them "hostages."

"Police freed the six people working for the British embassy in Qolhak garden," Iran's Fars news agency said.

A German school next to the Qolhak compound was also damaged, the German government said.

BRITAIN OUTRAGED

Police appeared to have cleared the demonstrators in front of the main downtown embassy compound, but later clashed with protesters and fired tear gas to try to disperse them, Fars said. Protesters nevertheless entered the compound a second time, before once again leaving, it said.

British Prime Minister David Cameron chaired a meeting of the government crisis committee to discuss the attacks which he said were "outrageous and indefensible."

"The failure of the Iranian government to defend British staff and property was a disgrace," he said in a statement.

"The Iranian government must recognize that there will be serious consequences for failing to protect our staff. We will consider what these measures should be in the coming days."

The United States, alongside the European Union and many of its member states also strongly condemned the attacks.

There have been regular protests outside the British embassy over the years since the 1979 Islamic revolution that toppled the U.S.-backed shah, but never have any been so violent.

The attacks and hostage-taking were a reminder of the 1979 takeover of the U.S. embassy in Tehran carried out by radical students who held 52 Americans hostage for 444 days. The United States cut diplomatic ties with Iran after the hostage-taking.

All British embassy personnel were accounted for and safe, a British diplomat, who spoke on condition of anonymity, told Reuters in Washington.

The diplomat said the attack likely flowed from Britain's November 21 decision to impose new sanctions on Iran because of its nuclear program, including a ban on British financial institutions dealing with their Iranian counterparts.

"It's impossible, really, not to reach that conclusion," the diplomat said, suggesting that the protests may have been sparked by the Iranian authorities.

"In the past we have certainly had demonstrations that have ... been sanctioned, if not encouraged, by the government. I don't know about this one. I don't think we'd put it past them," said the diplomat.

"It's hard to imagine, in a place like Iran, that these were some kind of spontaneous (event)," said a State Department official who declined to be identified.

INFIGHTING

The demonstrations appeared to be a bid by conservatives who control parliament to press home their demand, passed in parliament last week and quickly endorsed by the Guardian Council on Tuesday, for the government to expel the British ambassador in retaliation for the sanctions.

A lawmaker had warned on Sunday that angry Iranians could storm the British embassy.

"Parliament officially notified the president over a bill regarding degrading the ties with Britain, obliging the government to implement it within five days," Fars news agency quoted speaker Ali Larijani as saying.

Ahmadinejad's government has shown no willingness to compromise on its refusal to halt its nuclear work, but has sought to keep channels of negotiation open in an effort to limit the worst effects of sanctions.

An Iranian official told Reuters the storming of the British compounds was not planned by the government.

"It was not an organized measure. The establishment had no role in it. It was not planned," said the official, who declined to be identified. Iran's Foreign Ministry said it regretted the attacks and was committed to ensuring the safety of diplomats.

Police arrested 12 people who had entered the north Tehran compound, Fars said, quoting a police chief as saying they would be handed over to the judiciary.

Protesters said they planned to stage a sit-in at the gates of the north Tehran compound and would not move until they were told to do so by Iran's religious leaders.

Britain, along with the United States and Canada, imposed new unilateral sanctions on Iran last week, while the EU, France and Italy have all said financial measures against Tehran should be strengthened.

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