Iran has said the European Union's proposals for incentives in return for a suspension of nuclear fuel work were unacceptable, and former Tehran mayor Mahmoud Ahmadinejad has been sworn in as president of Iran.
"The Europeans' submitted proposals regarding the nuclear case are not acceptable for Iran," the official IRNA news agency on Saturday quoted Foreign Ministry spokesman Hamid Reza Asefi as saying.
"The proposals are unacceptable because Iran's right to enrich uranium is not included," he said.
Asefi said Iran would give a full answer to the EU's proposals on Saturday or Sunday.
The EU on Friday offered Iran a package of incentives for it to give up nuclear fuel work but also called an urgent meeting of the UN nuclear watchdog that could refer Tehran to the UN Security Council for sanctions.
The EU - represented by Britain, France and Germany - has been trying to find a compromise for two years between arch-foes Iran and the United States.
Washington accuses Iran of trying to covertly build a nuclear bomb, but Tehran denies the charge and says it has the right to convert and enrich uranium for power generation.
"I should say the Europeans have not honoured their commitments," Asefi said. "We have repeatedly said that any proposal should include Iran's right to enrichment."
Ceremony
Surprise election winner Ahmadinejad became president on Wednesday after approval by Iran's most powerful figure Supreme Leader Ayatollah Ali Khamenei and has the task of appointing ministers to tackle the nuclear problem and fulfil his promises of social justice.
"We want justice, peace and honour for all," he said after taking the oath of office on the Quran at a parliamentary ceremony. "Managers of the Islamic government have no duty but to serve the people."
Ahmadinejad, 48, deeply loyal to the values of Iran's 1979 Islamic revolution, won a landslide election victory in June, replacing reformist cleric Mohammad Khatami, who was unable to stand for a third term.
Ahmadinejad stood firm on Iran's nuclear dispute with the EU.
"We are logical and respect international rules, but will not give in to those who want to violate our rights," said Ahmadinejad. "The Iranian nation cannot be intimidated."
US relents
On Friday, the United States explicitly accepted for the first time that Iran can develop civilian nuclear programmes, backing an EU proposal to allow Tehran to pursue atomic power in exchange for giving up fuel work.
In a compromise that completed a gradual shift in US policy, Washington acquiesced because it believes the EU offer has enough safeguards to prevent Iran from diverting its civilian work into making nuclear bombs.
"We support the (Europeans') effort and the proposal they have put forward to find a diplomatic solution to this problem and to seek an end to Iran's nuclear weapons program," State Department spokesman Tom Casey told reporters.
The US acquiescence is in contrast with its stance in talks with North Korea, which it insists cannot have any nuclear development for fear Pyongyang would build atomic bombs under the guise of a civilian power program.
The shift also comes despite long-held US worries that allowing a civilian program could help Iran develop its nuclear technology and know-how so that, if it ever breaks any EU agreement, it would be closer to acquiring a bomb.
A US official said the EU offer helped allay American fears.
"There's a certainty and an ability to ensure that none of the nuclear fuel that would be involved is diverted to an illicit nuclear weapons program," said the official, who asked not to be named because he was not authorised to discuss details of the proposal.
PHOTO CAPTION
Iran's new President Mahmoud Ahmadinejad (C) is congratulated by parliamentarians after his swearing-in ceremony in Tehran August 6, 2005. (REUTERS)