U.N. must empower IAEA, not rely on sanctions: ElBaradei

VIENNA (Reuters) - The head of the United Nations nuclear watchdog urged the U.N. Security Council Monday to give it more powers to prevent the spread of atom bomb know-how and avoid relying on sanctions he said often did not work.

Mohamed ElBaradei's call was a clear reference to the case of Iran, which is expanding a declared civilian uranium enrichment program without clarifying allegations that it has also researched how to fuel a nuclear weapon.

He spoke as state television in Iran, which is shrugging off the threat of harsher sanctions, said Tehran and six world powers trying to resolve the standoff over its disputed nuclear program would launch talks in early October.

Iran last week handed over a package of proposals in which it said it was ready to discuss global nuclear disarmament and other international issues, but not its own nuclear activity, despite U.S. insistence the issue will be raised.

ElBaradei, outgoing chief of the International Atomic Energy Agency, welcomed the U.S. offer to revive dialogue with Iran without preconditions. But he suggested threats of tougher sanctions on Iran if the talks fizzled would achieve little.

"We must keep open the channels of communication with those with whom we have issues that need to be resolved rather than seeking to isolate them," ElBaradei said in an address opening the annual meeting of 150 IAEA member nations.

He said IAEA inspectors could not do their job "in isolation" but depended on political support from the Security Council. He urged it to give the IAEA greater means to verify states are not diverting nuclear technology for weaponry.

SANCTIONS OFTEN MISFIRE, ELBARADEI SAYS

"The Council needs to develop a comprehensive compliance mechanism that does not rely only on sanctions, which too often hurt the vulnerable and the innocent," ElBaradei said, referring to the example of Saddam Hussein's Iraq and to North Korea.

He said that if three burning issues were not addressed soon -- the IAEA's weak legal authority, underfunding of the agency, and the threat of militants obtaining nuclear materials -- they would "could put the entire non-proliferation regime at risk."

ElBaradei said 73 countries including Iran and North Korea had failed to ratify an IAEA protocol allowing snap inspections ranging beyond declared nuclear sites -- a measure critical to ferreting out evidence of covert atomic bomb activity.

"For these countries, our ability to detect possible undeclared activities is severely limited," he said.

The chief U.S. delegate, obliquely differing with ElBaradei, said any nuclear outlaws must face "serious consequences" at the Security Council, an allusion to the tool of sanctions.

"Failure to impose meaningful consequences puts at risk everything we have achieved (with non-proliferation rules). We cannot let this happen," said U.S. Energy Secretary Steven Chu.

Iran says it is enriching uranium only to fuel nuclear power plants. The West suspects Iran's latent purpose with the dual-use nuclear technology is to make atom bombs.

ElBaradei said six years of IAEA investigation had given a better grasp of Iran's "civil" nuclear program hidden for 18 years in violation of Iran's IAEA safeguards agreement.

But he reiterated that Iran's stonewalling of requests for IAEA access to check credible intelligence reports pointing to military nuclear dimensions to the program was unacceptable.

"If we are to restore confidence in the exclusively peaceful nature of its nuclear program, Iran needs to engage substantively with the Agency to clarify ... the difficult and important questions regarding the authenticity of information relating to alleged weaponization studies," he said.

Japan's Yukiya Amano, who succeeds ElBaradei on December 1 and has vowed to pursue cases of alleged nuclear proliferation like Iran's, said the spread of atomic weapons and nuclear terrorism posed an increasing threat for the international community.

"It is unlikely that this trend will ever be reversed, but rather it will continue to accelerate," said Amano.

(Additional reporting by Sylvia Westall; Editing by Charles Dick)