Iran could have nuclear weapon by 2012: Britain

Britain's Defence Secretary, Liam Fox, delivers his speech at the Royal United Services Institute (RUSI) in London June 14, 2010.

LONDON (Reuters) - Western powers should work on the assumption that Iran could have a nuclear weapon by next year and an Israeli intelligence assessment of 2015 could be over-optimistic, British Defense Secretary Liam Fox said on Monday.

Meir Dagan, outgoing director of Israeli intelligence agency Mossad, said this month that Israel believed Iran would not be able to produce a nuclear bomb before 2015.

But Fox, answering questions in parliament, said Dagan was "wrong to insinuate that we should always look at the more optimistic end of the spectrum" of estimates of Iran's nuclear capability.

"We know from previous experience, not least what happened in North Korea, that the international community can be caught out assuming that things are more rosy than they actually are," he said.

"We should therefore be very clear that it is entirely possible that Iran may be on the 2012 end of that spectrum and act in accordance with that warning," he said.

He did not say whether his statement was based on any intelligence assessment available to Britain, a close U.S. ally and one of six powers that made no progress in talks with Iran this month on its nuclear program.

"Iran does not yet have nuclear weapons, as assessed, however it does continue to pursue uranium enrichment and the construction of a heavy water reactor, both of which have military potential," Fox said.

The U.N. Security Council has approved four rounds of sanctions against Tehran for refusing to freeze its uranium enrichment program, which Western powers suspect is aimed at producing a nuclear weapon. Iran says its program is for peaceful energy needs.

Dagan's assessment was in line with Israeli Prime Minister Benjamin Netanyahu's caution about resorting to force against Iran, which has vowed to retaliate against Israel and U.S. interests for any attack on its nuclear installations.

Dagan was contradicted last week by Israel's chief of military intelligence, Major-General Aviv Kochavi, who said sanctions had not held up Iran's nuclear program and it could produce bombs within two years.

Secretary of State Hillary Clinton has said Dagan's assessment should not undercut international determination to keep pressure on Iran through sanctions.

(Reporting by Adrian Croft; Editing by Janet Lawrence)