Iran fails to answer weapons questions: IAEA

By Mark Heinrich

VIENNA (Reuters) - The U.N. nuclear watchdog said on Friday it confronted Iran for the first time with Western intelligence reports showing work linked to making atomic bombs and that Tehran had failed to provide satisfactory answers.

The United States passed the intelligence, which came mainly from a laptop spirited out of Iran, to the International Atomic Energy Agency (IAEA) in 2005 but out of fear for its spies only authorized the IAEA to present it last month, diplomats said.

The IAEA said Iran had dismissed the intelligence as "baseless" or "fabricated", but had provided increased cooperation on other issues in the past few months.

Iran's increased transparency amounted to a doubled-edged sword as it reaffirmed Tehran was forging ahead with uranium enrichment in defiance of U.N. Security Council demands to stop all proliferation-sensitive nuclear activity.

The IAEA findings, which also said Iran had failed to clear up all outstanding questions by an agreed February deadline, may spur the Security Council to adopt a third round of sanctions against the Islamic Republic as early as next week.

The United States, which has accused Iran of having a secret program to build nuclear weapons, said the IAEA's report had produced a good reason to impose new sanctions.

Senior diplomats from Britain, France, Germany, the United States, China and Russia would meet in Washington on Monday to discuss the next steps over Iran, Western officials said.

Iran, which says its nuclear program is only for power generation to meet the growing demands of its economy, hailed the IAEA's comments as a victory because it said the watchdog had found Tehran was pursuing peaceful activities.