Iran yesterday brushed aside western expressions of alarm over its decision to start uranium enrichment work at a virtually impregnable underground mountain bunker as "exaggerated and politically motivated".
Tehran had long broadcast its intention to activate the Fordo plant near the holy city of Qom. But the start of operations there comes at a time of heightened tensions.
The United States and the European Union are moving towards far tougher sanctions over Iran's suspect nuclear ambitions and Tehran has threatened to close the Strait of Hormuz, a key oil transport waterway, in retaliation.
The West's concerns were greeted by schoolboy humour yesterday when Iran's president, Mahmoud Ahmadinejad, visited his like-minded, anti-American counterpart in Venezuela during a tour of leftist Latin American countries.
Pointing to a grassy mound in front of his presidential palace, Hugo Chavez delighted his guest by joking: "That hill will open up and a big atomic bomb will come out".
For some experts, Fordo's start-up indicated Iran has no intention of negotiating with world powers over its nuclear programme. But others said Iran could be planning to use the issue as a 'fact on the ground' to bolster its bargaining power in any new talks with the US, Russia, China, Britain, France and Germany.
Either way, analysts doubt new negotiations will be more successful than the last round of negotiations that ended in stalemate in Turkey 13 months ago.
"There's a slightly increased chance that Iran will be receptive to new proposals," said Sir Richard Dalton, a British former ambassador to Iran and senior fellow at Chatham House, a leading British think tank. But, he added in an interview: "There's a low chance they will receive any new proposals."
The UN's atomic watchdog, the International Atomic Energy Agency (IAEA), confirmed late on Monday that Iran had begun enriching uranium to 20 per cent purity at Fordo, 145 kilometres south-west of Tehran.
Gill Tudor, a spokeswoman for the IAEA, added that "all nuclear material in the facility remains under the agency's containment and surveillance" - a point echoed by Tehran yesterday.
Fordo's existence only came to light after it was identified by western intelligence agencies in September 2009. Unlike Iran's main enrichment site at Natanz, Fordo is buried under a mountain, which Tehran says is necessary to protect it from aerial bombardment. Its operation greatly reduces the option for the US and Israel of destroying a key component of Iran's nuclear programme through superior military firepower.
"Israel, which has already warned Iran that it could take military action against installations, is very, very worried by this facility," said Mark Hibbs of the Carnegie Endowment for International Peace. "We are moving into dangerous territory."
Yesterday, the Russian foreign ministry expressed "regret and worry" at the new enrichment plant, in a statement by the Itar-Tass news agency. Western leaders believe Iran has not yet taken the strategic decision to weaponise its nuclear programme. Leon Panetta, the US defence secretary, said at the weekend Iran was laying the groundwork for making nuclear weapons someday, but was not building a bomb.
Citing an Israeli security report, the Times of London reported yesterday that Israel is now "thinking the unthinkable" by preparing to deal with a nuclear-armed Iran within a year. The daily said the move was "tacit recognition" that Israel is backing away from its long-held position that it would do everything, including mounting a military strike, to stop Iran acquiring nuclear-weapons capabilities.
Iran, which insists its nuclear programme is solely peaceful, says the 20 per cent enriched uranium at Fordo is needed to provide fuel for its Tehran Research Reactor to produce medical isotopes for the treatment of cancer.
Some analysts say Iran has enough enriched uranium for this purpose already. And it is a quick technological leap to purify 20 per cent enriched uranium to the 90 per cent concentration needed for weapons grade material.
Iran's main nuclear facility at Natanz is enriching uranium to 3.5 per cent, the level required to fuel nuclear reactors. Several thousand centrifuges there are said to have produced enough material for four nuclear warheads if the uranium is enriched to much higher levels.
The US denounced the activity at Fordo as "a further escalation of their ongoing violations with regard to their nuclear obligations". Britain called it "provocative" while France went furthest by declaring international sanctions should now be enforced to "an intensity and severity without precedent".
Iran's envoy to the IAEA, Ali Asghar Soltanieh, responded: "These reactions are exaggerated and politically motivated and have been made over previous years."