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IAEA's Olli Heinonen (l) and Javad Vaeedi, an Iranian negotiator spoke to media last week.
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US and Iran spar ahead of Iraq report

The US says it is worried about Iranian support for insurgents in Iraq. Separately, the IAEA reported that Iran's progress on nuclear enrichment is slow.

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American and Iranian leaders are boosting their belligerent rhetoric ahead of key US progress reports on Iraq, even as the UN's nuclear watchdog Thursday reported that Iran's cooperation to clear up suspicions of a weapons program marked "a significant step forward."

The report from the International Atomic Energy Agency (IAEA) in Vienna confirms that Iran is expanding uranium enrichment in defiance of the UN Security Council, though at a slower than expected pace and below capacity. The assessment comes shortly after a controversial deal was reached by the IAEA and Iran to "resolve" outstanding questions by the year's end.

The burst of rhetoric on both sides comes as Washington awaits reports from Baghdad about the affect of a months-long surge of troops into the Iraqi capital. Those reports are expected to determine future deployment and withdrawal plans.

The top US commander in Iraq, Gen. David Petraeus, and US Ambassador Ryan Crocker, are to give assessments the second week of September that will shape future US plans for Iraq.

"The US is seriously concerned about Iranian support for violence in Iraq that has killed American soldiers, and as we get close to the date of the Petraeus report, the Iran factor looms large," says Mark Fitzpatrick, an Iran expert at the International Institute of Strategic Studies in London. "It's natural that President Bush would point to that external factor as a reason not to cut and run from Iraq."

Using his strongest public language on Iran to date, President George Bush on Tuesday repeated charges that Iran is causing US deaths in Iraq by supporting and supplying weaponry to Shiite militias and saying that he had ordered US commanders to "confront Tehran's murderous activities."

Speaking just hours before in Tehran, Iranian President Mahmoud Ahmadinejad dismissed the US as an empire in decline, with failure in Iraq leaving a "huge power vacuum" that Iran was ready to fill.

"The political power of the occupiers is collapsing rapidly," said Mr. Ahmadinejad. "Occupation is the root of all problems in Iraq. It has become clear that occupiers are not able to resolve regional issues."

A separate draft report by the Government Accountability Office, described Thursday as "strikingly negative" by The Washington Post, which acquired the document, found that only three of 18 benchmarks mandated by Congress had been met in Iraq.

The arrest of seven Iranians and their Iraqi guards at the Sheraton hotel in Baghdad this week – with television footage showing them blindfolded and being led out of the hotel by US soldiers – threatened a further deterioration, akin to the arrest of five Iranians in northern Iraq in January, who remain in custody. They were released next morning, with an adviser to General Petraeus expressing "regret" after it became known the group were on official business.

Iranian spokesmen this week again denied supporting anti-US actions in Iraq and, in Vienna, warned the US and West against pushing for a third round of Security Council sanctions.

Iran says its efforts are peaceful

Iran says it aims only to peacefully produce nuclear power. The US and many in the West believe the civilian program masks a secret weapons effort.

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