Iraq’s Foreign Ministry spokesman Ramin Mehmanparast said on Tuesday that Iran was not opposed to sending LEU abroad as long as it had "100 per cent guarantees" of receiving refined fuel in return, for use in a medical research reactor.

"Regarding the guarantees we are not going to suggest anything, but one ... could be exchanging it on Iranian soil, Mehmanparast told a news conference.

Last week Foreign Minister Manouchehr Mottaki rejected a UN-drafted deal that would see Iran ship low-enriched uranium (LEU) abroad for reprocessing.

Any fuel swap in Iran, however, would likely be a non-starter for Western powers which are seeking a delay in Tehran's potential to make a nuclear bomb by reducing its LEU stockpile. Iran says its nuclear programme is peaceful.

Major powers on Friday urged Tehran to accept the proposal brokered by the International Atomic Energy Agency (IAEA). US President Barack Obama has warned of more sanctions on Iran, the world's fifth-largest oil producer.

Some analysts say hardline President Mahmoud Ahmadinejad favours the fuel deal as a way to shore up his legitimacy after his disputed re-election in June, but that domestic rivals are trying to undermine him by criticising the proposal.

Western officials also suspect that Iran is trying to buy time and avert the threat of more punitive measures by offering to hold further talks on the plan while pressing ahead with its nuclear enrichment work.

"Commercial issue"

"Nobody in Iran ever said that we are against sending 3.5 per cent-enriched uranium abroad. We talked about the process of dispatching fuel," Mehmanparast said.

"If we say we are looking for 100 percent guarantees, it means that we want 3.5 per cent enriched uranium to be sent out under such circumstances that we make sure that we will receive the 20 percent fuel."

Iran's top nuclear negotiator, Saeed Jalili, said, according to Iran's Arabic-language al Alam television: "The Islamic Republic of Iran needs objective guarantees for exchanging fuel for its Tehran reactor."

Western powers agree that Iran has the right to develop a civilian nuclear programme, but want restrictions to prevent it from developing a nuclear weapon.

Iran says its nuclear work is aimed at generating electricity and has ruled out suspending its uranium enrichment.

Refined uranium can have both civilian and military uses.

The draft deal calls on Iran to send some 75 per cent of its LEU to Russia and France, where it would be turned into fuel for the Tehran reactor.

Mottaki said last week: "Surely we will not send our 3.5 per cent fuel abroad but can review swapping it simultaneously with nuclear fuel inside Iran."

The US has rejected Iranian calls for amendments and further talks on the deal. Obama has said time was running out for diplomacy to resolve the long-running nuclear standoff.

Jalili said supply of fuel for the Tehran reactor was not a political issue and it was not related to Iran's talks with six world powers -- the US, France, Britain, Germany, China and Russia.

"It is a commercial issue. Iran has asked the agency to provide it for Iran," Jalili said. "If they can't provide fuel in time and based on Iran's request, then ... we have other options to get fuel." – Reuters