By Doina Chiacu and Francois Murphy
WASHINGTON/VIENNA (Reuters) - President Donald Trump accused Iran on Wednesday of secretly enriching uranium for a long time and said U.S. sanctions would be increased "substantially" soon, as the U.N. nuclear watchdog held an emergency meeting on Tehran's breach of a nuclear deal.
Washington used the session of the International Atomic Energy Agency's 35-nation Board of Governors to accuse Iran of extortion after it inched past the deal's limit on enrichment levels, while still offering to hold talks with Tehran.
Iran says it is reacting to harsh U.S. economic sanctions imposed on Tehran since Trump pulled out of world powers' 2015 nuclear accord with the Islamic Republic last year, and says all its steps were reversible if Washington returned to the deal.
"Iran has long been secretly 'enriching,' in total violation of the terrible 150 Billion Dollar deal made by John Kerry and the Obama Administration," Trump said on Twitter.
"Remember, that deal was to expire in a short number of years. Sanctions will soon be increased, substantially!"
While Iran was found to have had covert enrichment sites long before the nuclear accord, the deal also imposed the most intrusive nuclear supervision on Iran of any country, and there has been no serious suggestion Iran is secretly enriching now.
The deal confines enrichment in Iran to its Natanz site, which was itself exposed in 2003. Any clandestine enrichment elsewhere would be a grave breach of the deal. It was not immediately clear from Trump’s comments whether he was referring to previous, long-known activities or making a new allegation.
"NOTHING TO HIDE," IRAN SAYS
Kazim Gharib Abadi, Iran's ambassador to the IAEA, told reporters following Trump's accusation that all Tehran's nuclear activities were being monitored by IAEA inspectors.
"We have nothing to hide," he said after the IAEA meeting in Vienna, which was called at the request of Washington.
Abadi said in a German newspaper interview published earlier in the day that Tehran intended to preserve the nuclear deal if all other signatories honoured their commitments under it.
"Everything can be reversed within a single hour - if all of our partners in the treaty would just fulfil their obligations in the same way," he told the weekly Die Zeit.
In the past two weeks Iran has breached two limits pivotal to the 2015 deal, which aimed to extended the time Iran would need to obtain enough fissile material for a nuclear weapon, if it chose to do so, to a year from around 2-3 months.
The Trump administration says it is open to negotiations with Iran on a more far-reaching agreement on nuclear and security issues. Iran has conditioned any talks on first being able to export as much oil as it did before the U.S. withdrawal.
Tensions between Washington and Tehran have escalated, culminating in a plan for U.S. air strikes on Iran last month that Trump called off at the last minute.
"There is no credible reason for Iran to expand its nuclear programme, and there is no way to read this as anything other than a crude and transparent attempt to extort payments from the international community," the U.S. mission to the IAEA said in a statement delivered at the closed-door agency board meeting.
"We call on Iran to reverse its recent nuclear steps and cease any plans for further advancements in the future. The United States has made clear that we are open to negotiation without preconditions, and that we are offering Iran the possibility of a full normalisation of relations."
Iran says it will continue to breach the deal's caps one by one until it receives the economic windfall - trade and investment deals with the wider world - promised under terms of the agreement.
IRAN RAISING ENRICHMENT LEVEL
In a separate closed-door meeting with member states on Wednesday, IAEA inspectors confirmed that Iran was now enriching uranium to 4.5% purity, above the 3.67% limit set by its deal. This would be Iran's second breach of the deal in as many weeks, diplomats familiar with the figures said.
However, that is still far below the 20% to which Iran refined uranium before the deal, and the roughly 90% needed to yield bomb-grade nuclear fuel.
"The latest steps indicate that Tehran's leadership has made a decision to move onto the offensive to create leverage vis-à-vis the international community and bring about a solution to its constraints," a Western intelligence source told Reuters.
Washington is set on isolating Iran to force it to negotiate stricter limits on its nuclear programme and, for the first time, to address calls to curb its ballistic missile programme and its role around the conflict-ridden Middle East.
EUROPEAN POWERS IN DILEMMA
Diplomats from several countries on the IAEA board said that despite likely fiery U.S.-Iranian exchanges at the meeting, the board was not expected to take any concrete action.
While Iran has breached terms of the deal which the IAEA is policing, the U.N. watchdog is not a party to the accord and Tehran has not violated the nuclear Safeguards Agreement binding it to the agency.
Britain, France and Germany are considering their next move, torn between the urge to show their displeasure at Iran's breaches and wanting to keep alive a deal that signatories in 2015 touted as vital to preventing wider war in the Middle East.
(Additional reporting by Parisa Hafezi in Dubai and Tassilo Hummel in Berlin; Editing by Mark Heinrich)