Iran will maintain its right to produce nuclear fuel, the country's President Mahmoud Ahmadinejad insisted, the day after the UN Security Council gave the Islamic Republic an Aug. 31 deadline to stop uranium enrichment.

Iranians consider "fuel production" and the "peaceful use of nuclear energy as a legitimate right," Ahmadinejad said in a speech today to supporters televised live from the northeastern town of Bojnord, in North Khorasan province.

"Iranians today possess the nuclear know-how," Ahmadinejad said in his address. "If some believe they can use the language of force and threats they are badly mistaken, and if they don't realize it now they will when their head hits a stone. They are facing a knowledgeable and proud people."

The Security Council yesterday voted 14-1 to give Iran until Aug. 31 to accept a multinational incentives package aimed at suspending its nuclear program, or face the threat of economic sanctions. The resolution expressed "serious concern" about Iran's failure to halt the enrichment of uranium in the face of International Atomic Energy Agency demands. Qatar, the only Muslim nation on the council, voted against.

The Security Council resolution raised the nuclear dispute to a new level because it makes Iran's compliance mandatory. The U.S. and some European allies suspect Iran wants to develop nuclear weapons.

EU Incentives

The U.S.-backed package of incentives drafted by the European Union, which includes the lifting of some U.S. sanctions as well as access to light-water nuclear reactors, was formally presented to Iran on June 6 by the Security Council's five permanent members—the U.S., U.K., France, Russia and China—plus Germany.

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Iran would also receive airplane parts and World Trade Organization membership under the proposal.

Iran, holder of the world's second-largest reserves of oil and natural gas, says the enriched uranium is needed for a power plant, as allowed under the Non-Proliferation Treaty.

To contact the reporter on this story: Ladane Nasseri in Tehran at (98) (21) 2281 9322 or lnasseribloomberg.net.

To contact the editor responsible for this story: Peter Torday at (44) (20) 7330 7539 or ptordaybloomberg.net.

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