Iran has begun installing centrifuges at the Natanz site where it plans 3,000 machines to enrich uranium in defiance of UN demands to halt nuclear activity, diplomats said on Thursday.
At the same time, Iran is blocking UN inspectors from installing surveillance cameras in the huge underground hall where the production lines, or cascades, of centrifuges are being set up, the diplomats said.
Both moves mark an escalation in the international showdown with Iran over a nuclear program which the US and others suspect is hiding secret development of an atom bomb, and on which the UN Security Council has levied sanctions to force Tehran to halt enrichment.
A diplomat in Vienna, where the UN watchdog International Atomic Energy Agency (IAEA) is based, told reporters that "construction has started [at the underground Natanz facility] but the cascades have not yet been assembled."
Another diplomat said bringing in centrifuge parts had started last week. But Iran has not yet assem-bled a complete cascade, the basic unit for beginning actual enrichment, said the diplomats, who asked not to be named because of the confidentiality of the information.
Uranium enrichment uses centrifuges to make fuel for civilian nuclear reactors but can also produce the explosive material for atom bombs.
IAEA spokeswoman Melissa Fleming refused to comment.
In Washington, the US administration said the report -- if confirmed -- offered more proof of Tehran's defiant stance toward the international community.
"If true, this would demonstrate that the Iranian government continues to disregard the will of the international community and the United Nations," US National Security Council spokesman Gordon Johndroe said.
Iran is building cascades in units of 164 centrifuges each. It already has two such cascades running aboveground at a pilot enrichment plant at Natanz which would only produce small amounts of enriched uranium.
But the underground plant, protected in a bunker from possible air attack, could produce enough highly enriched uranium for one bomb in nine to 11 months, the London think tank the International Institute for Strategic Studies (IISS) has said.
Diplomats said Iran was stopping UN inspectors, who are currently at Natanz, from installing surveillance cameras at the underground site.
Iranian authorities are "not allowing the IAEA to install the cameras inside the [underground] cascade halls [for centrifuges] in Natanz and are causing further delays in the inspectors' activity," a diplomat who closely monitors IAEA's work told reporters.
The IAEA monitors the above-ground pilot site with cameras and visits by inspectors and is entitled under the nuclear Non-Proliferation Treaty to the same sort of presence at the underground facility, as the agency is mandated to monitor the use of nuclear material.
But Iranian authorities "have not yet introduced nuclear material [feedstock uranium gas] into the centrifuges at the underground site, so there is still time," a second diplomat said.
Another diplomat said: "The game is not over."
The first diplomat said: "The Iranians are now willing to accept the installation of cameras only outside the cascade halls, which will not enable the IAEA to monitor the entire uranium enrichment process."
But another diplomat said that "verification goals can be achieved from inside or outside cascade halls."