"We will continue negotiating with them, but on the other hand we will not restrict our negotiations to being with just these three countries," foreign ministry spokesman Hamid Reza Asefi said of the so-called EU-3.

Britain, France and Germany have been engaged in close to two years of tough talks with the Islamic republic but Asefi said that Iran has now also been talking with countries such as Japan, Malaysia and South Africa.

"We want to have negotiations with other countries, it is up to the Europeans not to remove themselves from the negotiations," he said, accusing the EU-3 of refusing to recognize Iran's right to the nuclear fuel cycle.

Countries from the Non-Aligned Movement -- notably South Africa and Malaysia -- have been more sympathetic to Iran's effort to possess nuclear fuel facilities.

"The Europeans did not live up to commitments. If the European cannot live up to their commitments, we will negotiate with other countries as is our right," Asefi added.

According to Asefi, Iran's "main negotiating partner is the
International Atomic Energy Agency" -- the Vienna-based UN nuclear watchdog -- and said IAEA chief Mohamed ElBaradei had been informed of this.

Iran unhappy with EU demands

Iran is unhappy with the EU-3 after they demanded a total halt to fuel cycle work in exchange for a package of trade, security and technology incentives. Iran maintains such work for peaceful purposes is a right of any signatory of the nuclear Non-Proliferation Treaty (NPT).

Iran has rejected the deal, and in protest resumed uranium conversion activities, the first step in making enriched uranium which is fuel for power reactors but can also be the raw material for atom bombs. The resumption of this work, which Iran had suspended last November to start talks with the EU, has scuttled the negotiations and could lead to Iran being brought before the United Nations Security Council for possible sanctions.

The IAEA is due to issue a new report on Iran on September 3, and Iran has been emboldened by agency conclusions that highly enriched uranium (HEU) particles found in Iran were from imported equipment and not from Iran's own activities. But the report will also however cover suspicious on Iranian work with plutonium, another atom bomb material.

"We expect the report on September 3 to clarify the remaining, minute issues because our cooperation has clarified a lot of ambiguities," Asefi insisted. "I don't think Iran's case can be referred to the UN Security Council. If they want to make our case a security issue, it will cost the Europeans more than it will cost Iran," he warned.

More details to come

Asefi also revealed further details on promised proposals from Iran's new hardline President Mahmoud Ahmadinejad, which he suggested would be released within the next six weeks.

"They will enshrine Iran's right to have the fuel cycle. It will also have objective guarantees" that Iran will not seek nuclear weapons, Asefi said. "It will say the main negotiating partner will be the IAEA. It will make sure the other parties will not resort to pretexts. This proposal is a way out of the current situation. I think around two years of negotiations (with the Europeans) is enough."

The EU-3 have already reacted to Iran's challenge, with France insisting Friday that the EU-3 have been working in conjunction with their 22 other EU partners as well as the IAEA's full 35-nation board of governors.

The US State Department on Thursday said Iran was trying to "change the subject from what the real issue is, and that is their continued pursuit of nuclear weapons."