TEHERAN (BLOOMBERG) – Iran’s new government continued to dramatically increase production of highly-enriched uranium while failing to resume full cooperation with international monitors, signaling a new round of escalation awaits officials when they convene this month to discuss the country’s atomic program.

International Atomic Energy Agency inspectors reported Tuesday (Sept 7) that the Islamic Republic increased its stockpile of uranium enriched close to the levels needed for weapons and was expanding its production capacity. It also continued to restrict monitoring of facilities and an investigation into allegedly undeclared activities. It’s the first IAEA report issued since hardline cleric Ebrahim Raisi assumed the presidency last month.

“Iran’s failure to respond to the agency’s requests for access to its monitoring equipment is seriously compromising the agency’s technical capability,” the IAEA wrote in a 16-page restricted document seen by Bloomberg. A second 7-page restricted report reiterated the IAEA’s deeply concerned that nuclear material has been present at undeclared locations.

“The agency’s confidence that it can maintain continuity of knowledge is declining over time and has now significantly further declined,” the IAEA warned. “This confidence will continue to decline unless the situation is immediately rectified by Iran.”

The reports are likely to renew pressure on international envoys to the IAEA to formally censure Iran when they meet Sept 13 in Vienna. A resolution condemning Iran’s nuclear activities and lack of cooperation could eventually end up at the United Nations Security Council. Iranian officials have warned that such a move could dim the prospects for broader talks designed to resurrect a 2015 deal, known as the JCPOA, with world powers.

The agreement reined in Iran’s nuclear activities in exchange for sanctions relief until the Trump administration withdrew and reimposed penalties, and Iran retaliated by breaking limits on its enrichment. Negotiations to restore the pact, also held in Vienna, halted earlier this year as Iran prepared to elect a new president, and are yet to resume.

In the meantime, Teheran has been racing ahead with its atomic activities while securing the economic support of China and Russia. Robert Malley, the US special envoy to the Iran talks, will be meeting counterparts in Moscow and Paris this week to try to “quickly reach and implement an understanding on a mutual return to compliance” with the Iran nuclear deal, known as the JCPOA, the State Department announced Tuesday.

Some analysts and diplomats expect Raisi to try to use Iran’s nuclear advances to wring wider sanctions relief from Washington. A deal could unleash a surge in Iranian oil exports and calm Gulf tensions.

Iran’s stockpile of highly-enriched uranium rose fourfold to 10 kilograms over the last three months while its inventory of material enriched to 20 per cent rose by about a third to 84.3 kilograms. The overall stockpile fell as Iranian engineers shifted low-enriched inventory into feeds intended to produce material at higher levels of purity, according to the agency. The country possesses more than enough supply of the material for several weapons if it made the decision to go for a bomb.

Iran has always maintained its atomic program is for peaceful purposes. The IAEA’s two-year probe into the source of uranium particles detected at undeclared sites in Iran also failed to make headway.

“Iran has still not provided the necessary explanations for the presence of the nuclear material particles,” the agency reported. Director General Rafael Mariano Grossi is “increasingly concerned.”

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