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For the United States and its allies, the fact that Bushehr will use fuel imported from Russia shows that Iran does not need to enrich its own uranium, the part of Tehran's nuclear work they are most concerned about, if its intentions are peaceful.
Russia started loading fuel into Iran's first nuclear power station at Bushehr on Saturday, signalling its launch after years of delays even as Tehran faces increased international pressure over its atomic activity.
Iran will probably hail the event as further evidence that its nuclear programme is designed to generate electricity and that the West is wrong to accuse it of seeking to develop weapons from nuclear technology.
For the United States and its allies, the fact that Bushehr will use fuel imported from Russia shows that Iran does not need to enrich its own uranium, the part of Tehran's nuclear work they are most concerned about, if its intentions are peaceful.
The following looks at how the Russian-built plant near the Gulf coast city of Bushehr fits into Iran's nuclear programme and whether its launch will further raise the stakes in its dispute with major powers.
Does Bushehr pose any proliferation concerns?
Washington earlier criticised Moscow for pushing ahead with the $1 billion Bushehr project and US secretary of state Hillary Clinton in March said its planned start-up was "premature".
But the criticism was not repeated after Russia last week announced it would load the fuel and the US state department said it did not regard the plant as a proliferation risk, while noting "the world's fundamental concerns with Iran's overall nuclear intentions".
The move to launch Bushehr may still rankle some in the United States and Israel — Iran's arch-foes — which are deeply suspicious of Iran's nuclear policy, whose uranium enrichment element was hidden from UN inspectors until 2003.
"What this does is give Iran a second route to nuclear weapons in addition to enriched uranium. It's a very huge, huge victory for Iran," John Bolton, the former US ambassador to the United Nations, was quoted as saying.
But other diplomats and experts played down any fears that the Bushehr plant in itself may help Iran build nuclear weapons. Iran says its nuclear programme is solely meant to yield electricity or isotopes for medicine and agriculture.
"If the Iranian nuclear programme only consisted of projects like the Bushehr reactor there wouldn't be a proliferation problem," said Ian Anthony, director of the arms control and non-proliferation programme at the Stockholm International Peace Research Institute (SIPRI).
"The issue is that they have other nuclear facilities which present a very real proliferation concern, including the uranium enrichment activities," he said.
Low-enriched uranium can be used as fuel for power plants or, if refined to a high degree of purity, can provide the fissile core of nuclear weapons.
Iran's refusal to halt such work despite four rounds of UN sanctions since 2006 as well as separate punitive steps by the US and Europe, has fuelled Western fears about its intentions.
What will happen to Bushehr's spent fuel?
Offering a different route to building a bomb, weapons-grade plutonium can be derived from spent fuel rods. But under its fuel contract with Moscow, Iran must return the fuel rods to Russia after they have been used and cooled down.
This has helped calm Western fears that the Bushehr project could help Iran to master the means to build an atom bomb. Russia shipped the nuclear fuel for Bushehr to Iran in 2007-08.
Moreover, the fuel will be under the scrutiny of inspectors from the International Atomic Energy Agency, the Vienna-based UN nuclear watchdog, who should notice any diversion.
"Whatever comes in and whatever comes out will have to be verified by the IAEA," said a diplomat in Vienna with knowledge of the Iranian nuclear file. "IAEA inspectors will have to verify that the fuel is there."
Mark Fitzpatrick, proliferation expert at the International Institute for Strategic Studies think tank, described Bushehr as a 'sideshow' in the nuclear standoff. "It shouldn't distract world attention from the real issue of enrichment," he said.
A European diplomat said that for Iran, Bushehr offered "proof that they are serious about the peaceful uses of nuclear energy", although for Western powers it showed that Tehran does not need enrichment technology because it could import the refined uranium it needs for a civilian nuclear energy industry.
How important is Bushehr for Iran?
Iran has said it wants Bushehr, which will have an operating capacity of 1,000 megawatts, to be the first in a network of nuclear power plants by 2020 that would slake rising energy demand at home and allow it to export more of its oil and gas.
Western experts say this aim looks unrealistic for now, since Iran lacks experience in building nuclear reactors itself and could face problems in buying them abroad due to prevailing United Nations sanctions.
"I seriously doubt they can build that amount of reactors in such a short time," said an expert at the Paris-based Nuclear Energy Agency who declined to be named.
SIPRI's Anthony said that while peaceful nuclear cooperation with Iran was not prohibited, the nuclear standoff was likely to make it difficult for Tehran to find willing suppliers of more reactors such as the one in Bushehr.
Despite such issues, Fitzpatrick said Iran would "breathe a sigh of relief" when the fuel is loaded into the reactor.
"It is a big day for Iran's sense of status because it will be on the way to joining the ranks of 30 or so countries that produce nuclear power," he said.
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