Mofaz says Iran heading to nuclear breakthrough

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By Dan Williams and Susan Cornwell

WASHINGTON (Reuters) - Iran is heading toward a majorbreakthrough in its nuclear program, an Israeli official saidon Friday, as the White House warned Iran could face newsanctions if it ignores an international freeze offer.

"As soon as 2010 (Iran) will have the option to reach(uranium production) at military levels," Israeli Deputy PrimeMinister Shaul Mofaz told an audience in Washington, addingthat this would be an "unacceptable" development.

Oil prices rose $4 in early Friday trade after the warningby Mofaz stirred concerns of a possible attack on the OPECnation that would disrupt supplies.

There has been speculation that either the United States orIsrael could attack Iran's nuclear facilities, though both havesaid force should be a last recourse.

The West accuses Iran of seeking to develop nuclear weaponsunder cover of a civilian energy program; Iran denies it, andIran's Supreme Leader Ayatollah Ali Khamenei said this weekthat Iran would press ahead on its nuclear path.

Western powers gave Iran two weeks from July 19 to respondto their offer to hold off on imposing more U.N. sanctions onIran if Tehran would freeze any expansion of its nuclear work.

The White House said on Friday that "negative consequencesawait" if the Iranians don't respond positively. The informaldeadline is this Saturday.

"That would possibly come in the form of sanctions," WhiteHouse spokeswoman Dana Perino told reporters.

The United Nations has already imposed three rounds ofsanctions on Iran.

Mofaz, a former Israeli defence minister and contender toreplace outgoing Israeli Prime Minister Ehud Olmert, emphasizedthat any new sanctions should be imposed this year, instead ofallowing the Iranians to stall for time past U.S. presidentialelections in November.

"We must insist on Iran meeting the timetable set," he saidin a speech to the Washington Institute. "The red line shouldbe that there is no uranium enrichment on Iranian soil."

"It is a race against time and time is winning," theIranian-born Mofaz warned. But he also said he supporteddiplomacy and spoke of other options as "last resort."

Mofaz told reporters that he had handed over to the U.S.government a list of Israeli proposals for new sanctions. Thesewould "affect Iranian leaders and others individuals ofinfluence, as well as the general populace."

Asked whether there had been any discussion with theAmericans of possible U.S. green lights for Israeli militaryaction against Iran, Mofaz said: "I cannot answer the question,because it was not raised in our dialogue."

U.S. officials say they are not sure what to expect fromthe Iranians this weekend, and that they would want to consultwith the other major powers behind the offer about Iran'sresponse, or lack of it. Those countries are Russia, China,Germany, France, and Britain.

"The Iranians sent mixed messages this week and it's reallyhard to tell what the bottom line is. And so we'll just need towait and see if they do respond formally," Perino said.

Reuters asked Mofaz whether he worried about losing U.S.support when climbing gasoline prices were often blamed onMideast turmoil.

"The existence of the state of Israel is more importantthan the price of gas or oil," he replied.

(Additional reporting by David Alexander in Kennebunkport,Maine, Editing by Anthony Boadle)