VIENNA (Reuters) – The U.N. nuclear watchdog’s chief said on Monday he was hopeful a deal over Iran’s atomic program could be reached soon, citing a flurry of diplomacy involving Russia and European Union powers.

Mohamed ElBaradei was speaking just before an International Atomic Energy Agency (IAEA) board meeting on Iran that may be a prelude to U.N. Security Council action.

“I am still very much hopeful that in the next week or so an agreement could be reached,” he said, while acknowledging that Russia’s compromise proposal to enrich uranium for Iran had snagged on Tehran’s determination to purify nuclear fuel itself.

Javad Vaeedi, deputy secretary of Iran’s national security council, highlighted that obstacle when he told Reuters that enrichment “research and development” in Iran was irreversible.

Western leaders suspect the Islamic Republic is seeking atomic weapons under cover of a civilian program for nuclear-generated electricity. Iran denies this.

“Confrontation (between the West and Iran) could be counterproductive and would not provide us with a durable solution,” ElBaradei, calling for verbal restraint on all sides.

The IAEA’s 35-member board reported Iran to the Security council a month ago. It urged Iran to heed resolutions to halt uranium enrichment work, which potentially can yield bomb-grade nuclear fuel, and stop stonewalling IAEA inquiries.

The IAEA board session this week will take stock of a new ElBaradei report detailing Iran’s accelerating nuclear fuel research and development and evasions of IAEA inquiries.

ElBaradei said the likelihood of U.N. action hinged on the fate of diplomatic efforts, now focused on the Russian proposal to supply Iran with nuclear fuel if it stops trying to master enrichment technology itself.

“Whether the Security Council takes up the issue depends very much on progress to get the parties back to the negotiating table,” the IAEA chief said.

He said Iran’s insistence on pursuing enrichment research and development with centrifuge machines remained “a divisive issue, with both parties (EU and Iran) taking a hard line.

“There is universal recognition that the Iran issue has serious implications for international security. Middle East security is also very much at stake,” he said.

ElBaradei’s report will be forwarded to the Security Council as mandated by a February 4 board decision.

John Bolton, U.S. ambassador to the United Nations, said Iran faced “tangible and painful consequences” if it pushed ahead with uranium enrichment. U.S. leaders are keenest for the Security Council to consider sanctions against Iran.

But French President Jacques Chirac said efforts to induce Iran to stop nuclear research would continue even though Tehran had “disappointed” the international community.

“We don’t give up, we actively continue our efforts internationally to convince the Iranians,” he said in Riyadh.

Iranian President Mahmoud Ahmadinejad said pressure on Tehran would have unspecified consequences.

“If they exert political pressure on us, we will revise our decisions and change our behavior,” Ahmadinejad told the official news agency IRNA. “There is no need for them to create problems for themselves and for us. They should accept the Iranian nation’s rights, then cooperation can be done.”

He did not say what Iran might do but Iranian officials have hinted it might leave the nuclear Non-Proliferation Treaty.

Tehran seems to be counting on opposition to any sanctions from Russia and China, both with vetoes on the Security Council.

Iran’s top nuclear negotiator, Ali Larijani, vowed Tehran would pursue industrial-scale nuclear fuel production if the Security Council tackles its case.

Iran is already testing a cascade of 20 centrifuges — machines that convert uranium UF6 gas into fuel for atomic power reactors or, if purified to high levels, weapons.

ElBaradei said Iran aims to begin installing 3,000 centrifuges this year in what it calls research and development that has nothing to do with industrial-scale fuel production. A skeptical West says such work could have no other purpose.

Nuclear scientists estimate Iran remains some years away from mastering technology to enrich enough uranium for bombs.

The Security Council’s first step would probably be to urge Iran to heed IAEA resolutions. It might also consider endowing the IAEA with more intrusive, short-notice inspection powers.

Trade sanctions seem a more distant prospect given broad international reluctance to isolate the world’s No. 4 oil exporter.