MOSCOW: Russia said that it would slow work on Iran's nearly completed Bushehr nuclear power plant.
Russia contended that Iran had not yet made the last two payments, in a dispute about whether it could pay in euros instead of dollars.
The move added a new twist to the deeply contentious project to build a Russian-designed, water-cooled reactor in Iran, a decade-old deal that is a factor in the United States' concerns over Iran's nuclear ambitions.
The dispute that became public on Monday will delay, perhaps by a year, any delivery of nuclear fuel to Iran, Russian officials and experts said. Low-enriched uranium fuel was scheduled to be shipped next month.
"The accounts are not being paid," said Ivan A. Dybov, spokesman for Rosatom, the Russian nuclear agency. What is at issue, he said, was a request last month from an Iranian bank to settle accounts in euros rather than dollars. The Iranian government has a stated policy of settling contracts and holding reserves in currencies other than the dollar.
As part of its effort to halt Iran's nuclear program, the United States has encouraged European banks to freeze Iranian dollar-denominated accounts.
An Iranian official denied that the country had been late in making payments. "We have made all the payments so far based on the contract and the agreed installments," said Muhammad Saeedi, the deputy director of Iran's Atomic Energy Organization, Iran's official IRNA news agency reported.
"We will try to come up with a solution for the financial problem of the Russian contractor, which is their problem, not the problem of the Iranian side, in the next few days," he added.
A former Iranian president, Ali Akbar Hashemi Rafsanjani, said, "World powers are trying to dominate international organizations and deny Iran's right but we expect our friends to stop such moves," IRNA reported.
A U.N. ultimatum to Iran to halt uranium enrichment expires Wednesday. But the commercial arm-twisting was also in keeping with the Kremlin's policy lately of pumping up the bottom line across a spectrum of state businesses, from oil and gas to nuclear power.
Analysts say rising prices for steel and heavy machinery have probably made the Bushehr project unprofitable from a purely commercial standpoint.
Russia refused payment in euros without opening the contract to renegotiation, Dybov said. The Iranians settled less than 25 % of the dollar-denominated bill in January and missed February's payment entirely, he said. "We aren't turning down the euros" on principle, Dybov said, but added that any change must be incorporated in a contract amendment. Both the payment conditions and the exact amount of the shortfall are commercial secrets, he said.
Russian officials also cited as a cause of the delay a holdup in the delivery of safety equipment for the reactor from an unspecified third country. The plant was scheduled to begin operations in September and connect to the Iranian grid in November.
Now, operations probably will not begin before mid-2008, said Andrei Cherkasenko, a member of the board of the Russian state nuclear power company Atompromresursy, Interfax reported.
Monday's conflict was not the first dispute between the countries over the plant.
"From time to time, the Russians get fed up with the Iranians" and work slows, Rose Gottemoeller, the director of the Carnegie Moscow Center, said in a telephone interview. "The Russians have been very canny in using the Bushehr project to back up their diplomacy" by modulating the construction schedule, she said.