Iran announces it has produced its first nuclear fuel rod

Nuclear fuel rods contain pellets of enriched uranium that provide fuel for nuclear power plants • Iran calls on West to return to table for talks on nuclear program • Obama signs law sanctioning Iran's central bank.

Yoni Hirsch, Lior Yacoby and News Agencies

Iran says its scientists have produced the nation's first nuclear fuel rod, a feat of engineering the West doubted Tehran was capable of.

Sunday's announcement comes after Iran has said it was compelled to manufacture fuel rods on its own since international sanctions banned Tehran from buying them on foreign markets.

Nuclear fuel rods contain pellets of enriched uranium that provide fuel for nuclear power plants. Iran's atomic energy agency's website says the first domestically made rod has already been inserted into the core of Tehran's research nuclear reactor.

It is unclear if the rod contained pellets or was inserted empty, as part of a test.

Meanwhile, in an earlier announcement made in the midst of a large-scale war game on Saturday, which included the launch of several land-to-sea missiles, Tehran said it was willing to renew talks with the West over its nuclear program.

According to the semi-official Mehr news agency, Iran's ambassador to Germany, Ali Reza Sheikh Attar, said on Saturday that Iran's chief nuclear negotiator and former Deputy Foreign Minister Saeed Jalili intends to formally turn to EU foreign policy chief Catherine Ashton to announce Iran's agreement to return to the negotiations table. According to Attar, "Jalili will soon send a letter to Catherine Ashton over the format of negotiations; then fresh talks will take place with major powers."

Ashton's spokesman, Michael Mann, said the EU was willing to renew talks with the Iranians. "We continue to pursue our twin-track approach and are open for meaningful discussions on confidence-building measures, without preconditions from the Iranian side," Mann said.

A U.S. administration official added, "We have indicated for years that we are willing to engage in talks with Iran, provided it is ready to engage in a meaningful and constructive fashion."

Negotiations between Iran and the five permanent members of the U.N. Security Council - the U.S., Russia, China, Britain and France - as well as Germany, stalled in January, and both the U.S. and Israel have not ruled out a military option if diplomacy fails to resolve the nuclear dispute.

As it probes Western willingness to resume talks, Iran continued its 10-day naval war game, reportedly launching long-range missiles. The Iranian FARS news agency said that land-to-sea missiles with a range of 2,000 km (1,240 miles) were launched on the eighth day of the exercise. But Deputy Navy Commander Mahmoud Mousavi later went on the English language Press TV channel to deny they had in fact been fired, saying instead, "The exercise of launching missiles will be carried out in the coming days."

Meanwhile, the U.S. announced on Friday the sale of $3.5 billion worth of weapons to Iran's enemy, the United Arab Emirates. Among the weapons purchased by the UAE is the THAAD anti-rocket system, marking the first time the U.S. has sold the system to another country. The THAAD is currently the only operational system that can intercept short and medium-range rockets.

Keeping up the pressure on Iran, U.S. President Barack Obama also signed into law sanctions on Iran's central bank on Saturday, a move that Iran has said would be equivalent to a declaration of war.

The defense funding bill, approved by Congress last week, aims to reduce the oil revenues that make up the bulk of Iran's export earnings. If strictly enforced, the sanctions could make it nearly impossible for most refiners to buy crude from Iran, the world's fourth biggest producer.

However, Obama asked for some flexibility with which to apply the measures, and he will have the discretion to waive penalties. Senior U.S. officials said Washington was consulting with foreign partners to ensure the new measures did not harm global energy markets.

The rising tensions are having an impact at home. Iran's currency has taken a nosedive in recent weeks as ordinary Iranians have moved money from savings accounts into gold or foreign currency. The price of staple foods has increased by up to 40 percent in recent months and many critics have put the blame on increasing isolation brought about by President Mahmoud Ahmadinejad's economic and foreign policies.

Iran's massive media coverage of the naval maneuvers appeared to be an attempt by the authorities to strike a patriotic chord among ordinary Iranians worried about a military strike. "I have already witnessed a war with Iraq in the 1980s. I can hear the drumbeat of war," said merchant Mohsen Sanaie, 62, glancing over newspaper headlines at a central Tehran newsstand. "One stray bullet could spark a war."

In response to the growing threat of war with Iran, IDF Chief of General Staff Lt.-Gen. Benny Gantz on Friday told high school students in Be'er Tuvia [a moshav in the Southern District of Israel near the city of Kiryat Malachi] that Israel would be able to deal with Iran in a future confrontation. "Iran is working on a military-related nuclear program, which is cause for concern. Israel is the only country in the world being threatened with annihilation by a country working to make that happen, but the threat is against the entire region, and other parts of the world as well," Gantz said.