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GENEVA (Reuters) - The still uncompleted Arak heavy-water reactor, seen by the West as a potential source of nuclear bomb fuel, has emerged as a big stumbling block in Iran's talks with six world powers on a deal to rein in its nuclear programme.
Iran denies Western accusations that it is seeking the capability to make atomic bombs and says the research reactor near the town of Arak, some 250 km (155 miles) southwest of the capital Tehran, will produce only radio-isotopes for medicine.
But experts say this reactor type is suitable for making plutonium, thus providing an alternative pathway to manufacturing fissile material for the core of a nuclear weapon, in addition to Iran's enrichment of uranium.
The plant - also known as the "IR-40" reactor as it is designed to produce that many megawatts of thermal power - has been under construction for years but apparently delayed by problems in importing specialised equipment due to trade sanctions imposed on Iran over its disputed nuclear activity.
Arak came under a renewed spotlight in May when the U.N. nuclear watchdog said Iran had informed it that the plant would start up in the first quarter of 2014. Iran later withdrew that timetable, without specifying a new target date.
Israel, the Islamic Republic's arch-foe, has previously bombed Middle East nuclear sites that it identified as threats. Analysts say any attack on Arak would probably come before it is operational to avoid any dangerous release of radiation.
Following is an overview of Arak and how it evolved into a major obstacle to a deal between Iran and the United States, France, Germany, Britain, China and Russia in negotiations that resumed in Geneva on November 20.
Iran appears to have largely built the plant's external structure in a valley among barren desert highlands, gradually installing key components over the years.
In May, U.N. nuclear inspectors observed that the reactor vessel had been delivered to the site. It was later connected to the cooling and moderator piping.
But the latest quarterly report on Iran by the International Atomic Energy Agency (IAEA) said other major parts - such as control room equipment, the refuelling machine and reactor cooling pumps - had yet to be put in place.
A diplomat familiar with the issue said last week Iran appeared to have "more or less" frozen Arak's construction.
IAEA Director General Yukiya Amano told Reuters this month that Iran still had "quite a lot to do" to complete the plant, which the U.S. Institute for Science and International Security (ISIS) said has been under construction since mid-2004 with development work dating back at least another decade.
Iran has now indicated that "they are behind schedule, and will not have a load of fuel for the reactor before August 2014," Jeffrey Lewis, a director of the James Martin Center for Non-Proliferation Studies, wrote in a Foreign Policy article.
Another nuclear analyst, Mark Hibbs of the Carnegie Endowment think-tank, said that "eventually ... perhaps a year from now" Iran might finish and then operate the reactor.
The fear is that, while Iran says its nuclear programme is entirely peaceful, it might still separate the plutonium from the reactor's irradiated fuel and use it to assemble bombs.
While Western attention has Long focused on Iran's established uranium enrichment work, stockpiling potential explosive material, Arak's progress has rung alarm bells. But Iran would also need to build a reprocessing plant to extract the plutonium, something it has no declared plans to do.
ISIS estimated that the reactor could yield 9-10 kilograms (20-22 pounds) of plutonium per year - sufficient for about two bombs. "Suspicions remain that after the reactor operates, Iran will overtly or covertly build a plant to separate plutonium produced in this reactor," ISIS said in a July report.
Lewis said: "Many of the states that have built reactors of this type and size have done so precisely for the purpose of making nuclear weapons," including Israel, India and Pakistan.
As is the case with Iran's enrichment activities, the U.N. Security Council has demanded in resolutions since 2006 that the Islamic Republic halt its heavy water-related activities.
Iran has so far ignored such requests. But the election of relative moderate Hassan Rouhani as president in June raised hopes that it may be more willing to compromise on both issues.
At the previous round of talks in Geneva, held between November 7 and 10, France demanded that construction of the reactor be stopped. Washington says concerns about Arak must be addressed.
Western diplomats say there is consensus among the six powers about what is expected from Iran on Arak, but they declined to say precisely what their demands were.
"Although some commentators suggested that the French proposals were essential to stopping progress on the Arak reactor, in fact measures had already been agreed that would significantly halt such progress," said Robert Einhorn, the U.S. State Department's non-proliferation adviser until earlier this year.
Israel, believed to be the only nuclear-armed state in the Middle East, has already shown readiness to attack nuclear sites to deny its enemies the means to mount a mortal threat.
In 1981, Israel bombed Iraq's Osirak reactor. Still under construction, Israel believed nuclear fuel was about to be loaded and decided to hit it then, avoiding a risk of sending fallout over nearby Baghdad. In 2007, Israeli warplanes reduced to rubble a site in Syria in 2007 that the United States said was a nuclear reactor being built with North Korean expertise. Syria said the complex was a conventional military base only.
Israel now regards Iran's nuclear programme as the most serious risk to it and has warned of last-ditch military action if diplomacy and sanctions fail to check Tehran's nuclear work.
The timetable for Arak's start-up is closely watched: experts say any attacker would probably prefer to act before it becomes operational to avoid unleashing radioactive fallout.
"The weeks before Iran loads fuel at Arak will be a moment of maximum danger - the United States and Israel will think long and hard about their last opportunity to destroy the reactor before it is filled with radioactive fuel," Lewis said.
Editing by Mark Heinrich