ANALYSIS - Row over nuclear fuel bank awaits new IAEA chief

By Sylvia Westall

VIENNA (Reuters) - Whoever becomes head of the U.N. nuclear watchdog later this year will have to tackle a deep political divide over a nuclear fuel supply plan aimed at keeping the world safe from the spread of atomic weapons.

The International Atomic Energy Agency (IAEA) holds a vote on Thursday to try to pick a successor to director-general Mohamed ElBaradei, who will retire in November without realising his vision of a safe nuclear fuel supply for all.

The issue will test his successor's diplomatic mettle but who that will be is also up in the air, with industrialised and developed nations at odds over the best candidate.

On the backburner for decades, the fuel bank has been given a strong boost U.S. President Barack Obama, and got further impetus from Iran's expanding enrichment programme which the West suspects is aimed at yielding atom bombs.

The IAEA forecasts that demand for nuclear energy, most visible so far in countries across the conflict-ridden Middle East, will almost double over the next generation as nations seek an alternative to high-polluting and finite fossil fuels.

But the uranium used in nuclear power plants can also be enriched to high levels to form the fissile core of atom bombs -- something the West fears Iran could be pursuing but Tehran denies, saying its programme is intended only for electricity.

"This is an issue which will increasingly demand the attention of the (IAEA) director-general -- to manage the expansion of nuclear power in ways that provide for confidence," said Mark Fitzpatrick, senior non-proliferation fellow at London's International Institute for Strategic Studies.

ElBaradei, backed by uranium producer Russia, has been trying to propel the plan forward but was blocked at a June IAEA board meeting by developing states, who fear it could limit their right to establishing their own atomic energy programmes. Some 60 countries want to develop projects according to the IAEA.