Tehran Rejects Key Demand

Ahmadinejad also confounded expectations he would unveil a major development on Iran's nuclear progress in his speech marking the 28th anniversary of the Islamic revolution, saying more news would follow by April 9.

"If you are willing to negotiate, why do you insist on a suspension (of nuclear enrichment)?" Ahmadinejad said, referring to the sensitive nuclear process the West wants Iran to halt as proof it is not seeking nuclear weapons. "If we suspend our activities then what are we going to talk about? Why, if your nuclear plants are working 24 hours a day, why must Iran be pressured to shut them down?"

"We are ready to negotiate but under fair and even conditions," he told the faithful massed at Azadi (freedom) square in Tehran.

Hundreds of thousands of Iranians massed around the country in their annual show of support for the revolution, with slogans like "Death to America" mixing with the now familiar "Nuclear Energy is Our Natural Right."

Ahmadinejad's defiance comes despite the UN Security Council's decision to impose sanctions against Iran in December and its deadline for Iran to halt uranium enrichment by Feb. 21 or face further action.

French Foreign Minister Philippe Douste-Blazy said any idea of holding talks while Iran carried out uranium enrichment was "totally unacceptable."

Steinmeier: world stands at crossroads

German Foreign Minister Frank-Walter Steinmeier, attending the annual security conference in Munich, said that resolving the nuclear conflict with Iran was of central importance to international security in the 21st century. He said that the world stood at a crossroads.

"Either we succeed in preventing Iran and other states away from toying with the nuclear option over the next few years, or we'll experience a new nuclear arms race with unforeseeable consequences for global security," Steinmeier said.

Also at the conference, Iran's chief nuclear negotiator Ali Larijani said that Iran wanted to achieve a "negotiated settlement of the case."

"We don't want to aggravate the situation in the region," Larijani said.

Larijani said he had sent a letter to Mohamed ElBaradei, the chief of the Vienna-based International Atomic Energy Agency (IAEA), offering to work out outstanding issues "within three weeks."

"I have written to Mr ElBaradei to say we are ready within three weeks to have the modality to solve all the outstanding issues with you."

Expectations were high that Ahmadinejad would announce in his speech a breakthrough towards an industrial-scale enrichment of uranium, a process that can be used both in nuclear power stations and atomic bombs.

Speculation had been that Iran would announce the installation of some of the 3,000 uranium-enriching centrifuges it wants to put in place at an underground nuclear facility in the city of Natanz in the next months.

No plan to quit Non-Proliferation Treaty

Instead, Ahmadinejad promised that announcements would follow by April 9 -- the day designated by Iran as a holiday celebrating its achievements in nuclear technology.

"From now until April 9 you will hear frequently about the great progress of the Iranian people and unique developments in the domains of industry, agriculture, and especially nuclear energy," Ahmadinejad said.

Striking a conciliatory tone with the UN nuclear watchdog, Ahmadinejad said that his government had no intention of quitting the nuclear Non-Proliferation Treaty (NPT), despite previous threats.

"We are willing to follow the regulations," he said, referring to the nuclear Non-Proliferation Treaty of which Iran is a signatory.

"Despite the authority of the parliament for the government to reduce its cooperation with the agency or even quit the NPT, the government, with the coordination of parliament, has not used this. It is willing to defend the people's rights within the framework of the law."

There was a festive spirit at the mass rally in Tehran, with children clutching balloons emblazoned with pro-nuclear slogans and the revolution motto: "Freedom, Independence and Islamic republic."

The United States accuses Iran of seeking a nuclear weapon, a charge denied by Tehran which insists its atomic program is peaceful in nature.

Although the United States has said it wants the nuclear standoff resolved through diplomacy, Washington has never ruled out military action to thwart Iran's atomic drive.