The US said on Thursday Iran had attended North Korean missile tests this month, increasing US concern about ties between two countries Washington accuses of having secret nuclear weapons programs.
No comment on the US charge was immediately available from Iran, which earlier accused Washington of trying to obstruct talks to end a standoff over Tehran's nuclear program.
The accusations were traded as the UN Security Council wrangled over a resolution to make legally binding demands Iran halt uranium enrichment, a process that can produce fuel for power stations or bomb material. Iran again rejected international calls for it to scrap nuclear fuel production.
US Assistant Secretary of State Chris Hill said one or more Iranian representatives witnessed July 4 missile tests in North Korea, which experts say is a key partner in Iran's missile program.
Washington says the two have collaborated and has expressed concern cash-strapped Pyongyang could sell missiles and possibly atomic material. Experts say Iran's Shahab 3 missile has a 2,000km range and is based on a North Korean design.
Asked at a US Senate hearing about reports Iranians witnessed the North Korean tests, Hill said: "Yes, that is my understanding."
It was "absolutely correct" the relationship was worrisome, said Hill, also chief US negotiator with Pyongyang.
Meanwhile, in related news Iran announced it would reply to the Western incentives on its nuclear program on Aug. 22 -- the first time it has given a precise date after weeks of being accused of stalling.
Thursday's statement by Supreme National Security Council suggested Iran was likely to reject the main point of the West's proposals -- the imposition of a long-term moratorium on uranium enrichment.
The statement said Iran "has made plans to produce part of its nuclear fuel needs inside the country and is making efforts to meet its required fuel" -- a process that entails enriching uranium for use in nuclear reactors.
The council also warned that Iran would retaliate if the world tried to punish it over its nuclear program.
"In case the path of confrontation is chosen instead of the path of dialogue ... and Iran's definite rights are threatened, then there will be no option for Iran but to reconsider its nuclear policies," the council said.
The statement did not spell out what reconsideration would mean, but Iranian officials have repeatedly threatened to withdraw from the Nuclear Nonproliferation Treaty and stop cooperating with UN nuclear inspectors.
The five permanent members of the UN Security Council plus Germany offered Iran a package of incentives on June 6 to persuade it to suspend enrichment -- a process that can produce material for atomic weapons as well as fuel for reactors. The incentives include advanced technology and the easing of US sanctions on the sale of aircraft and aircraft parts.
Last week the world powers decided to refer Iran to the UN Security Council, saying it had taken too long to reply and had given no sign of wanting to negotiate in earnest over its nuclear ambitions.
The Supreme National Security Council insisted that Iran wanted to avoid a showdown.
"Iran is not after tension, but if others push things toward tension and create problems, then all will face problems," it said in the statement. "Iran believes dialogue is the most logical solution. It is serious in this path."
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