The United States accused Iran this week of violating the Nuclear Nonproliferation Treaty but is willing to give the country another chance to prove it doesn't operate a clandestine nuclear weapons program, according to the Associated Press.
The Board of Governors of the International Atomic Energy Agency met in Vienna on Monday to consider a U.S.-backed draft resolution composed by Britain, Germany and France, reports the British Broadcasting Company.
The draft calls for Iran to fully cooperate with the IAEA, "to ensure full compliance with the Safeguards Agreement (of the NPT) by taking all necessary actions by the end of October 2003," reports the BBC.
Inspector for the IAEA say weapons-grade uranium was found at an Iranian nuclear plant. Iran claims it produces low-grade uranium necessary to meet its energy needs.
The draft also asks Iran to give unrestricted access to IAEA inspectors to do "environmental sampling" and run tests for illegal uranium, says a BBC report.
Iranian Ambassador to the IAEA Ali Akbar Salehi told the Tehran Times that Iran remains open to IAEA inspections but will resist any propaganda campaign against Iranian nuclear programs.
"We are sitting on a very thin edge. It could tilt on way or the other very easily," Salehi said in the Tehran Times on Monday.
How to handle the situation in Iran has been debated since President Bush declared it part of his "axis of evil" 18 months ago.
Washington claims Iran supports terrorism by harboring members of al-Qaeda and supporting militant Palestinian groups, such as Hamas and Islamic Jihad. Washington also accuses them of developing weapons of mass destruction.
There is a split in the Bush administration on how to deal with Iran, reports the BBC. The "realists" favor using diplomatic pressure and in the other camp; the "neo-conservatives" call for a more aggressive approach - regime change.
The discussions on how to deal with Iran revolve around the durability of the regime, Roger Hardy said, BBC Middle East analyst.
Following the overthrow of the monarchy and the Islamic revolution of 1979 conservative religious clerics rule Iran.
Iran has a unique political system because it combines elements of Islamic theocracy with democracy. They have a supreme leader, Ayatollah Ali Khamenei, who although is appointed by an elected body of clerics (the Assembly of Experts), does not have to answer to anyone. However, the Iranian constitution also calls for an elected president and parliament. The liberals won in 1997 and again in 2001, with Mohammad Khatami capturing 77 percent of the vote, according to the BBC. He supports greater social and political freedoms, making him popular with Iran's young people. Fifty percent of the population is under 25. Tension often exists between the supreme leader and the president, indicative of deeper rifts between religious principles and the wants of most Iranians.
Violent street demonstrations and student protests in Tehran over the summer were seen by some "neo-conservatives" as signs of a faltering regime.
John Calabrese of the Middle East Institute in Washington told the BBC, "I think the street demonstrations and protests provide additional evidence that there is a deep resentment, a deep alienation - a gulf really - between the regime and the population."
The "realists" saw the attempts by the regime to control the protests as signs of its power and resilience, according to Calabrese.
"It is clear that the regime is resourceful and prepared to use repression in order to make sure that the protests were kept more or less under control," he said.

-Compiled by Sarah Stiles