Last week, Iran said it had successfully enriched uranium for the first time, an announcement that put it on a collision course with the West, which says Tehran is secretly making nuclear weapons in breach of its international obligations. Iran denies that charge.

At the time, Iran said enrichment was to 3.5 percent, enough for a nuclear energy cycle but insufficient for weapons.

Uranium enrichment, a process Iran is permitted under its obligations to the nuclear nonproliferation treaty, is a key step to both making weapons and generating power. Iran says it needs the power to feed its increasing energy demands. According to Iranian figures, the country's energy consumption is expected to grow between 7 percent and 10 percent annually for the next 10 years. As of now, Iran's domestic oil consumption stands at around 1.7 million barrels per day.

Separately, natural gas accounts for some 54 percent of energy consumption, according to Iranian data. And natural gas consumption has been growing by 10 percent annually for the past decade.

Iran has the world's second-biggest proven oil reserves after Saudi Arabia and the No. 2 gas reserves after Russia. According to government estimates, crude production is at around 3.5 million to 4 million bpd. But decades of sanctions on Iran have made its oil industry inefficient. There is little foreign investment for fear of secondary U.S. sanctions, and the country relies on allies for some of its refining needs. In 2005, it was a net electricity importer.

And though Iran has vast oil and gas resources, it says it needs nuclear power because under current high energy prices, it is more economical for it to sell its energy assets overseas. Revenue from oil exports is expected to reach $45 billion by next March with current oil prices, Iranian media reports say. The revenue funds about half of Iran's budget.

Still, setting up a nuclear program to meet its energy needs will not be cheap.

Iran, however, has rejected a Russian offer to enrich fuel. Under the proposal, Iran would convert uranium into uranium hexafluoride to produce enriched uranium; Russia would enrich the uranium produced. But Iran insists it must enrich its own fuel because it can't trust foreign sources of enriched uranium.

"It would be a pretty expensive way to go," said Patrick Clawson, the deputy director for research at the Washington Institute for Near East Policy. "But all of that is totally irrelevant because the debate is about fuel. There is no economic argument for Iran carrying out its own enrichment."

"It doesn't make sense," he asserted.

Indeed, that seems to be the logic of the Bush administration and its European allies that are pushing for strong action at the U.N. Security Council as retaliation for Iran's announcement last week. Security Council members Russia and China seem opposed to any heavy-handed action by the body due to extensive trade and energy relations with Tehran, but the issue is likely to be discussed by President Bush and his Chinese counterpart, Hu Jintao, in Washington this week.

Daryl Kimball, executive director of the Arms Control Association in Washington, says Iran's claims of its needs for nuclear power don't coincide with real numbers.

"Nuclear power, wherever it is, is hardly economical because it requires so much government subsidization," he said. "And foreign investment is unlikely.

"Iran's justifications probably don't add up and don't stand up to economic scrutiny."