But Viktor Kozlov, head of Atomstroyexport, said Washington's fears were groundless and promised to bid for more Iranian deals along with other states.

"Iran has a (long-term) programme which includes six reactors. We have only concluded a contract for one bloc but we also have an agreement for further cooperation," Kozlov told Reuters in an interview.

Islamic Iran is a bitter foe of the United States and U.S. officials have said that Russia's nuclear dealings with Iran are the biggest single thorn in increasingly warm relations between Washington and Moscow.

But Kozlov said the $800 million Bushehr light-water reactor in southwest Iran, completed by Russian scientists and due to open next year, could serve only civilian purposes.

"These are just assumptions by the man on the street, for whom a nuclear plant is the same as a nuclear bomb," he said.

"This is purely political. They see Iran as an enemy which should not be allowed even to develop economically... We will be training technicians, not nuclear physicists."

DIRTY BOMB?

But Russian analysts said Iran could turn spent fuel rods into a "dirty" bomb to disperse radioactive material.

"Theoretically you could make a bomb out of these rods but for arms-grade plutonium you need a different kind of reactor," defence analyst Pavel Felgenhauer said. "However, radiological weapons, or "dirty bombs", can be built from such rods."

Kozlov said used fuel from Bushehr would be returned to Russia for reprocessing - a gesture designed to appease the United States, which fears fuel from the plant could eventually be refined locally into weapons-grade plutonium.

"There is such a deal," he said, giving no further details.

Kozlov said that during 2002 some 50 monitoring teams from the U.N. nuclear watchdog had visited Bushehr, a German plant begun in the 1970s but frozen after the 1979 Islamic revolution in Iran.

"Russia is convinced that the plants it builds in neighbouring countries are used only for civilian purposes," he said. "You shouldn't think Russian leaders are stupid."

The Russian nuclear sector, heavily subsidised during the Cold War, was effectively crippled by the 1986 Chernobyl reactor explosion and the collapse of the Soviet Union in 1991.

Exports of nuclear technology and expertise are essential to keeping the sector afloat. The Bushehr contract alone will involve some 20,000 people, 19,000 of them in Russia.

"We need to focus on markets where demand for energy is high, and that is mainly developing countries at the moment, including Iran, India and China," Kozlov said.

Iran is key, footing a large part of the Bushehr bill in cash. Russia's other main clients, China and India, pay most of their bills in kind.