In what seems to be the end of the honeymoon between Iran and Europe, this week has witnessed confrontations over Iran's nuclear activities and its human rights record. Rasha Saad reports On Tuesday, Iran's military authorities announced that they would prosecute eight members of Britain's Royal Navy accused of straying into Iranian territorial waters close to the Iraqi border. The announcement dampened hopes in London for a swift resolution to the incident that occurred on Monday when Iran seized three British vessels and arrested their crews. Iranian-British relations have always been sensitive, but the move was regarded as Iranian retaliation as it came shortly after Iran's nuclear and human rights files were sharply criticised by Europe's key trio: Britain, Germany and France. On Sunday, the European Union gave Iran a tough rebuke over the Islamic republic's human rights record, despite a series of talks with Tehran. "The European Union continues to be gravely concerned at the continued and numerous violations of human rights in Iran," said a statement issued by Ireland, the current holder of the EU presidency. "These include unequal rights for women, the use of torture in prisons and other places of detention," read the statement. The statement also pointed to the lack of an independent judiciary, the use of the death penalty, as well as reports of the continued use of cruel punishments among other issues. The discussions were the fourth round of an EU effort -- started in December 2002 -- to engage Tehran on human rights. Iran hit back at the European Union on Monday saying the 25-member bloc could use lessons on human rights rather than criticise the Islamic republic. Angry comments came from Foreign Ministry spokesman Hamid Reza Asefi as he told Iran's official news agency IRNA that the criticism merely "indicates the Union's inability to accept transparent dialogue". He also pointed to what he deemed as failure to uphold the rights of minorities, discrimination against Muslims, Islamophobia and the non- observance of refugee rights in the EU. "During the talks, the EU's lack of attention to repeated human rights violations in the occupied Palestinian lands and Iraq was highly criticised," he added. The statement came only days after the three key European powers co- sponsored a tough resolution at last week's meeting of the International Atomic Energy Agency (IAEA) in Vienna. The resolution belied alarming signals regarding the future of rapprochement between the EU and Iran. Progress on human rights and nuclear proliferation have been set by the EU as conditions for the possible development of closer relations with Iran, including trade deals. The EU resolution "deplored" Iran's poor cooperation with the IAEA, saying that such cooperation "has not been as full, timely and provocative as it should have been". The resolution also noted that "a number of questions remain outstanding" since Iran's undeclared programme came to light. Hassan Rowhani, Iran's top national security official and nuclear negotiator, refuted accusations that his country is covering up an undisclosed site next to a military complex in a Tehran suburb. "Excluding sites we have openly declared [to the IAEA] ... Iran has no other places for enriching uranium," Rowhani said. However, satellite photos show that several buildings were destroyed and topsoil was removed from a site at Lavizan Shiyan. This fueled US accusations that Iran was running a secret enrichment programme there. The row between Iran and the EU contrasts sharply with what was described as a diplomatic victory for both the Iranians and the Europeans when the European trio was able to strike a deal last October to suspend the enrichment of uranium and to allow surprise inspections of Iran's reactors. The "confidence building package" was aimed at restoring international ease following revelations that Iran had kept sensitive nuclear research secret for nearly two decades. However, the deal was then described as a means to evade UN Security Council sanctions over Iran's nuclear programme and deny the US a pretext for escalating pressure on the Islamic republic. Both sides now accuse each other of failing to respect their parts of the bargain. Britain, France and Germany have expressed annoyance that Iran is still making centrifuge parts despite pledging not to, while Iran is angry at the Europeans because they had pledged to help Iran normalise relations with the IAEA and close its case at last week's meeting if Tehran cooperated. Iran insists that it has met its obligations. Although enrichment is permitted under the Nuclear Proliferation Treaty (NPT), the IAEA had called on Iran to cease such activities while it sought to account for traces of highly enriched uranium found by inspectors and complete its evaluation of the Iranian nuclear programme. Renowned Iranian analyst Mohamed Sadeq Al-Husseini agrees that this phase of negotiations is rife with confrontations between Iran and Europe. "Each side believes that it was let down by the other," Al-Husseini said. He explained that the European side believes that Iran let them down in its policy of "dialogue and constructive engagement" and that the Islamic republic is not doing much to get itself out of international isolation and "will thus fail to realise the EU's aspired strategic balance with the US". On the other hand, Al-Husseini believes that the EU is not abiding to its commitments and that they are "bowing to US pressures in their policies towards Iran". Al-Husseini believes that both sides will be losers as a result of the confrontation. To his mind, the Europeans are the losers in the short term. "The European trio has a high trade balance with Iran. Any major confrontation will encourage Iran to turn to the east, towards China, Japan or Russia." However, he believes that Iran is the loser in the long-term as it will forfeit a strategic balance in its conflict with the US. Iran, however, has checked its reaction. In a measured response, Iran said that it had no immediate plans to resume uranium enrichment, but said it might resume making parts for enrichment equipment. Iran also stressed that it will continue to work with the IAEA. Angered by the tough IAEA resolution, Iran's first reaction was to reconsider its commitment to the suspension of enrichment activities. In a reaction to the IAEA resolution, Rowhani and other Iranian officials, including Iranian President Mohamed Khatami, reacted angrily on being slapped with yet more criticism from the UN's nuclear watchdog, saying that the Islamic republic's suspension of enrichment would be reviewed. But Rowhani later appeared to back away from the threat, saying that Iran had no intention of resuming enrichment "for the time being". Al-Husseini described the Iranian dual reaction as a sort of "cooperation and rejection policy" which the Islamic republic exercises to send a tough message without sparking a major crisis. "Iran is trying to say that it is ready to cooperate but at the same time is trying to fight all pressures from the side of Europe, especially from London which Iran believes is working for the US interests." Al-Husseini also noted that the Iranians do not want to spoil the whole issue with the Europeans. "Iran believes that it can communicate well with the Europeans," he said. He believes that the two main questions the IAEA wants Iran to answer, the sources of enriched uranium and the scope of Iran's P-2 centrifuge programme used to enrich uranium, are "not outstanding issues and can be resolved with the agency". He is also optimistic that the resolution did not set any deadlines for Iran or contain a trigger mechanism for its case to be sent to the UN Security Council for possible sanctions that the US desires. He also believes that part of the problem between the Europeans and Iran is the fact that "they [Europeans] rely on CIA reports which proved their failure in Iraq, Afghanistan and even Iran itself." The US welcomed Friday's resolution. In fact, John R Bolton, US undersecretary of state, said it would hinder what he called Iran's efforts to "deceive and obstruct" agency inspectors. The US maintained its hard line approach and said it continues to believe that Iran has violated the nuclear NPT and should be taken before the UN Security Council for possible sanctions. This stance caused political observers to believe Iran's case in front of the IAEA was highly politicised. They cite the IAEA's admission on Thursday that it had made a mistake in saying in its report that Iran has failed to admit to the import of magnets for P-2 centrifuges after Iran produced, as evidence, a tape recording of an Iranian importer reporting the magnets to an IAEA inspector. Fahmy Howeidy, an Egyptian expert on Iran, believes that the real confrontation is between Iran and the US and that the latter is using Europe and the IAEA as tools "to twist Iran's arms". According to Howeidy, Europe sees the US a natural ally and follows its foreign policy in the Middle East as long as it does not collide with its own interests. "Despite some differences that might surface between the two powers, the US is the future and natural ally of Europe and they [Europeans] are not ready to lose the US over Middle East issues in Palestine, Iran or even Afghanistan." The main issue that causes friction between the US and Iran now is the situation in Iraq. The US knows that Iran has a great influence on the Shia majority in Iraq and is thus pressing the Islamic republic to use that influence to benefit US interests. According to observers, Iran's rejection of some US demands has led the US to pressure Iran with regard to nuclear and human rights issues. One of the issues that the US is pressing Iran for help with, according to Howeidy, is controlling the power of Iraqi Shia leader Moqtada Al-Sadr. "The US perceives that Moqtada Al- Sadr has strong connections with the Iranians so they are hoping that Iran play a role in alleviating this headache," Howeidy explained. The US is also pressing Iran to extradite some members of Al-Qaeda who have been arrested in the country. Howeidy believes that despite the escalating tension between Iran, the US and Europe, the situation is not likely to blow up anytime soon. "The Iranians know that the US, with its quagmire in Iraq and its preparation for the elections, cannot deliver more than threats. Until the end of elections both countries will maintain their state of pull and push," Howeidy said.