The Financial Times is reporting that the  International Atomic Energy Agency (IAEA), the UN's nuclear watchdog, believes that Iran has has built up a stockpile of enough enriched uranium for one nuclear bomb.

In a development that comes as the Obama administration is drawing up its policy on negotiations with Tehran over its nuclear programme, UN officials said Iran had produced more nuclear material than previously thought.

They said Iran had accumulated more than one tonne of low enriched uranium hexafluoride at a facility in Natanz.

If such a quantity were further enriched it could produce more than 20kg of fissile material - enough for a bomb.

"It appears that Iran has walked right up to the threshold of having enough low enriched uranium to provide enough raw material for a single bomb," said Peter Zimmerman, a former chief scientist of the US Arms Control and Disarmament Agency.

Chalk up another failure for the Bush Administration whose unwillingness to have even back channel communications played right into Iranian hands. Let's face it, the mullahs know their geo-political poker and they have been nothing but coy and ambiguous. Iran's goal, according to a number of analysts, is not a bomb but a virtual bomb. That is, Iran wants the capability to build one on short notice if need be. David Albright, the head of the Institute for Science and International Security finds that if Iran does decide to build a nuclear weapon, "it has reached a point in which it could do so quickly."

Here's the crux of the argument courtesy of David Sanger:

Iran figured out a way to successfully game the system and build a ''virtual bomb.''

In this era, a nation doesn't have to parade its nukes in the capital on May Day. In fact, it's probably against its interest to do so. All it has to do is create convincing ambiguity -- to leave the world wondering whether, if push came to shove and shove led to talk of a pre-emptive strike, in a few short weeks the country could screw together a workable, deliverable nuclear weapon. In an age when centrifuge components and bomb designs are on the black market, and when technology has made bomb-building much less expensive and time-consuming, it doesn't take much for the world to take you seriously.

''I call them 'latent weapons states,' said Mohamed El Baradei, the chief of the International Atomic Energy Agency, in an interview. ''It's a description that fits a lot of countries that have the know-how. The only key is the fissile material. If you are really smart, you don't need to develop a weapon, you just develop a capability. And that is the best deterrence.''

Of course, a nuclear weapon, real or virtual, is more than a deterrent. It has the power to shape events in a region. Nuclear ambiguity is all it takes to change the strategic balance.

UN officials and other nuclear analysts cautioned that there remained many practical obstacles to the production of a bomb  and the weaponization of the enriched uranium, and pointed out that the uranium was under close surveillance. The report also said Iran appeared to have slowed down the rate at which its uranium enrichment capacity is expanding which suggests that Iran is interested in a credible deterrent and not much more. But the IAEA report is likely to raise further the already high tensions surrounding the Iranian nuclear program especially on the eve of a new right wing government in Israel.

According to the UK Guardian a "respected US analyst said that the tonne milestone meant that Iran had reached 'breakout capacity' - the theoretical ability to produce the 20-25 kg highly enriched uranium needed for one functioning warhead." Other analysts were more cautious but said there were other items in the report to raise the level of international concern.

Iran's nuclear technology is also now spread out across the country. It cannot be destroyed in a single strike as Iraq's nascent nuclear ambitions were back in June 1981 when the Osirak nuclear facility near Baghdad was leveled by Israeli jets. The questions that remain now are how far long is Iran on building a warhead capable of delivering a weapon, how will the Israelis respond and how does this effect Obama's recent overtures to Tehran.

So does Iran want a bomb? If we talk to them, the chances of ascertaining an answer to that question is greater than if we don't. Through negotiations we might yet provide incentives to prevent an Iranian nuclear weapon.