UNITED NATIONS – Iran yesterday took its first concrete step toward resuming uranium enrichment activity. The move underlined the limitations of European-led diplomacy, which has repeatedly urged the Iranian regime to abandon its nuclear program.

Yesterday Iran broke the seals at a nuclear processing plant in Isfahan that were installed by the International Atomic Energy Agency to ensure compliance with a pact, known as the Paris agreement, signed at the end of last year to freeze Iranian enrichment activities. World diplomats, who have been negotiating for months with the Iranians, scrambled to respond.

Resuming full operations at Isfahan is “another negative step taken by Iran in breach of the November 2004 Paris agreement,” a State Department spokesman, Adam Ereli, said. “It shows that Iran is just isolating itself further, digging itself deeper into a hole.” He said that the Bush administration still wants the question of Iran’s nuclear activity to be referred to the U.N. Security Council, where sanctions on the country could be imposed. But Mr. Ereli also stressed the need for consensus in Vienna.

Secretary-General Annan, who said yesterday that he had spoken by phone in the last few days with “all parties concerned,” including Iran’s new president, Mahmoud Ahmadinejad, said “all sides” should return to diplomacy.

The 35-member board of directors of the Vienna-based IAEA suspended negotiations yesterday on a resolution meant to address the Iranian crisis. Although a European-proposed resolution shied away from threatening sanctions against Tehran, members of a voting bloc known as the non-aligned movement urged a toning down of the proposal’s language, which conveyed the IAEA’s “concern” about Iran’s actions.

Israel, which has consistently warned against softening international diplomacy toward Iran, is following the Vienna negotiations closely. “We are concerned that Iran will emerge out of this crisis with tangible gains,” an Israeli official told The New York Sun, speaking on condition of anonymity due to Israel’s sensitive position. He said that since the Iranian presidential election, officials with “smiling faces” were replaced by hardliners, who have deliberately toughened their stance in hopes of dividing the international community.

Seals were placed at the Isfahan plant by IAEA inspectors last winter to assure compliance with the Paris agreement between Iran and a group known as the E.U.-3 – France, Britain, and Germany. Under the pact, Iran agreed to suspend its uranium enrichment program. The Isfahan plant, where raw uranium, or yellowcake, is converted into uranium hexaflouride gas, UF-6, was rendered inactive.

Yesterday, at Iran’s request, “We went from a mode of monitoring a frozen facility to a mode of monitoring an active facility,” an IAEA spokeswoman, Melissa Fleming, told the Sun. In other words, the seals that had locked equipment at the Isfahan plant were replaced by cameras mounted in the facility in order to allow the IAEA to conduct 24-hour surveillance of activities there.

The Paris agreement was endorsed by the IAEA, but the agency never adopted it in a binding manner. Although the IAEA’s board of directors urged Iran to freeze enrichment as a confidence-building measure, its pact with the E.U.-3 was “a political agreement,” Ms. Fleming said.

The loophole allowed Iranian negotiators to insist that they do not violate international law by reneging on their obligations under the Paris agreement. “The removal of seals has been completed. The plant is fully operational now,” the deputy head of Iran’s Atomic Energy Organization, Mohammad Saeedi, told Reuters yesterday.

The European-sponsored IAEA resolution encountered resistance from members of the agency’s board, led by South Africa and Brazil, even though the latter is technically no longer a member of the Cold War-era relic known as the non-aligned movement. China and Russia, both of which have extensive commercial interests in Iran, opted to support the European language after assuring that it contained no threat of economic sanctions.

“I think the people in the IAEA in Vienna are discussing this issue, so I think we don’t have to worry about it,” China’s U.N. ambassador, Wang Guangya, told Turtle Bay reporters, adding that he hoped the matter never came to the Security Council.

On Tuesday, President Bush said he was “deeply suspicious” of Iran’s nuclear ambitions. Asked if he, too, was suspicious, Mr. Annan told the Sun yesterday that after speaking with Iran’s president, he is “urging for restraint and continuation of the dialogue.”

But according to the Israeli official, Tehran thrives on “dialogue” and uses the divisions among international diplomats to gain recognition for its nuclear program.