The Russian government last month agreed in principle to build two more nuclear reactors for Iran. The units are to be constructed at Bushehr where two unfinished reactors are being completed by Russian engineers.

The agreement was announced by a spokesman from the atomic energy ministry, but specific details of the deal between the two countries remain unclear. The move has angered the US and Israeli governments, who have both been applying pressure to try and prevent Russia transferring nuclear technology to Iran.

The USA and Israel argue that the nuclear technology could be hijacked for weapons development. Russia has denied this possibility, claiming that Bushehr will use the same technology that the US is currently pressing on North Korea as part of a deal to persuade the country to abandon its indigenous nuclear programme.

Under a $850 million deal, Russia is already working to complete two nuclear units at Bushehr that were originally started by German engineers.

The International Atomic Energy Authority has said it is not currently concerned about the construction of the civilian nuclear powerstation. Iran is a signatory of the nuclear non-proliferation treaty.

The political ramifications of the affair have already spread beyond Russia, with Ukraine announcing that it has withdrawn from a deal to supply turbines for the Bushehr power plant. Cancellation of the deal, which appears to be the result of US pressure, will cost the country around $45 million.

Withdrawal from this turbine deal will clear the way for investment by US companies in the Ukraine. In particular, Westinghouse is now expected to go ahead with a nuclear fuel development programme.

The US company may also bid for a $1.2 billion contract to complete two Russian designed nuclear plants, depending on financing from the European Bank for Reconstruction and Development.