Tehran, Iran ? Iran on Sunday denounced as “illegal” demands from the U.N. atomic watchdog agency that it freeze all work on uranium enrichment, a technology that can be used for nuclear weapons, and threatened to limit cooperation with the agency if it moves toward sanctions.

But Hasan Rowhani, Iran’s top nuclear negotiator, stopped short of outright rejection of the International Atomic Energy Agency’s demands and held out the possibility of negotiations on the issue.

“We are committed to the suspension of actual enrichment, but we have no decision to expand the suspension,” Rowhani said at a news conference a day after the IAEA governing board issued its demand to freeze all enrichment-related work and said it would judge Tehran’s compliance in two months.

“This demand is illegal,” he said. “The IAEA board of governors has no right to make such a suspension obligatory for any country.”

“Actual enrichment” refers to the injection of uranium gas into centrifuges. Rowhani indicated Iran’s other activities, such as production, assembly and testing of centrifuges, were likely to continue.

Such ambiguity has led U.S. and other officials to accuse Iran of hiding an intention to create a nuclear weapons and trying to stonewall the international community. Iran says its nuclear program is only for peaceful energy purposes.

“We have no dependency on the outside world to control the nuclear fuel cycle. We don’t need parts or technology,” Rowhani said.

“We possess all the requirements,” he added, referring to the steps from mining uranium ore to enriching uranium for use either to produce electricity or nuclear weapons.

If the IAEA refers questions about Iranian nuclear activities to the U.N Security Council for possible sanctions, Rowhani said: “Iran will stop implementing the additional protocol and will limit its cooperation with the IAEA.”

The United States insists the 35-member IAEA board must refer Iran to the Security Council when it meets again on Nov. 25 if Tehran doesn’t comply.

The IAEA board unanimously approved a toughly worded resolution Saturday saying it “considers it necessary” that Iran suspend all uranium enrichment and related programs. It expressed alarm at Iranian plans to convert more than 40 tons of raw uranium into uranium hexafluoride — the gas that when spun in centrifuges turns into enriched uranium.

It called on IAEA chief Mohamed ElBaradei to provide a review of the investigation of Iran’s nuclear activities and said the next board meeting in November “will decide whether or not further steps are appropriate” in ensuring Iran complies, suggesting that Iran could have to answer to the Security Council.