WASHINGTON/VIENNA (Reuters) - President Donald Trump warned on Wednesday that U.S. sanctions on Iran would be increased “substantially” soon, as the U.N. nuclear watchdog held an emergency meeting at Washington’s request to weigh Tehran’s breach of a nuclear deal.

Trump also accused Iran of secretly enriching uranium for a long time but offered no evidence, and Iran said after the 35-nation meeting in Vienna that it had “nothing to hide”. U.N. inspectors have uncovered no covert enrichment by Iran since long before its 2015 nuclear agreement deal with world powers.

Washington used the session of the International Atomic Energy Agency’s Board of Governors to accuse Iran of extortion after it inched past the deal’s limit on enrichment levels over the past week, while still offering to hold talks with Tehran.

Iran says it is reacting to harsh U.S. economic sanctions imposed on Tehran since Trump pulled Washington out of the nuclear deal in 2018 and says all its steps were reversible if Washington returned to the agreement.

“Iran has long been secretly ‘enriching,’ in total violation of the terrible 150 Billion Dollar deal made by John Kerry and the Obama Administration,” Trump said on Twitter.

“Remember, that deal was to expire in a short number of years. Sanctions will soon be increased, substantially!”

While Iran was found to have had covert enrichment sites long before the nuclear accord, the 2015 deal imposed the most intrusive nuclear supervision on Iran of any country, and there has been no serious suggestion Iran is secretly enriching now in a way that would hint at an effort to develop a nuclear weapon.

The deal confines enrichment in Iran to its Natanz site, which was itself exposed in 2003. Any clandestine enrichment elsewhere would be a grave breach of the deal. It was not immediately clear from Trump’s comments whether he was referring to previous, long-known activities or making a new allegation.

“NOTHING TO HIDE”

Kazim Gharib Abadi, Iran’s ambassador to the IAEA, told reporters following Trump’s accusation that all Tehran’s nuclear activities were being scrutinized by IAEA inspectors.

“We have nothing to hide,” he said after the IAEA meeting ended without any action taken against Iran.

Abadi said in a German newspaper interview published earlier in the day that Tehran intended to preserve the nuclear deal if all other signatories honored their commitments under it.

“Everything can be reversed within a single hour - if all of our partners in the treaty would just fulfill their obligations in the same way,” he told the weekly Die Zeit.

Trump’s allegation about covert enrichment was met with derision by diplomats who follow the IAEA. “That tweet kills me,” one diplomat at the meeting said in a sign of exasperation.

The agency itself was not immediately available for comment.

IRANIAN BREACHES

In a separate closed-door meeting with member states on Wednesday, IAEA inspectors confirmed that Iran was now enriching uranium to 4.5% fissile purity, above the 3.67% limit set by its deal. This would be Iran’s second breach of the deal in as many weeks, diplomats familiar with the figures said.

FILE PHOTO - A staff member removes the Iranian flag from the stage after a group picture with foreign ministers and representatives of the U.S., Iran, China, Russia, Britain, Germany, France and the European Union during the Iran nuclear talks at the Vienna International Center in Vienna, Austria July 14, 2015. REUTERS/Carlos Barria/File Photo

However, that is still far below the 20% to which Iran refined uranium before the deal, and the roughly 90% needed to yield bomb-grade nuclear fuel. Low-enriched uranium provides fuel for civilian power plants.

“The latest steps indicate that Tehran’s leadership has made a decision to move onto the offensive to create leverage vis-à-vis the international community and bring about a solution to its constraints,” a Western intelligence source told Reuters.

The 2015 deal was tailored to extend the time Iran would need to produce enough fissile material for a nuclear weapon, if it chose to do so, to a year from around 2-3 months. Iran has repeatedly denied any intent to develop atomic bombs.

The Trump administration says it is open to negotiations with Iran on a more far-reaching agreement on nuclear and security issues. Iran has conditioned any talks on first being able to export as much oil as it did before the U.S. withdrawal.

Tensions between Washington and Tehran have escalated, culminating in a plan for U.S. air strikes on Iran last month that Trump called off at the last minute.

“There is no credible reason for Iran to expand its nuclear program, and there is no way to read this as anything other than a crude and transparent attempt to extort payments from the international community,” the U.S. mission to the IAEA said in a statement delivered at the closed-door agency board meeting.

“We call on Iran to reverse its recent nuclear steps and cease any plans for further advancements in the future. The United States has made clear that we are open to negotiation without preconditions, and that we are offering Iran the possibility of a full normalization of relations.”

Iran says it will continue to breach the deal’s caps one by one until it receives the economic windfall - trade and investment deals with the wider world - promised under terms of the agreement.

Washington is set on isolating Iran to force it to negotiate stricter limits on its nuclear program and, for the first time, to address calls to curb its ballistic missile program and its role around the conflict-ridden Middle East.

Britain, France and Germany are considering their next move, torn between the urge to show their displeasure at Iran’s breaches and wanting to keep alive a deal that signatories in 2015 touted as vital to preventing wider war in the Middle East.