The Vienna-based nuclear watchdog, the IAEA, reported Friday that Iran had sharply cut its most sensitive nuclear stockpile in accordance with the interim pact concluded with the six world powers last November. The report showed that Iran had since January reduceed its stockpile of higher-grade enriched uranium gas - a relatively short technical step away from weapons-grade material - by more than 80 percent. The amount that remains after most of the material was either converted or diluted to less proliferation-prone forms - less than 40 kg - is far below the 250 kg which experts say is needed for one nuclear bomb. DEBKAfile: These figures are carefully edited to generate a optimistic outlook for the next round of negotiations on a final nuclear accord with Iran. The impression of progress is illusory. Iran still has a stockpile of 3.5 tons of uranium enriched up to a low 5.3 percent - which, however, can in a short space of time be enriched up to 20 percent grade, sufficient to fuel 5-7 bombs. The diluted materials can also be quickly reconverted for another bomb.