Dec. 4 (Bloomberg) -- A new U.S. intelligence assessment that Iran halted its nuclear weapons program four years ago is likely to complicate President George W. Bush's drive for stiffer international sanctions on the Iranian government, an administration official and security experts said.

White House National Security Adviser Stephen Hadley acknowledged that possibility yesterday, even as he pointed to the report's conclusion that Iran had stopped its program precisely because of international pressure.

``I'm sure some people will use this as an excuse or a pretext for flagging on the effort,'' Hadley said. ``Our argument is, actually, it should be just the reverse.''

The Bush administration has been campaigning for a new United Nations Security Council resolution imposing tougher financial and diplomatic penalties on Iran because the government there has defied demands to end its uranium enrichment program.

Bush, Vice President Dick Cheney and other U.S. officials have argued for months that the real purpose of Iran's nuclear program is to produce weapons-grade uranium for a nuclear bomb.

Declassified portions of the latest National Intelligence Estimate released yesterday reversed a 2-year-old judgment by concluding Iran halted its nuclear weapons program in 2003 and hadn't resumed it as of mid-2007. It said that even if the program were restarted, the Iranians wouldn't be able to produce enough material for a bomb until 2010 at the earliest.

Iran's Denial

Iran says its intent is to produce fuel for nuclear power generation. Foreign Ministry spokesman Mohammad Ali Hosseini, commenting today on state television, said Iran has never sought to build nuclear weapons, and he denied that the country had a nuclear-weapons program as recently as 2003.

Bush's critics pounced on the new finding, which represents the consensus view of the 16 U.S. intelligence agencies. They said it undermined the credibility of a president who as recently as Oct. 17 warned that allowing Iran to produce a nuclear weapon would risk the outbreak of ``World War III.''

The report's judgments ``expose the latest effort by the Bush administration to distort intelligence to pursue its ideological ends,'' said Lee Feinstein, national security director for Democratic presidential candidate Hillary Clinton, a senator from New York.

Another Democratic contender, former North Carolina Senator John Edwards, said the report shows ``that George Bush and Dick Cheney's rush to war with Iran is, in fact, a rush to war.''

Russian UN Ambassador Vitaly Churkin, whose government opposes new sanctions on Iran, also claimed vindication, even as he said he couldn't assess the report's impact on the debate. ``We have always been saying there is no proof they are pursuing nuclear weapons,'' Churkin said.

Iran's Decisions

Joseph Cirincione, an arms-control expert with the Center for American Progress in Washington, said the intelligence finding would undermine the credibility of those advocating military action to halt the Iranian nuclear program and may weaken the case for new sanctions.

Perhaps the most important finding in the report, Cirincione said, is that Iranian leaders make rational decisions on policy based on the relative costs and benefits. That indicates there is an opportunity for an accord that offers assurances the enrichment program won't be used for military purposes, he said.

``There is a deal that can be struck with them,'' he said. ``The question is, what is the price?''

Good News, Bad News

Some analysts cautioned against focusing too much on the finding that the weapons program was halted in 2003. Tony Cordesman of Washington's Center for Strategic and International Studies and Patrick Clawson of the Washington Institute for Near East Policy both pointed to the continuing attempts to enrich uranium as a source of considerable concern.

``The NIE is good news in that it indicates that past efforts to pressure Iran have had some impact, and there is time for negotiation,'' Cordesman wrote in an analysis. ``The bad news is that many will focus only on taking the more positive news out of context.''

Clawson said he thinks Bush is genuinely interested in a diplomatic deal with Iran and that the report may enhance the drive for negotiations. It will ``calm people down'' who think ``that Bush is going to bomb,'' he said.

Judgment Reversed

The new report reversed the intelligence community's 2005 judgment that ``that Iran is determined to develop nuclear weapons despite its international obligations and international pressure.''

It stemmed from a recent added emphasis on Iran and includes data from publicly available sources, according to intelligence officials, who briefed reporters yesterday on condition of anonymity.

For instance, the Iranians allowed the media to tour and take pictures of the Natanz nuclear facility, adding to the agencies' knowledge of the operations there, the officials said.

Bush was kept abreast of the changing analysis of the agencies, which have been sifting new information for three months, the officials said. He was given the key judgments on Nov. 28, one day after the agencies approved them.

The intelligence agencies said in the report that while they lack ``sufficient intelligence to judge confidently'' how long Iran will suspend its nuclear weapons program, Iran's decisions appear to be ``guided by a cost-benefit approach rather than a rush to a weapon irrespective of the political, economic, and military costs.''

Still, the agencies said it would be difficult to prevent Iran from eventually developing nuclear weapons because the country's leaders believe this goal is important to their national security.

To contact the reporters on this story: Ken Fireman in Washington at kfireman1@bloomberg.net; Jeff Bliss in Washington at jbliss@bloomberg.net

Last Updated: December 4, 2007 08:26 EST