Iran has threatened legal action against Western states to seek compensation for losses it said it had suffered from U.N. Security Council sanctions over its nuclear program.

The threat came in a 20-page letter from Foreign Minister Manouchehr Mottaki to U.N. Secretary-General Ban Ki-moon, obtained by Reuters on Wednesday. It rejects as illegal the latest sanctions resolution, passed on March 3, and says Tehran would not comply with it.

That resolution ratcheted up earlier sanctions imposed for Iran's refusal to suspend nuclear enrichment, a process that can produce fuel for atomic power stations or nuclear bombs. The measures extend travel and financial curbs on named Iranian individuals and companies.

In a point-by-point rebuttal, Mottaki's letter denounced the resolution as contrary to the U.N. Charter and international law. It said Iran had acted within its rights and its critics had failed to prove it was seeking atomic weapons.

Sponsors of the resolution "should, as a minimum step, admit their mistakes, apologize to the great nation of Iran, correct their behaviour, and above all, compensate all the damages they have inflicted" on Iran, the minister said.

"Iran and its citizens have the right to resort to legal actions to seek redress against the sponsors of these unlawful actions. These countries should accept the responsibility for their actions and must be held accountable."

Mottaki did not directly identify the countries concerned but other paragraphs of his letter indicated he was referring to the United States, Britain, France and Germany -- the principal backers of the resolution.

He did not specify where Iran might seek legal redress.

A U.N. spokesman said Ban had received the letter, dated Monday, but made no further comment.

WHO SHOULD COMPENSATE?

The letter said that as a result of an earlier suspension of enrichment under Western pressure, Iranian factories had been closed, workers laid off and planning for energy needs disrupted. Iran later rescinded the suspension.

"Now, given the fact that the peaceful nature of Iran's nuclear activities has been proved, the question arises of who should compensate these huge damages," Mottaki said.

Iran says it has been given a clean bill of health in reports by the U.N. nuclear watchdog, the International Atomic Energy Agency. Western countries dispute that.

Iran's letter dwelt on a clause of the resolution calling on countries to inspect cargoes to and from Iran of aircraft and vessels owned or operated by two named Iranian companies if they believed they were carrying prohibited goods.

It said that if such inspections were carried out "on baseless and unfounded pretexts ... Iran reserves its right to follow the case before the competent fora."

Western diplomats have said some Security Council members were concerned about possible legal implications of the inspections provision.

Mottaki said a clause in the resolution that seeks to pre-empt legal action by Iran violated a U.N.-sanctioned right of people to have recourse to courts.

The letter repeated earlier statements that Iran would ignore the resolution, which was passed by a 14-0 vote with one country, Indonesia, abstaining.

"Iran believes that the decisions adopted by the Security Council shall be considered inconsistent with the U.N. Charter," it said. "Thus, my government ... will not be obliged to implement them."