The United States said Monday that sanctions slapped on Iran over its nuclear program were weakening its leaders, which is becoming increasingly dependent on the elite Revolutionary Guards.

Stuart Levey, a key architect of the sanctions as under secretary of the Treasury for terrorism and financial intelligence, praised the growing number of companies that have halted business in Iran.

"Because Iran is vulnerable, the strategy we have in place today is working to create the leverage we need to enhance our diplomatic options," Levey told the Center for Strategic and International Studies think tank.

"We are already receiving reports that the regime is quite worried about the impact of these measures, especially on their banking system and on the prospects for economic growth," Levey said.

"As pressure increases, so has internal criticism of (President Mahmoud) Ahmedinejad and others for failing to prepare adequately for international sanctions and for underestimating their effect," he said.

Levey said that there was a growing international consensus -- including sanctions by countries including Australia, Japan and South Korea -- that has tightened the screws on Iran.

"Iran's leaders are turning increasingly to the Islamic Revolutionary Guard Corps -- Iran's military vanguard that has long been involved in Iran's terrorism and missile programs -- to prop up the economy," he said.

"This is likely to exacerbate Iran's isolation, as companies around the world have begun to shun all business" with the elite unit, he said.

Levey is the latest US official to hail what President Barack Obama's administration is portraying as the success of efforts to isolate Iran.

Secretary of State Hillary Clinton on Sunday said that the sanctions were "biting" and also spoke of a growing influence of the Revolutionary Guards.

Western nations have championed sanctions against Iran over concerns that its nuclear program -- which the Islamic republic insists is for peaceful purposes -- is designed to develop nuclear weapons.

Obama last year offered talks with Iran to repair three decades of bad blood. The administration says the offer is still open if Iran addresses its concerns.

earlier related report
Israel row looms over UN atomic watchdog meet
Vienna (AFP) Sept 20, 2010 - A bitter row over Israel's assumed nuclear arsenal looked set to loom large over the annual general conference of the International Atomic Energy Agency which began Monday.

The conference, which brings together all 151 member states of the IAEA. is slated to last until Friday and will tackle a long list of issues ranging from the election of member states to the board of governors, the 2011 budget, nuclear security and technical coperation.

But it is an Arab-backed resolution on Israeli's nuclear capabilities, which will be one of the last items on the agenda, that looks set to dominate the debate, as it has done in previous years.

The resolution, which is non-binding and therefore purely symbolic, calls on the Jewish state to foreswear nuclear weapons and sign up to the nuclear Non-Proliferation Treaty (NPT).

It is one of the last items on the agenda and will likely be debated on Thursday.

The United States and its western allies are concerned that putting the resolution -- which was passed with a very narrow majority last year -- to a vote again this year could jeopardise newly-launched Middle East peace talks.

And it would also not help to persuade Israel to attend a conference in 2012 to establish a Middle East free of weapons of mass destruction, they argue.

Opening the general conference, last year's conference president and New Zealand's ambassador to the IAEA, Jennifer Macmillan, said it was "important ... that we do not hinder the process or create roadblocks along the way that will make realising the dream of a peaceful Middle East free from nuclear weapons and other weapons of mass destruction more difficult."

But IAEA Director General Yukiya Amano touched only briefly on the issue in his opening address.

"I hope that the proposed 2012 conference will take place with the participation of all relevant states and that it will lead to a productive outcome," he said.

When the resolution was passed with a very narrow majority last year, Amano was instructed to "work with member states towards achieving" the goal of persuading Israel to join the NPT.

And Amano provided an update of his efforts in an 81-page report published at the beginning of September.

But Arab states quickly dismissed Amano's findings as "weak and disappointing" and criticized the report for being "devoid of any substance and not up to the typical level of the agency's reporting."

They accused the IAEA, which has long been investigating both Iran and Syria for alleged illicit nuclear activity, of using "double standards" when dealing with Israel.