(Reuters) - Israeli Prime Minister Benjamin Netanyahu on Sunday denounced the world powers' nuclear agreement with Iran as a historic mistake that left the production of atomic weapons within Tehran's reach.
A grim-faced Netanyahu, who had strongly opposed any easing of economic sanctions against Iran - in a rift with Israel's main ally, the United States - told his cabinet his government would not be bound by the Geneva deal.
He repeated a long-standing Israeli threat of possible military action against Iran - even as a member of his security cabinet acknowledged the interim accord limited that option.
"What was achieved last night in Geneva is not a historic agreement, it was a historic mistake," Netanyahu said.
"Today the world has become a much more dangerous place because the most dangerous regime in the world took a significant step towards obtaining the world's most dangerous weapon."
The United States said the agreement halted Iran's most sensitive nuclear work, including the construction of the Arak research reactor, which is of special concern for the West as it could produce material for bombs.
The deal would neutralize Iran's stockpile of uranium refined to a fissile concentration of 20 percent - a close step away from the level needed for weapons - and called for intrusive U.N. nuclear inspections, a senior U.S. official said.
The Islamic Republic also promised to stop uranium enrichment above a fissile purity of 5 percent, a U.S. fact sheet said. {ID:nL2N0J907M]
Netanyahu, whose country is widely assumed to be the Middle East's sole nuclear power, had called for a total dismantling of Iran's nuclear enrichment capabilities.
Instead, he said, the world's leading powers "agreed for the first time to uranium enrichment in Iran while ignoring Security Council resolutions that they spearheaded themselves".
ISRAEL NOT BOUND BY DEAL
"Israel is not committed by this agreement. The regime in Iran is committed to destroying Israel. And Israel has the right and the obligation to defend itself by itself from any threat," Netanyahu said.
"I would like to make clear, as the prime minister of Israel: Israel will not allow Iran to develop a military nuclear capability."
But Israeli Civil Defence Minister Gilad Erdan, a security cabinet member, said the deal "makes it much more difficult, in the diplomatic sphere, to talk about a military option".
Tehran denies it is pursuing atomic weapons, saying its nuclear program is a peaceful energy project.
Erdan told Army Radio that Israel would continue monitoring Iran's activities and lobby for better terms in any final deal with Tehran.
"We have six months now, and there are significant improvements that can be made in these six months," he said.
In Washington, a senior U.S. official said President Barack Obama would discuss Israel's misgivings with Netanyahu on Sunday.
"Ultimately we understand and appreciate how Israel is particularly skeptical about Iran. Given the threats that have been made about Israel from Tehran we understand why Israel will want to make sure that this is the best deal possible," the official said.
"I would say that what we have now is a six-month period to test whether the new leadership in Iran continues to follow through their commitment to move Iran on a new path. What we will know after six months is whether there can be a solution."
Israeli Foreign Minister Avigdor Lieberman said the Geneva deal was Iran's "greatest diplomatic triumph" since its 1979 Islamic revolution, and predicted an arms race could result among Sunni Arabs who also feel wary of the Persian Shi'ites.
The Netanyahu government has therefore to conducted a strategic review of its options, Lieberman told Israel Radio.
He played down any rift with the United States, which led the Geneva talks. Asked if he felt betrayed by Israel's most important ally, Lieberman said: "Heaven forbid."
(Writing by Dan Williams and Jeffrey Heller; Editing by Andrew Heavens)
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