The United States raised the ante last week, signalling that it intends to exact a price if Russia persists in its refusal to jump aboard an accelerating US diplomatic bandwagon for quick and tough international steps to isolate Iran.

A top US diplomat, Nicholas Burns, emerged from talks here on Iran with Russia and other UN Security Council powers -- talks in which Russia did not budge in opposing US calls for Iran sanctions -- demanding that Moscow drop lucrative nuclear energy and weapons contracts with Tehran.

To hammer the point home, Burns also said the United States now wanted to see "problems" in ex-Soviet republics on the agenda of the Group of Eight (G8) powerful states -- highly sensitive issues for Russia with the potential to seriously tarnish its first-ever G8 chairmanship this year.

And despite backing membership in the World Trade Organization (WTO) for Russia's ex-Soviet neighbours and China, the United States continues to withhold its critical support for Russia to join that body, a long-cherished objective of President Vladimir Putin.

Putin accused Washington of changing the WTO rules late in the game, and many observers say all of these issues have some linkage to Kremlin policy on Iran in particular and its newly-assertive foreign policy in general.

"US pressure on Russia is growing," said Vladimir Pribylovsky, analyst with the Moscow-based Panorama policy think tank.

Publicly, Russia has put a proud face on its rejection of US demands, vowing to continue helping Iran build a nuclear power plant, to sell Iran an air defence system as planned and saying it will not even discuss sanctions without proof of US allegations that Iran is pursuing nuclear weapons.

But behind the Kremlin walls, Putin and aides face a quandary over how far -- and how concretely -- to take their tactical opposition to the United States on Iran, knowing that setbacks in the G8, WTO and other forums could have long-term negative economic consequences for Russia, say experts.

Their tactics will be tested further starting later this week when the head of the UN nuclear watchdog delivers a report to the Security Council on Iran's nuclear programme, a report expected to be followed quickly by an intensified US push for strong international steps to isolate Tehran.

The United States accuses Iran of hiding a nuclear weapons programme behind its atomic energy drive, a charge Tehran denies, that Russia says is worrisome but unproven and that no one expects to be proven conclusively in the report from the UN nuclear agency to be delivered Friday.

"Russia has veto power at the UN Security Council and it will have to decide if it is prepared to use it to block strong action now against Iran" as sought by Washington, Pribylovski said.

"If there is a UN vote on something that would open the way to military action against Iran then Russia will definitely veto it. If there is a vote on sanctions against Iran, Russia may well veto this too," he said.

The rising stakes in the diplomatic tension between Washington and Moscow over how to deal with Iran were highlighted by the British economic weekly The Economist, which said in its latest issue that as US attention to Iran grows so too do the implications of Russian opposition to Washington.