* U.S. spy report cited, though Washington signals no change
* Reports come amid Israeli debate over whether to go to war
* Obama has called for more time for diplomacy with Tehran
JERUSALEM, Aug 12 (Reuters) - Iran has stepped up work to
develop a nuclear warhead, Israeli newspapers said on Sunday,
citing officials in Prime Minister Benjamin Netanyahu's
government and leaked U.S. intelligence.
The front-page reports in the liberal Haaretz, a frequent
Netanyahu critic, and in the conservative, pro-government Israel
Hayom could intensify Israeli debate about whether to go to war
against Iran - and soon - over its disputed atomic projects.
Doing so would defy appeals by U.S. President Barack Obama,
seeking re-election in November, to allow more time for
international diplomacy. Tehran says its nuclear ambitions are
peaceful and has threatened wide-ranging reprisals if attacked.
Citing an unnamed senior Israeli official, Haaretz said a
new National Intelligence Estimate (NIE) compiled by the Obama
administration included a "last-minute update" about significant
Iranian progress in the development of a nuclear warhead "far
beyond the scope known" to U.N. inspectors.
Israel Hayom reported NIE findings that Iran had "boosted
efforts" to advance its nuclear programme, including work to
develop ballistic missile warheads, and said U.S. and Israeli
assessments largely tallied on this intelligence.
Neither daily newspaper provided direct quotes or detailed
evidence. For Haaretz, it was the second report since Thursday
purporting to draw on a new NIE.
Israeli government spokesmen had no immediate comment. Asked
about the reports in an Israel Radio interview, Cabinet
Secretary Zvi Hauser suggested they be taken at face value.
"There is too much attribution of manipulation, which does
not exist, to this or that official," Hauser said. "There are a
great many things that are just as they are, for better or
worse."
Washington has not commented on whether such an NIE exists.
But its officials say the U.S. intelligence assessment remains
that the Islamic republic is undecided on whether to build a
bomb and is years away from any such nuclear capability.
DOMESTIC DIVIDE
Israel, widely reputed to have the region's sole atomic
arsenal, sees a nuclear-armed Iran as a mortal menace and has
long threatened to attack its arch-foe preemptively.
The war talk is meant, in part, to stiffen sanctions on
Tehran by conflict-wary world powers. Israel and the United
States have publicly sought to play down their differences.
Much of the media scrutiny has been on opposition to the war
option within the Israeli cabinet, military and public, given
the tactical and strategic risks involved. But opinion polls
suggest support for an attack is growing.
Yedioth Ahronoth newspaper suggested on Friday that a
destabilising Israeli attack on Iran before November could
undermine Obama, a Democrat whose ties with Netanyahu have been
testy, and help Republican rival Mitt Romney, who casts himself
as a better friend of the Jewish state.
But a senior Israeli official quoted in a separate Haaretz
story spoke of the question of who would head the next U.S.
administration as largely irrelevant regarding Iran given
Israel's belief that "we cannot place our fate in the hands of
others" and "in statesmanship there are no future contracts".
That official was described by Haaretz as a "decision-maker"
and veteran security figure who owns a grand piano - strong
signals it was Ehud Barak, Israel's longtime, centrist defence
minister. Ex-general Barak is also an accomplished pianist who
has recently briefed media in his Tel Aviv penthouse.
Though the Obama administration has refused to rule out a
U.S. war of last resort to deny Iran the means to make a bomb,
the Israeli official quoted by Haaretz said "expectation of such
a binding American assurance now is not serious".
"And if Mitt Romney is elected, history shows that
presidents do not undertake dramatic operations in their first
year in office unless forced to," the Israeli official said.