KIEV -- It sits now, almost forgotten, in a downtrodden nuclear research institute in Eastern Ukraine: 75 kilograms of weapons-grade uranium. Enough material to construct three nuclear bombs.

Not far from where the uranium is stored at the Kharkiv Institute of Physics and Technology is a fourth-floor office in a Soviet-style office block on Kharkiv's Leninsky Prospekt that happens to sport Iraqi flags on either side of the door. Western diplomats call it one of the clearest suggestions that Iraq wishes to build a nuclear weapon.

According to officials of the North Atlantic Treaty Organization in Ukraine, the office of Yuri Orshansky, a Ukrainian businessman who was named Iraq's honorary consul to Kharkiv two years ago, is one case of smoke definitely betraying a fire. It's not by chance, they believe, that Iraq set up diplomatic representation in a city that was once a centre for the Soviet Union's nuclear-weapons research.

Iraq has sent three trade delegations to Kharkiv in the past four years. One of them was given an official tour of the Institute of Physics and Technology.

"It looks blatant, and it is blatant," a NATO official said. "There's all sorts of military interest by Iraq in Kharkiv."

According to a report released this year by British intelligence, if Iraq could acquire even one-third of the uranium known to be stored at the institute, it could have nuclear weapons within 12 months.

The apparent Iraqi interest in Kharkiv brings back a nightmare scenario that has worried the West since the collapse of the Soviet Union 11 years ago. When Ukraine achieved independence, it immediately became the world's third-largest nuclear power, trailing only Russia and the United States, and at the same time lost much of its financial ability either to ensure the security of its nuclear installations or to pay the scientists there properly.

Fifty thousand weapons scientists once worked in the city of Kharkiv alone, and many of them now are paid just $6 or $7 a day. Their laboratories are no longer world-class; in some cases, they are not even properly heated. The city is also home to Khartron, one of the world's largest missile-technology plants.

"Most of the scientists in Ukraine are in very difficult financial situations," said Yves Carmel, a Canadian who heads the Science and Technology Centre in Ukraine, an institute funded by Canada, the United States and the European Union that works to employ Ukrainian weapons scientists in other, peaceful, scientific fields.

Although Ukraine eventually agreed to give up its functioning nuclear arsenal in exchange for Western aid money, there remains in the country a potentially dangerous mix of loosely guarded nuclear materials and underemployed scientists who might be tempted by a big-money offer to defect to a rogue state.

Mr. Orshansky, many here believe, did just that. An engineer by trade, he now proudly displays the emblem of Iraq's ruling Baath party above the door of his Kharkiv office. When a team of U.S. and British weapons experts travelled to Ukraine last month and asked to interview him about weapons-sale allegations, they were told he was in Baghdad celebrating Saddam Hussein's victory in a recent national referendum on his leadership.

In an interview last year with a Ukrainian defence-industry publication, Mr. Orshansky said he had made more than 40 trips to Baghdad since 1993 and suggested that he would, if asked, work to buy nuclear material on Iraq's behalf.

"On some issues, we have begun to work with Iraq in order to create conditions so that orders are placed with Ukraine," he was quoted as saying. "Even if they want to create a nuclear bomb, we will study this."

Whether he has ever actually bought any weapons material on Iraq's behalf is unclear. Western experts say tracing Iraq's dealings in the arms market is difficult, since Mr. Hussein's regime often uses middlemen and circuitous delivery routes. A Western diplomat here said "there's plenty of evidence" that Mr. Orshansky shipped weapons to Baghdad, but refused to share any of the alleged proof. The Kharkiv Institute says it has never sold -- and would never sell -- nuclear material to Iraq or anyone else. Director Oleksiy Yehorov says the uranium is to be used domestically for energy production. He says the lab's security has been upgraded, and that the uranium in Kharkiv is as secure as that at top sites in Western Europe and North America.

"The uranium cannot be sold to anybody, no matter who offers to buy it and what their reasons are," Mr. Yehorov told the Ukrainian news agency, UNIAN.

But to the chagrin of the U.S. State Department, the Ukrainian government has refused to give up the uranium, a step Yugoslavia took earlier this year in a high-profile deal that saw 45 kilograms of enriched uranium from the Vinca Institute near Belgrade taken to Russia to be processed.

Recent revelations have made the U.S. administration even more suspicious of Ukrainian intentions, especially a sensational audio recording allegedly made by a former bodyguard of President Leonid Kuchma that appears to catch Mr. Kuchma personally authorizing the $100-million (U.S.) sale of the Kolchuga advanced radar system to Iraq two years ago, in direct contravention of United Nations sanctions.

Kolchuga is a passive radar system that tracks aircraft without giving off the telltale "ping" that tells pilots they've been spotted. If Iraq were to acquire the system, the British and U.S. governments say, the danger to the allies' pilots patrolling the no-fly zones over northern and southern Iraq would greatly increase.

Though Mr. Orshansky's name has turned up on documents that UN weapons inspectors found in Baghdad during the last round of weapons inspections in the late 1990s, Ukraine accredited him as Iraq's representative in Kharkiv in 2000. That accreditation was revoked only this year after the Kolchuga scandal broke.

"The Iraqis are trying hard now to get as much military equipment from whoever will sell it," a Western diplomat said.

"Ukraine is one of those who will sell."