(Reuters) - Iran said it was prepared to make an offer to major powers in talks on its nuclear programme in Kazakhstan on Tuesday, after the United States proposed limited sanctions relief in return for a halt to the most controversial work.
The first meeting in eight months between Iran and the five permanent members of the U.N. Security Council plus Germany - the "P5+1" - aims to resolve a dispute that threatens to trigger another war in the Middle East.

Iran has used the last eight months to expand activity that the West suspects is aimed at enabling it to build a nuclear bomb, something that Israel has suggested it will prevent by force if diplomacy fails.

The negotiations in the city of Almaty - which follow inconclusive meetings last year in Istanbul, Baghdad and Moscow - were expected to run through Tuesday and Wednesday.

But with the Islamic Republic's political elite preoccupied with worsening infighting before a presidential election in June, few believe the meeting will yield a quick breakthrough.

"It is clear that nobody expects to come from Almaty with a fully done deal," a spokesman for the European Union's foreign policy chief Catherine Ashton, who oversees contacts with Iran on behalf of world powers, said shortly after talks started.

A U.S. official said on Monday that the powers' updated offer to Iran - a modified version of one rejected by Iran last year - would take into account its recent nuclear advances, but also take "some steps in the sanctions arena".

This would address some of Iran's concerns but not meet its demand that all sanctions be lifted, the official said.

In Almaty, a source close to the Iranian negotiating team said on Tuesday that Iran would put up a counterproposal.

"Depending on what proposal we receive from the other side we will present our own proposal of the same weight," the source told reporters. "The continuation of talks depends on how this exchange of proposals goes forward."

PRACTICAL STEPS?

At best, diplomats and analysts say, Iran will take the joint offer from the United States, Russia, France, Germany, Britain and China seriously and agree to hold further talks soon on practical steps to ease the tension.

"We are looking for flexibility from the Iranians," said Ashton's spokesman, Michael Mann.

But Iran, whose chief negotiator Saeed Jalili is close to Supreme Leader Ayatollah Ali Khamenei and is a veteran of Iran's 1980s war against Iraq and the Western powers that backed it, has shown no sign of willingness to scale back its nuclear work.

It argues that has a sovereign right to carry out nuclear enrichment for peaceful energy purposes, and in particular refuses to close its underground Fordow enrichment plant, a condition the powers have set for any sanctions relief.

A U.N. nuclear watchdog report last week said Iran was for the first time installing advanced centrifuges that would allow it to significantly speed up its enrichment of uranium, which can have both civilian and military purposes.

Tightening Western sanctions on Iran over the last 14 months are hurting Iran's economy, slashing oil revenue and driving the currency down, which in turn has pushed up inflation.

The central bank governor was quoted on Monday as saying Iran's inflation was likely to top 30 percent in coming weeks as the sanctions contribute to shortages and stockpiling.

SANCTIONS NOT CRIPPLING

But analysts say they are not close to having the crippling effect envisaged by Washington and - so far at least - they have not prompted a change in Iran's nuclear course.

Western officials said the powers' offer would include an easing of sanctions on trade in gold and other precious metals if Tehran closes Fordow.

The facility is used for enriching uranium to 20 percent fissile purity, a short technical step from weapons-grade.

Iran's stockpile of higher-grade uranium has grown to about 167 kg, an increase of roughly 18 kg since mid-November. While the pile is still approaching the level of 240 kg that Israel has set as its "red line", the growth rate has slowed sharply.

The web-based news site Al Monitor said on Tuesday that the big powers' offer could also include some relief for the petrochemical industry and in banking. Officials present in Almaty declined to comment on the report.

The stakes are high with Israel, assumed to be the only nuclear-armed power in the Middle East, hinting strongly at military action and Iran pledging to hit back hard if attacked.

The fact that the meeting is taking place in Kazakhstan - which gave up its nuclear arsenal after the collapse of the Soviet Union in the early 1990s - has symbolic resonance.

A U.S. official said the Central Asian state could serve as a "role model" for the benefits of making "certain choices".

Western officials acknowledge an easing of U.S. and European sanctions on trade in gold represents a relatively modest step. But it could be used as part of barter transactions that might allow Iran to circumvent tight financial sanctions.

Iran's Foreign Ministry spokesman last week dismissed the reported incentive as insufficient and a senior Iranian lawmaker has ruled out closing Fordow, close to the holy city of Qom.

By Reuters

 

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