Iran, EU Fail to End Nuclear Standoff Before UN Talks (Update4)
March 3 (Bloomberg) -- European Union and Iranian diplomats failed to resolve a standoff over the Islamic Republic's uranium enrichment program days before the Middle Eastern country's case goes to the UN Security Council for possible sanction.

``We have not been able to reach agreement,'' EU foreign policy chief Javier Solana said in Vienna today. A precondition for building confidence is Iran ``stopping all uranium enrichment activities.''

Iran, the world's second largest holder of oil and gas reserves, says its nuclear plans are intended to produce energy for civilian purposes. The U.S. says Iran is planning to build an atomic bomb while EU countries are concerned the program goes beyond civilian needs.

The International Atomic Energy Agency -- the United Nations' nuclear watchdog -- reported Feb. 28 that Iran is engaging in small-scale uranium enrichment and getting ready to install 3,000 centrifuges for industrial-scale enrichment.

The IAEA's 35-member board of governors voted last month to refer Iran to the Security Council, for possible censure or economic and political sanctions, after a meeting on March 6 in Vienna.

``Time is running out,'' German Foreign Minister Frank- Walter Steinmeier said. ``If we want to achieve success we have to act now.''

French Foreign Minister Philippe Douste-Blazy joined Solana, Steinmeier and U.K. diplomats representing Britain's Foreign Secretary Jack Straw. France, Germany and the U.K., the so-called EU-3, have led negotiations with Iran over the nuclear issue on the European Union's behalf. They met Iran's top nuclear negotiator Ali Larijani at the German ambassador's residence in Vienna.

First Meeting

It was the first ministerial-level meeting between the EU and Iran since Mahmoud Ahmadinejad assumed the Islamic Republic's presidency in August. Ministers met last May 25 in Geneva, while Iran's nuclear activities were suspended under President Mohammad Khatami. Iranian and EU-3 diplomats will meet in Vienna again on March 6 when the IAEA board convenes.

``The course of the discussions will be of decisive importance to the process.'' Steinmeier said. ``It will either mean that we can return to the table of negotiations or that the matter has to be reported to the Security Council.''

Today's talks were ``constructive,'' said Steinmeier, adding that the EU-3 remain willing to ``sound out new ideas'' to resolve the crisis.

Enriching Uranium

Larijani's meeting followed talks in Moscow yesterday on a proposal that would involve Iranian scientists enriching uranium on Russian soil. Those talks ended with a tentative agreement, according to Larijani, Interfax reported. The two countries reached a ``complete agreement'' that meets international demands, Agence France-Presse reported today, citing an unidentified Iranian official.

The Iranian embassy in Vienna wasn't able to confirm a deal.

The Russian proposal is designed to allay international concerns that Iran wants to develop nuclear weapons. The prospects for the U.S. and Europe endorsing a deal are low, according to security experts and government officials.

The deal ``was never going to be acceptable to the Europeans or the Americans, who do not want the Iranians to posses the knowledge to enrich uranium, because they could always then bring that technology back to Iran at a later stage,'' said analyst Paul Ingram of the London-based British American Security Information Council. ``Once you know how to do it you can always bring it back and construct your own facilities.''

`Legitimate Requirement'

``It is a question of confidence,'' Douste-Blazy said. Ceasing uranium enrichment activities is a ``simple, legitimate requirement which does not hinder the development of Iran. On this point, unfortunately, we could not obtain an agreement with Mr Larijani.''

Crude oil fell from its highest level in almost four weeks on speculation that the dispute doesn't justify rising prices, because U.S. stockpiles are higher than average.

Crude for April fell 31 cents, or 0.5 percent, to $63.05 a barrel at 10:01 a.m. on the New York Mercantile Exchange, after rising as much as 43 cents, or 0.7 percent to $63.79 in electronic trading, the highest price since Feb. 7.

``There hasn't been any sign of significant progress'' regarding a compromise over Iran's nuclear program, said Kevin Norrish, an energy analyst with Barclays Capital in London, in a phone interview today. ``OPEC buys into the idea that prices are where they are because of Iran.''

A meeting of the Organization of Petroleum Exporting Countries is being held March 8 in Vienna, two days after the IAEA board takes up Iran's nuclear dossier.
 

 

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