Iran offered 'carrot and stick' deal

Six world powers last night agreed a "carrot-and-stick" package to be offered to Iran, intended to curb its nuclear ambitions and build on the Bush administration's U-turn on direct talks with Tehran.

The foreign ministers of the five permanent members of the UN Security Council, plus Germany, overcame months of differences at talks in Vienna in order to reach agreement on the package of incentives and penalties aimed at securing a diplomatic solution to the stand-off with Iran. Details of the package were yet to be released at the time of publication.

Russia and China had until now been adamant in their opposition to arguments from Britain, the US, France and Germany that Iran should be threatened with UN sanctions for failing to halt uranium enrichment, a process that can eventually lead to the production of a bomb.

But Margaret Beckett, the British Foreign Secretary, who chaired the talks, hoped that Russia and China might soften their position in the light of Wednesday's shift in policy made public by Condoleezza Rice, the US Secretary of State.

The American official offered the first direct talks with Iran in 27 years as a way out of the impasse - on condition that Iran "fully and verifiably" suspends enrichment and reprocessing activities.

It is understood the draft package agreed to in Vienna includes an offer of a light water nuclear reactor and a guaranteed foreign supply of atomic fuel so that Iran would not need to enrich uranium itself. Sanctions could entail visa bans and a freeze on assets of senior Iranian officials before economic measures are considered.

President Bush said the US would wait for a "firm position" from Iran after the Iranian Foreign Minister ruled out suspending Iran's uranium enrichment programme. But the American President warned that the dispute would head for the UN Security Council, which is empowered to order sanctions, if Iran rejected the international demands.

"If they continue their obstinacy, if they continue to say to the world 'We really don't care what your opinion is', then the world is going to act in concert," Mr Bush said. Manouchehr Mottaki, Iran's Foreign Minister, said that Iran was "ready to hold talks over mutual concerns", but added: "We will not give up our nation's natural right [to enrichment], we will not hold talks over it."

Mr Mottaki's comments could be an attempt to buy time before formulating a definitive response to the US offer, analysts in Tehran said. "My impression is that this is not the final response," said Shirzad Bozorgmehr, managing editor of the English-language daily Iran News. "We have seen before that responses change and a later response could seek to meet the Americans half way. They want a way to start diplomatic dialogue without being seen as giving in to Western pressure."

Mr Mottaki spoke after a late-night meeting with Iran's Supreme Leader Ayatollah Ali Khamenei, who has the final say over Iran's nuclear programme. "Rice's statement was not something new. This is what was said in her previous speeches and interviews. It lacked a logical and new solution to solve Iran's nuclear issue," he added.

His comments could be the opening gambit in a new round of horse-trading. Western diplomats often accuse Iran of missing opportunities to improve relations by holding out in negotiations for unrealistic terms.

For its part, Iran remains suspicious of US motives. An editorial in Kayhan, a semi-official daily newspaper, dismissed the US offer as an attempt to influence the foreign ministers' meeting by making Iran appear vulnerable to pressure. "America wants to sell this message politically to Russia and China ... Iranian officials should be careful and give a telling response to America's suggestion," the paper's editorial said.

Iran has consistently said it will not give up enrichment, casting the issue as a basic question of national sovereignty. During negotiations with the UK, France and Germany last year it did agree to temporarily suspend enrichment but accused the European countries of trying to stall its programme indefinitely.

Analysts have said that Iran might enter into a similar arrangement with the US if there was a clear time limit on its enrichment freeze.