World powers seek to ease nuclear deadlock with Iran

(Reuters) -

The talks, in Istanbul, the first between Iran and the six powers in 15 months, are unlikely to yield any major breakthrough but Western diplomats hope to see readiness from Tehran to start to discuss issues of substance.

That, they say, would mark a big change in Iran's attitude from the last meeting when it refused even to talk about its nuclear program and could be enough for scheduling a second round of talks next month, possibly in Baghdad.

Such an outcome could, at least for the time being, dampen speculation that Israel might launch military strikes on Iranian atomic sites to prevent its enemy from obtaining nuclear arms.

The morning round of talks were "completely different" from the previous meeting 15 months ago and Iranian chief nuclear negotiator Saeed Jalili had not stated the kind of preconditions that he did in the last meeting in early 2011, a diplomat said.

"He seems to have come with an objective to get into a process which is a serious process," said the envoy, who spoke on condition of anonymity. "I would say it has been a useful morning's work."

Both sides say they are ready at the meeting to work towards resolving the deepening dispute over the nuclear program which the West suspects is geared towards achieving a nuclear arms capability, but which Iran says has purely peaceful purposes.

"What we are here to do is to find ways in which we can build confidence between us and ways in which we can demonstrate that Iran is moving away from a nuclear weapons program," said European Union foreign policy chief Catherine Ashton who is also the main representative of the United States, France, Russia, China, Germany and Britain at the talks.

"For their own reasons, each side wants to give diplomacy a chance at this point, to start a process rather than to force a quick fix," said analyst Michael Adler at the Woodrow Wilson International Center for Scholars.

Iran must show that it is willing to enter "serious engagement", one senior diplomat said, suggesting Saturday's discussions were unlikely to go into detailed issues.

"My tip is to set your sights low," the diplomat said.

Iran says it will propose "new initiatives" in Istanbul, but it is unclear whether this means it is now prepared to discuss curbs to its uranium enrichment program.

"They met in a constructive atmosphere," said Ashton's spokesman Michael Mann after the morning session of talks. "We had a positive feeling that they did want to engage."

A U.S. official said: "We are open to a bilateral with Iranians," but while Iranian state television said some bilateral meetings would be held, an Iranian official said his delegation would not hold separate talks with the Americans.

The United States cut diplomatic ties in 1980 after Iranian students held 52 American diplomats hostage for 444 days and the two sides have held very rare one-to-one meetings since then.

The West accuses Iran of seeking to develop a nuclear weapons capability. Israel - believed to be the only Middle East state with an atomic arsenal - sees Iran's atomic plans as a threat to its existence. Iran has threatened to retaliate for any attack by closing a major oil shipping route.

COMPROMISE POSSIBLE?

Iran, one of the world's largest oil producers, says its nuclear program is a peaceful attempt to generate electricity and medical isotopes for cancer patients.

But its refusal to halt nuclear work which can have both civilian and military uses has been punished with intensifying U.S. and EU sanctions against its lifeblood oil exports.

"Given that oil revenue accounts for over half of government income, the budget will be under significant strain this year as oil exports fall as a result of sanctions and oil production is cut back by Iran as its pool of buyers begins to shrink," said Dubai-based independent analyst Mohammed Shakeel.

In a sign of what is at stake in the attempt to restart diplomacy, the fate of a new package of sanctions on Iran proposed by U.S. lawmakers may hinge on whether progress is made in Istanbul.

Western officials have made clear their immediate priority is to convince Tehran to cease the higher-grade uranium enrichment it began in 2010. It has since expanded that work, shortening the time it would need for any weapons "break-out".

Iran has signaled some flexibility over halting its enrichment to a fissile purity of 20 percent - compared with the 5 percent level required for nuclear power plants - but also suggests it is not ready to do so yet.

Iran would expect to be rewarded with an easing of sanctions if it agrees to scale back its sensitive nuclear work, but Western officials say this is not up for negotiation in Turkey.

"Stopping 20 percent enrichment would be seen as a gesture to start negotiations, not to lift sanctions," one diplomat at the talks said.

In the end, experts and some diplomats say, both sides must compromise for any long-term deal to resolve the dispute: Iran could keep enriching uranium to low levels in return for accepting much more intrusive U.N. nuclear inspections.

"From a non-proliferation point of view, zero enrichment is beneficial, but not necessary to prevent a nuclear-armed Iran," Ali Vaez of the International Crisis Group thinktank said.