Q+A: Possible Iranian responses to U.S. nuclear deadline

(Reuters) - Iranian President Mahmoud Ahmadinejad is back in power after a disputed June election that led the country to its worst unrest in the past three decades.

Infighting between Iran's political and clerical rulers since the vote may complicate deciding how to respond to engagement offers from the United States before a September deadline for Iran to agree to international nuclear talks.

IS IRAN CAPABLE OF MAKING DECISIONS?

The political turmoil in Iran since the June 12 vote, which Ahmadinejad's rivals say was rigged, is preoccupying Iranian leaders, making them incapable of taking decisions.

If the deadline fails, Iran may face harsher international sanctions or even a military strike by Israel, which could have knock-on regional affects and worry global markets.

Iran, the world's fifth largest oil producer, has been hit by three rounds of U.N. sanctions over its nuclear work, which the United States and its European allies fear is a cover to develop a nuclear bomb program. Iran denies this.

IS A COMPROMISE POSSIBLE?

The chances of a positive response from Iran's ultimate power Ayatollah Ali Khamenei and his anti-Western protege, Ahmadinejad, look unlikely.

Khamenei has so far shown no public hints of flexibility over Iran's nuclear row with the West.

The election and its turbulent aftermath have further strained Iran's relations with the United States and its European allies, which Tehran accuses of inciting unrest to overthrow the clerical establishment. They deny Iran's claim.

Ahmadinejad has already signaled a tougher approach toward the West in his second term presidency, declaring that his new government would "bring down the global arrogance," a term used to refer to the United States and its European allies.

CAN IRAN COPE WITH FURTHER SANCTIONS?

Western powers have warned Iran of fresh sanctions targeting its vulnerable oil refining sector to try to force the Islamic Republic to the negotiating table. Analysts say such a penalty will be a critical escalation of existing U.N. and U.S. sanctions against the Islamic state.

Ahmadinejad has shrugged off the impact of energy sanctions on Iran, which lacks sufficient refining capacity to keep its heavily subsidized domestic market supplied with petrol. It imports some 40 percent of gasoline.

CAN ENERGY SANCTIONS BE ENFORCED?

Some analysts say an embargo on gasoline exports to Iran would be hard to enforce because of opposition by major trade partners Russia and China, dissent in a European Union fearing retaliatory cut-offs of Iranian oil, and Iran's porous, smuggler- friendly borders.

The six powers involved in nuclear talks with Iran are: the United States, China, Russia, France, Germany and Britain.

U.S. sanctions against suppliers of fuel to Iran would drive up the price the Islamic Republic has to pay for imports and provide a big money-making opportunity for oil traders able to flout the measures.

IS IRAN'S NEW NUCLEAR CHIEF A DECISION-MAKER?

The appointment of mild-mannered Ali Akbar Salehi as Iran's top nuclear official does not necessarily mean the clerical establishment is willing to change its tough policy and suspend its nuclear enrichment, a process to make fuel for power plants or, potentially, nuclear weapons.

A senior Western diplomat said Iran wanted to buy more time to perfect enrichment by appointing a relatively moderate figure as the head of its Atomic Energy Organization.

"Salehi's hands are tight. He is not a decision-maker," the diplomat said on condition of anonymity.

Salehi raised hopes by saying Iran and the West should end the nuclear standoff, but avoided any substance that addressed the key dispute over enrichment.

IS STOPPING ENRICHMENT EXPANSION A SIGN OF FLEXIBILITY?

A senior Vienna diplomat told Reuters on Tuesday that Iran had not expanded the number of centrifuges enriching uranium at its Natanz underground nuclear site since the end of May, after increasing capacity steadily over the previous three years.

However, it is unclear whether the slowdown was politically motivated, to blunt U.S.-led pressure for stiffer sanctions.

The U.N. nuclear watchdog will issue a report on Iran later this week that will influence major powers' decision over fresh U.N. sanctions against Iran.

"Why should we abandon our program when we have progressed so much? Time is on our side," a senior nuclear official told Reuters on Thursday, echoing Iran's official stance.

CAN SANCTIONS EMPOWER RULING HARDLINERS?

Some analysts say further sanctions may also give an upper hand to hardliners in Iran, where the political situation has fluctuated on a daily basis since the presidential vote.

They argue that U.S. sanctions on companies supplying gasoline to Iran would be damaging to the Iranian economy, but harming the nation more than the establishment. It will allow the clerical establishment to empower itself by uniting the nation against a common foreign enemy.

Officials believe the country is united on the nuclear program, which is a source of pride for many in Iran.

Iran's opposition leader Mirhossein Mousavi, Ahmadinejad's main election rival, has also ruled out an enrichment halt.

(Writing by Parisa Hafezi, Editing by Andrew Hammond and Samia Nakhoul)