Iran, 3 powers have till Friday to OK nuclear deal

VIENNA (Reuters) - The U.N. nuclear watchdog presented Wednesday a draft deal to Iran and three world powers for approval within two days to reduce Tehran's stockpile of enriched uranium, seen by the West as a nuclear weapons risk.

Iran declined to say if it would endorse the plan, which Western diplomats said would require Tehran to send 1.2 tons of its known 1.5-tonne reserve of low-enriched uranium (LEU) to Russia and France by the end of the year. The material would be converted into fuel for a nuclear medicine facility in Tehran.

The Islamic Republic's envoy to the International Atomic Energy Agency hinted that his government may seek amendments.

Western diplomats suggested this could jeopardize the deal if they overstepped "red lines" set to create confidence that Tehran is not pursuing a nuclear weapons option. However, an outright rejection seemed less likely as this could revive Western pressure for harsher U.N. sanctions on Iran. "We have to thoroughly study this text and ... come back and reflect our opinion and suggestions or comments in order to have an amicable solution at the end of the day," Iranian Ambassador Ali Asghar Soltanieh told reporters. "We welcome this event; we are fully cooperating."

Three days of talks in Vienna failed to finalize the deal as the IAEA and the three powers -- France, Russia and the United States -- had wanted. Western diplomats said this was because Iran raised many questions about fundamental aspects of the plan which it had already agreed to in principle.

Iran has resorted to time-buying maneuvers in the past, including withholding final answers to offers in talks, while seeking to accelerate its secretive enrichment program.

IAEA Director General Mohamed ElBaradei announced the draft deal after the Vienna talks. "I have circulated a draft agreement that in my judgment reflects a balanced approach to how to move forward. The deadline for the parties to give, I hope, an affirmative action is Friday," he told reporters.

DEAL LIMITED WITHOUT ENRICHMENT HALT

"I cross my fingers that by Friday we have an OK by all the parties concerned," he said, betraying widespread uncertainty over whether Iran would make a concrete commitment.

The draft plan would reduce the high risk cited by the West of Iran, under suspicion over nuclear secrecy and restrictions on U.N. inspections, using accumulated LEU for refinement to the high level of purity suitable for a nuclear warhead.

Iran, which says its nuclear program is only for producing electricity, has already amassed enough LEU for one bomb if it were further enriched. Iran has no nuclear power plants that would use LEU, raising Western suspicions about its intentions.

ElBaradei's plan would only push back the point when Iran could "weaponize" LEU by about a year, the time it would need to supplant the 1.2 tons at its current rate of enrichment, U.S. proliferation analyst David Albright said.

Iran rules out curbing enrichment as an infringement on its "legal and obvious" right to civilian nuclear energy.

World powers seeking a lasting solution to the standoff with Iran will press it for a nuclear freeze at further talks at senior foreign ministry level planned soon, with trade rewards promised if Tehran fully suspends enrichment.

U.S. Secretary of State Hillary Clinton said "prompt action" by Iran was needed to turn the LEU blueprint into reality. "The door is open to a better future for Iran, but the process of engagement cannot be open-ended," she said in a speech.

U.S. and French officials indicated their governments would sign off on the plan.

Tehran tentatively approved the scheme in high-level talks with six world powers in Geneva on October 1. Then it appeared to row back from it, declaring it could enrich uranium to higher levels itself if terms of the deal proved unacceptable.

The arrangement envisages Russia refining Iran's 5-percent enriched uranium up to 19.7 percent and France processing the material into fuel rods to power the old, 1960s-era reactor.

Its fuel stock, imported in the early 1990s, is expected to run out in about a year. Sanctions imposed on Iran since 2006 ban it from trading for sensitive nuclear materials.

"Everybody is aware (this) transaction is a very important confidence-building measure that can defuse a crisis going on for a number of years, and open space for (further) negotiations" on other outstanding disputes, ElBaradei said.

He was referring to longstanding U.N. Security Council and IAEA demands on Iran to halt enrichment and permit wider ranging inspections to verify it is not hiding more proliferation-prone nuclear activity. Last month, Iran revealed a second enrichment site under construction since 2006 but not declared to the IAEA.

Iran has agreed to open the site to inspections on October 25.

(Additional reporting by Crispian Balmer in Paris, Arshad Mohammed and Deborah Charles in Washington; Editing by Samia Nakhoul, Mark Trevelyan and David Stamp)