U.S., Germany say Iran not ready for nuclear deal

A worker works at the Fuel Manufacturing plant at Isfahan Uranium Conversion Facility 440 km (273 miles) south of Tehran April 9, 2009.

ANKARA/MUNICH, Germany (Reuters) - The United States and Germany said on Saturday they saw no sign Tehran would make concessions on its nuclear programme, despite upbeat comments from Iran's foreign minister over prospects for a deal.

Iran's Manouchehr Mottaki said he had "a very good meeting" with the head of the U.N. nuclear agency on a plan to swap Iran's low-enriched uranium for higher-grade nuclear fuel to be used in a Tehran reactor producing medical isotopes.

International Atomic Energy Agency (IAEA) Director-General Yukiya Amano said he wanted dialogue with Iran to speed up.

"Dialogue is continuing, this should be accelerated. That's the point," he told reporters on the sidelines of an annual security conference in Munich. He added that during the meeting Mottaki had made no new proposal on the swap plan.

An accord on exchanging fuel could mark a major breakthrough in the long-running dispute over Iran's nuclear programme, which the West fears could be used to produce an atomic bomb.

But U.S. Defense Secretary Robert Gates said Iran had failed to address Western concerns and suggested it was time for more sanctions on the Islamic Republic, which denies its nuclear programme has a military goal.

"I don't have the sense that we're close to an agreement," Gates told reporters in Ankara where he met Turkish leaders.

Mottaki said on Friday he saw good prospects for agreement, but restated two conditions that could be stumbling blocks -- that any fuel exchange must be simultaneous and that Iran would determine quantities involved.

After his talks on Saturday with the IAEA'S Amano, Mottaki said Iran might want to exchange less than the 1,200 kg of uranium which world powers have asked it to part with in one go.

"We determine the quantity on the basis of our needs and we would inform the parties about our requirements," he told reporters at a Munich security conference.

Tomas Valasek, director of foreign policy and defense, Center for European Reform, said if the needs of Iran's research reactor were to dictate the process there would be no agreement.

"That's a deal breaker, because of course the whole idea behind the deal is let's get all of the stuff out so that we win more time so that the Israelis don't feel itchy and don't bomb Iran in the next few weeks," he said.

The five permanent U.N. Security Council members plus Germany met on Friday to discuss efforts to persuade Iran to halt its nuclear enrichment programme, but China made clear it was too soon to discuss further sanctions.

A Chinese diplomat said the major powers should respond to comments from President Mahmoud Ahmadinejad who, in contrast to Mottaki, said on Tuesday Iran could send low-enriched uranium (LEU) abroad before getting reactor fuel back.

"REACHING INTO NOTHING"

Russia's Deputy Prime Minister Sergei Ivanov told reporters in Munich that any sanctions against Iran should focus on stopping nuclear proliferation rather than target its economy.

German Foreign Minister Guido Westerwelle said Iran had so far failed to dispel Western scepticism that it was prepared to make meaningful concessions over its nuclear programme.

"Our hand is still reaching out toward them. But so far it's reaching out into nothingness," he said. "And I've seen nothing since yesterday that makes me want to change that view."

Gates said Iran's response had been disappointing and suggested it was time to move ahead with more sanctions on Iran, which has already had three sets of United Nations sanctions imposed for its failure to halt uranium enrichment.

"If they are prepared to take up the original proposal of the P-5 plus one of delivering 1,200 kilograms of their low enriched uranium, all at once to an agreed party, I think there would be a response to that," he added, referring to the five permanent U.N. Security Council members plus Germany.

"But...they have done nothing to reassure the international community that they are prepared to comply with the NPT (Non-Proliferation Treaty) or stop their progress toward a nuclear weapon, and therefore I think various nations need to think about whether the time has come for a different tack."

Western powers see the fuel swap as a means to ensure Tehran does not further enrich its uranium for use in a nuclear weapon. Iran denies it wants to make atomic bombs, but some Tehran officials have expressed strong opposition to the deal.

"In this connection you are after some kind of political fraud and intend to take away the enriched uranium material from the Iranians," parliament speaker Ali Larijani said, according to the semi-official Fars News Agency.

Some analysts interpret the mixed messages from Tehran as a sign of splits linked to political turmoil after Iran's disputed June presidential election. Others see it as a delaying tactic.

"It seems to be the old game. They are playing for time, while the international community is divided," Stephan Bierling, political science professor at the University of Regensburg.

U.S. National Security Adviser James Jones said Iran's "puzzling defiance" over its nuclear enrichment programme compelled the United States and its allies to work on a "second track of increased pressure," and said Iran could face wider sanctions or isolation.