China dislikes proposed Iran energy sanctions: envoys

WASHINGTON (Reuters) - China has made clear to the United States and four other world powers that it dislikes a proposed ban on new investments in Iran's energy sector as part of a new round of U.N. sanctions, diplomats said on Sunday.

After months of delay, China reluctantly agreed to join the other permanent members of the Security Council and Germany -- a group often referred to as the "P5-plus-one" -- in New York last week to begin drafting a sanctions resolution against Iran for refusing to suspend its uranium enrichment program.

But the diplomats, who spoke on condition of anonymity, told Reuters that Chinese U.N. Ambassador Li Baodong indicated his displeasure at the proposals affecting Iran's energy sector during the 3-hour meeting with his U.S., British, French, German and Russian counterparts on Thursday.

"In general, the Chinese ambassador did not want to discuss specifics of the text," a diplomat said, referring to a U.S. sanctions proposal that is the basis of talks among the six.

"The first meeting in New York was for an initial exchange of views on the U.S. draft," the diplomat added. Another envoy confirmed his comments.

The Chinese did convey the impression that Beijing had problems with the proposals regarding Iran's energy sector, a diplomat said.

"It was perceived that the Chinese do not agree with the energy proposals," one of the diplomats said.

Those proposals include a ban on new investments in Iran's energy industry, several diplomats have told Reuters. The U.S. draft does not include a call for import or export restrictions on Iran's oil and gas industries, as some in the United States and Israel had hoped for, the diplomats said.

Li told reporters after last week's 3-hour meeting of the six powers that it was "a very constructive negotiation."

He said the group planned to meet again this week.

RUSSIAN CONCERNS

Several diplomats familiar with talks said the delegations remain far from agreement on a fourth round of U.N. sanctions on Iran. They are expected to gather again in New York in the middle of this week to continue their discussions.

It was not clear whether the Russians also disliked the idea of banning new investments in Iran's energy sector. Such a measure would have no impact on the Bushehr nuclear reactor that Russia is building in the Islamic Republic.

Russian officials have told the Americans that they also have problems with the U.S. draft, diplomats say. Moscow wants any new sanctions to focus on Iran's nuclear and missile industries, as three previous rounds of U.N. sanctions have.

Iran, a major oil and gas exporter, says its nuclear ambitions are limited to generating electricity and refuses to suspend its enrichment program. The Security Council has passed five resolutions ordering it stop enriching uranium.

The U.S. draft was agreed upon with the three European powers and passed on to Russia and China a month ago. It targets the Islamic Revolutionary Guard Corps and shipping and other firms, and calls for a ban on the establishment of new Iranian banks abroad and new foreign bank branches in Iran.

Although the U.S. and European delegations would like a resolution adopted this month, diplomats say negotiations could continues at least until June as China and Russia are expected to work to dilute any proposed punitive steps before handing a draft resolution to the Security Council.

The issue may also come up on the sidelines of U.S. President Barack Obama's summit on nuclear security in Washington on Monday and Tuesday, which Chinese President Hu Jintao, Russian President Dmitry Medvedev and dozens of other leaders plan to attend.

(Editing by Sandra Maler)