Iran nuclear talks in China fall short of agreement

SHANGHAI (Reuters) - Six-nation talks looking to revive nuclear negotiations with Iran fell short on Wednesday of agreeing on a new package to present Tehran, while Iran's president said he was open to talks within limits.

The meeting in Shanghai of the five permanent members of the U.N. Security Council -- the United States, Russia, China, Britain and France -- plus Germany and an EU representative, was a first such meeting for China, which has kept away from the spotlight in the dispute.

But China's Assistant Foreign Minister He Yafei emerged from several hours of bargaining to say the diplomats failed to fully agree on a fresh plan to offer Iran, which rejected an earlier offer of negotiating incentives put to it in 2006.

"We can say we agreed on the main content of a plan to restart negotiations, but not all the problems have been resolved," He told reporters.

The political director-level diplomats would report back to their ministers in a bid to reach agreement, He said. "When the plan to restart negotiations is referred to Iran, we will urge Iran to respond positively," he added.

Iranian President Mahmoud Ahmadinejad earlier on Wednesday told a rally that Iran was ready for negotiations on nuclear and other issues provided talks do not violate his country's rights.

"The Iranian nation is after talks and negotiations but negotiations in a logical and just framework and in line with the fundamental rights of nations," Ahmadinejad said in his speech broadcast on state television, adding that Iran would not retreat from its rights "one iota".

Tehran insists it has the right to enrich uranium, which it says is for peaceful power. But the United States, Western European powers and their supporters fear Iran's enrichment could give it the means to make nuclear weapons.

The Security Council has passed three resolutions with sanctions pressing Iran to give international inspectors more information about nuclear work and stop the enrichment.

Iran has ruled out halting or limiting its nuclear work in exchange for the incentives offered in 2006, and says it will only negotiate with the U.N. watchdog, the International Atomic Energy Agency.

NO BREAKTHROUGHS FOR NOW

China has won widespread praise for hosting six-nation talks on North Korea's nuclear program and helping to broker agreement between Pyongyang and Washington on initial nuclear disarmament steps in return for economic and diplomatic rewards.

But bringing Iran in accord with wary Western powers remains beyond China's still limited influence. And Beijing must also tend to its own major energy and economic stakes in Iran, said Chinese analysts.

"China wanted to show that it's a mainstream member of the five plus one process," said Guo Xian'gang, a former Chinese diplomat to Iran, referring to the six-nation talks.

"But especially now with the energy markets so high and protecting Iran, and with the U.S. focused on its presidential election, I can't see any new negotiating plan creating a breakthrough in the short term."

China's He declined to discuss specifics of the discussions, in particular what would be in any new package of incentives to coax Iran back into nuclear negotiations.

Iran was being offered help in civilian nuclear power and economic development, as well as political confidence building measures, He said.

U.S. Secretary of State Condoleezza Rice spoke by telephone with the Chinese side about the Shanghai meeting, her spokesman Sean McCormack said, but he gave no details.

A senior Bush administration official told Reuters he did not anticipate major powers would make any big changes to the 2006 package offered to the Iranians.

"Several of the countries believe that if we repackage this a bit, tweak it a bit, then we would perhaps get the Iranians to be more interested in suspension for suspension or we would at least be able to better justify what we are doing," the U.S. official said.

"We are talking about whether there is any way at the tactical level that we can do things a bit better," added the official, who spoke on condition he was not named.

In Vienna, the European Union called on Iran to join the Convention on Nuclear Safety (CNS) -- a move that could increase knowledge about its disputed atomic energy plans.

The EU made the call at a closed safety review meeting of dozens of nations with nuclear programs. Iran was the only country building a nuclear power plant that was not a contracting party to the CNS, the EU said according to a text obtained by Reuters.

China and Russia have been colder to the idea of deeper sanctions on Iran than the United States and other Western powers. Iran is China's third biggest supplier of crude oil imports, behind Angola and Saudi Arabia.

(Additional reporting by Edmund Blair in Tehran, Mark Heinrich in Vienna and Washington staff; Editing by Jeremy Laurence and Richard Balmforth)