* Progress by Amano may boost big power talks
* Powers aim to stop Iran's higher-grade uranium enrichment
* Iran reports nuclear advance to boost bargaining power
(Adds White House reaction)
By Fredrik Dahl
VIENNA, May 22 The U.N. nuclear watchdog
director said on Tuesday he expected to sign a deal with Iran
soon to unblock an investigation into suspected work on atom
bombs, potentially brightening prospects for big-power talks
with Tehran to stop a drift toward conflict.
Yukiya Amano was summarizing the outcome of rare talks he
conducted in Tehran on Monday, two days before six powers meet
Iran's security council chief in Baghdad to test Iranian
willingness to curb its nuclear program in a transparent way.
Amano, director-general of the International Atomic Energy
Agency, said his wish for access to Iran's Parchin military
complex where nuclear weapons-relevant tests may have occurred
would be addressed as part of the accord.
But the powers will be wary of past failures to carry out
extra inspection deals between the International Atomic Energy
Agency and Iran, and Western patience is wearing thin.
White House press secretary Jay Carney called the move "a
step in the right direction" but stressed Washington wanted to
see verifiable movement by Tehran.
"We will make judgments about Iran's behavior based on
actions, not just promises or agreements," he told a news
briefing, adding that Washington "will continue to pressure
Iran, continue to move forward with the sanctions."
European sanctions to block Iran's economically vital oil
exports are to take force in July and Israel has mooted military
action. A defiant Iran, which denies any ambition to acquire
atom bombs, has threatened reprisals and oil prices have risen
on fear of a new Middle East war hitting a wobbly world economy.
Amano acknowledged that "some differences" remained before
the deal he discussed on his first visit to Tehran could be
sealed, although chief Iranian negotiator Saeed Jalili had
assured him these would not thwart agreement.
"The decision was made to conclude and sign the agreement
... At this stage, I can say it will be signed quite soon," the
veteran Japanese diplomat told reporters at Vienna airport on
his return from the Iranian capital.
Amano, who flew impromptu to Tehran to capitalize on
progress in talks with Iran in Vienna held by senior aides,
described the outcome of his meeting in Iran as an "important
development ... We understood each other's position better".
Asked what differences persisted, Amano said only that they
were "details of discussions on this document."
Western diplomats suggested there were still unresolved
issues concerning the way the IAEA's probe would be conducted,
with Iran wanting to control and restrict it in ways the U.N.
agency could not accept.
"It is not a small issue," one envoy said. Another said a
final deal might not be struck quickly: "Even if we got an
agreement ... it is a milestone, but it is a small milestone."
Driving home Western scepticism rooted in the checkered
history of IAEA transparency deals with Iran, the acting U.S.
ambassador to the agency urged the Islamic Republic to open up
immediately and meaningfully to inspectors.
"While we appreciate the efforts (by the IAEA) to conclude a
substantive agreement, we remain concerned by the urgent
obligation for Iran to ... cooperate fully with the verification
efforts of the IAEA ... to resolve all outstanding concerns
about the nature of its nuclear program," Robert Wood said.
Israel greeted word of a incipient IAEA-Iran pact with
suspicion, citing an Iranian track record of evading and
restricting inspections aimed at ensuring no military diversions
of nuclear activity.
"Iran has proven over the years its lack of credibility, its
dishonesty - telling the truth is not its strong side - and
therefore we have to be suspicious of them all the time, and
examine the agreement that is being formulated," Civil Defense
Minister Matan Vilnai said on Israel Radio.
Asked whether last-resort air strikes on Iran were still
conceivable with apparent headway being made on the diplomatic
track, Vilnai replied: "One shouldn't get confused for even a
moment - everything is on the table."
Iran has for four years stonewalled IAEA requests to examine
sites, especially the Parchin site southeast of Tehran,
interview senior nuclear scientists and peruse documents to
verify Western intelligence reports about Iranian research and
experiments pertinent to manufacturing nuclear explosives.
Western diplomats accredited to the IAEA said that whether
concerns about Iran's nuclear intentions would be allayed by the
deal would depend on how it was applied on the ground.
"There is scepticism until this is signed and then, once it
is signed, there will be scepticism until it is implemented," a
official from one Western power in Vienna told Reuters.
HIGH-STAKES BAGHDAD NEGOTIATIONS
In Baghdad, Jalili - the personal representative of Iranian
Supreme Leader Ayatollah Ali Khamenei - will meet Catherine
Ashton, the EU foreign policy chief heading a coalition of the
five U.N. Security Council permanent members - the United
States, Britain, France, Russia and China - plus Germany.
Their main goal is expected to be an Iranian agreement to
shut down the higher-grade uranium enrichment that it launched
in 2010 and has since expanded in an underground plant at Fordow
largely impervious to attack from the air, effectively
shortening the time needed to weaponize nuclear technology.
"Cooperation with the IAEA like access to Parchin is
important but not sufficient. The 20 percent enrichment has to
be addressed as a priority," a European diplomat said.
Iran maintains it needs uranium refined to a fissile
concentration of 20 percent for its medical isotope reactor.
Enrichment to 5 percent of fissile purity is suitable for power
plant fuel, while 90 percent constitutes fuel for bombs.
Iranian state television quoted Amano as saying that his
talks would have a "positive impact" on the Baghdad meeting.
But diverging agendas stand in the way of a breakthrough.
Iran has suggested it will try to leverage its reported
rapprochement with the IAEA into a deal in Baghdad to relax
sanctions inflicting increasing damage to its economy. But
Western officials ruled out such a weighty concession so soon.
"We are not going to do anything concrete in exchange for
nice words," a senior Western diplomat cautioned.
In an apparent move to beef up its bargaining position, Iran
announced on Tuesday that it had delivered its first two batches
of domestically made nuclear fuel to a Tehran research reactor.
If confirmed, Iran's ability to run the reactor with its own
fuel could remove any basis for a mooted deal under which Iran
would ship most of its enriched uranium abroad in a swap for
such fuel, reducing its stocks of potential atom bomb material.
Tehran tentatively agreed to the swap in 2009 talks with the
powers but the deal collapsed over details of implementation.
Iran's foreign minister had said last month it was willing to
consider an updated version of the idea.
Iran insists it wants nuclear energy only for electricity
generation and medical treatments, but has long defied U.N.
resolutions calling for a confidence-building suspension of
uranium enrichment and unfettered IAEA access.
U.S. analyst Graham Allison said Iran had been "cautiously,
but steadily, putting in place all the elements it needs to
construct a nuclear weapon in short order", but so far astutely
stopped short of a decision to do so.
"Any scenario that requires months between tripping the
IAEA's alarm and testing a bomb would mean taking a huge risk of
being attacked, something Iran's Supreme Leader Ali Khamenei has
so far assiduously avoided," Allison, director of Harvard
University's Belfer Center for Science and International
Affairs, said in an article for the Scientific American.
U.S. WIDENS ENERGY SANCTIONS
Cranking up pressure on Iran, the U.S. Senate on Monday
extended sanctions on its oil sector to cover dealings with the
National Iranian Oil Co and National Iranian Tanker Co to close
a potential loophole that could have allowed Tehran to continue
selling some of its petroleum using its own fleet.
As if the diplomatic challenges in Baghdad were not daunting
enough, the weather threatened to play havoc with the talks.
As delegations prepared to head for Iraq, Baghdad airport
was closed on Tuesday after a sandstorm blanketed the Iraqi
capital in choking dust, reducing visibility and grounding
flights from neighboring Jordan and the United Arab Emirates.
Iraq's transport ministry said the sandstorm could last
through Friday, risking further disruptions to air traffic.
Jalili arrived on Monday night in Baghdad while Western
delegations were scheduled to arrive on Wednesday morning.
(Additional reporting by Marcus George in Dubai, Roberta
Rampton in Washington, Maayan Lubell in Jerusalem, Justyna
Pawlak and Patrick Markey in Baghdad and Zahra Hosseinian in
Zurich; Writing by Mark Heinrich; Editing by Ralph Boulton and