* Iran, six world powers hold June nuclear talks in Vienna
* Wide gaps remain with five weeks to go before July 20
* No discussion yet on any extension of talks - US official
* U.S. says may discuss Iraq with Iran on sidelines of talks
By Justyna Pawlak and Fredrik Dahl
VIENNA, June 17 Iran and six world powers will
try in talks in Vienna this week to narrow differences and keep
alive hopes of ending a decade-old nuclear dispute by late July,
despite doubts the self-imposed deadline can be met.
On the sidelines of the five-day meeting in the Austrian
capital, the fast-moving crisis in Iraq could also require the
attention of U.S. and Iranian diplomats. The two countries share
concern over the ascendancy of militant Sunni rebels there.
With time running short if a risky extension of the nuclear
talks is to be avoided, negotiators face huge challenges to
bridge gaps in positions over the future scope of Iran's nuclear
programme in just five weeks.
The talks, co-ordinated by European Union foreign policy
chief Catherine Ashton, stumbled during the previous round in
mid-May. Both sides accused the other of lacking realism in
their demands and French Foreign Minister Laurent Fabius said
the negotiations had "hit a wall".
Although such rhetoric may in part be a negotiating tactic,
it also underlines how far the sides are from resolving a
dispute that retains the potential to unleash war in the region.
Israel sees Iran's nuclear programme as a threat and has in the
past suggested it could launch military strikes on its sites.
The powers want Iran to significantly scale back its uranium
enrichment programme, denying it any capability to move quickly
to production of a nuclear bomb. Iran denies any ambition to
produce such a weapon and demands crippling economic sanctions,
eased slightly in recent months, be lifted entirely.
The sides also need to agree on other complex issues as part
of a comprehensive deal, including the extent of U.N. nuclear
agency monitoring of Iranian nuclear sites, how long any deal
should run and the status of Iran's planned Arak research
reactor, which could potentially yield plutonium for bombs.
"We don't have illusions about how hard it will be to close
those gaps, though we do see ways to do so," a senior U.S.
official said, signalling the pace of diplomacy would intensify
in the days and weeks ahead.
Sounding a cautiously hopeful note after a bilateral
U.S.-Iranian meeting in Geneva last week, the official said that
"we are engaged in a way that makes it possible to see how we
could reach an agreement", without giving details.
In Tehran, Iran's Foreign Minister Mohammad Javad Zarif
said: "If the other parties enter in negotiations with realistic
views, the possibility of a final agreement exists. But if they
act irrationally, we will act in accordance to our national
Ashton, Zarif and the U.S. delegation, led by Under
Secretary of State Wendy Sherman and including Deputy U.S.
Secretary of State Bill Burns, held trilateral talks on Monday
ahead of the start of formal negotiations on Tuesday.
The U.S. official also said the United States may discuss
the security crisis in Iraq with Iran during this week's nuclear
talks, in what could mark a momentous step in U.S. engagement
with its longtime adversary.
Both Washington and Tehran are alarmed by the rapid advance
in Iraq of insurgents from the radical Islamic State of Iraq and
the Levant (ISIL), which is seeking to re-create an Islamic
caliphate across much of Iraq and neighbouring Syria.
"There may be discussion of that issue on the margins of our
discussions, completely and separately apart from the nuclear
negotiations," the U.S. official said.
IRAN "WANTS A LOT"
Diplomatic sources have told Reuters that it is increasingly
likely Iran will seek an extension of the nuclear talks
deadline. But Western officials insisted the
focus was still on sealing the agreement by late next month,
noting that any extension must be agreed by all sides.
"If there is an extension if will be for a few weeks," a
diplomat from one of the six powers - the United States, France,
Germany, Russia, China and Germany - told Reuters. If a deal
were really within reach the sides shouldn't need six more
The seven states agreed on the July deadline to reach a
comprehensive agreement as part of an interim deal on the
decade-old nuclear stand-off in Geneva struck on Nov. 24.
That accord - under which Iran suspended some sensitive
nuclear activities in exchange for limited sanctions relief -
allowed for a six-month extension if necessary for a settlement.
It would allow up to half a year more for partial sanctions
waivers and restraints on Iranian nuclear activity as agreed in
Geneva. To avoid open conflict with a hawkish Congress, U.S.
President Barack Obama would want lawmakers' approval to extend.
An extension would have its perils. Analysts say both sides
might come under pressure from hardliners at home to toughen the
terms during this extra time period, further complicating the
chances of a successful outcome.
The previous round of talks in Vienna, the fourth since
February, ran into difficulties when it became clear that the
number of centrifuge enrichment machines Iran wanted to maintain
was well beyond what would be acceptable to the West.
Refined uranium can be used to fuel nuclear power plants,
Iran's stated goal, but also in a more highly refined form
provide material for atomic bombs, which the West fears may be
it ultimate aim.
Iran says it is Israel, a close U.S. ally, which threatens
regional peace with an atomic arsenal it has never acknowledged
but is widely believed to possess.
"Iran wants a lot and we are ready to only give a little. A
strong capacity to enrich enables them to quickly move to an
armed nuclear weapon. A weak capacity delays that
substantially," a Western diplomat said.
(Additional reporting by Louis Charbonneau and Parisa Hafezi in
Vienna and by John Irish in Paris; editing by Ralph Boulton)