IAEA and Iran agree to draw up action plan

By Karin Strohecker

VIENNA (Reuters) - The U.N. nuclear watchdog director said on Friday he and Iran's chief negotiator had agreed to draw up an "plan of action" within two months on how to resolve questions about Iran's disputed nuclear program.

International Atomic Energy Agency director Mohamed ElBaradei said he hoped the stalemate of the last weeks could be broken and described the two-hour meeting with Ali Larijani as "quite satisfying".

Yet while Larijani also spoke of "good progress", they reported no breakthrough in the core dispute -- Iran's defiance of U.N. demands to stop uranium enrichment.

"I hope we should be in a position in the next weeks to move forward and break the stalemate where we have been in for the last few months," ElBaradei told reporters.

He said they were drawing up "a plan of action which I hope we should be able to conclude within two months" and then start implementing.

However, diplomats say that about a year ago, Iran agreed with the IAEA to come up with a plan for resolving outstanding issues within three weeks, but never followed through.

Larijani is due to meet EU foreign policy chief Javier Solana in Lisbon on Saturday, seen as the last chance to overcome a standoff over Tehran's nuclear defiance before world powers start drafting tougher sanctions against it.

Solana has been exploring a face-saving way to allow the Islamic Republic to stop enriching uranium.

"I believe our talks with Mr. ElBaradei today will be quite helpful with the process that Mr. Solana is working on to reach an understanding and a solution," Larijani told journalists after the meeting.

The last Larijani-Solana meeting in May produced no breakthrough on the core enrichment dispute and the latest flurry of exploratory talks were unlikely to make much headway.

The meetings come amid IAEA concern about increasing Iranian restrictions on access for agency inspectors, imposed in retaliation for existing sanctions.

The United States said on Tuesday it and five other world powers -- Britain, Russia, France, Germany and China -- had begun discussing a third round of penalties against Iran over concerns that it was secretly trying to build atomic bombs.

Larijani made it clear upon his arrival in Vienna that he would not discuss what he called a compromise of Iran's right to a peaceful nuclear energy program.

"Even if the U.N. threatens Iran with more sanctions, the country will not stop its uranium enrichment activities," Larijani said, according to Iran's official news agency IRNA.

Iran has refused U.N. demands to halt enrichment, a process that yields fuel for power plants but can also provide material for weapons if the uranium is refined to a much higher degree. Tehran says its goal is the peaceful generation of electricity.