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WASHINGTON (Reuters) - The United States and its European allies are preparing a new offer to Iran on a possible nuclear fuel swap that would include tougher conditions than those Tehran rejected last year, the U.S. State Department said on Thursday.
"We expect and hope that we would be able to offer a revised (fuel swap) proposal to Iran should there be talks in the near future, but we are still working on the specific details," State Department spokesman P.J. Crowley said.
The New York Times cited a senior U.S. official as saying Washington and its allies were close to an agreement on a proposed deal, an assessment echoed by a Western diplomat in Washington.
"It's nearly done," the diplomat told Reuters on condition of anonymity.
Crowley cautioned that even if the fuel exchange plan for the Tehran Research Reactor, or TRR, is revived, possibly in talks the Western powers hope to hold with Iran in Vienna next month, it would still not resolve wider concerns about Iran's nuclear intentions.
"There is a recognition that an updated TRR proposal can be helpful as a confidence building measure," Crowley said.
"You should not confuse the advancement of a TRR proposal with the core concerns that we continue to have on Iran's nuclear program and its character.
The New York Times reported intelligence analysts had concluded last year's fuel exchange proposal was scuttled by Iran's supreme leader, Ayatollah Ali Khamenei, and that many officials therefore suspected that this latest effort would also fail.
"I for one am skeptical that the Iranians will change course ... what comes out of Iran is not very promising," another senior diplomat told Reuters in Vienna.
Iran, which has ruled out halting sensitive nuclear work that can have both civilian and military uses, has welcomed the offer of talks with the major powers but has yet to formally reply to the invitation for a meeting from November 15 to 17.
Dismissing the impact of tougher sanctions introduced since June, it has said it is open to resume negotiations on a proposal for it to send low-enriched uranium (LEU) abroad and get higher-grade fuel for a medical research reactor in return.
Western diplomats say economic sanctions are beginning to have an impact on Iran, and it may be possible to revive the fuel swap plan if Iran also accepts broader talks they hope will lead to Tehran agreeing to curb its enrichment drive.
They have made clear any new swap deal must be updated to take into account Iran's increased uranium stockpile and its work to enrich to higher levels since February.
"In order to meet their obligations and in order to have economic sanctions that are having a bite lifted, they're going to have to do more," White House spokesman Robert Gibbs said.
The Times said the new offer would require Iran to send more than 4,400 pounds (2,000 kg) of LEU out of the country. That would represent a more than two-thirds' increase from the amount required under a tentative deal a year ago that later collapsed.
Iran would also be required to stop all production of nuclear fuel it is enriching to 20 percent, a key step toward bomb-grade levels, and agree to negotiate on the future of its nuclear program, the Times said.
Crowley declined to confirm specific details of the proposal being discussed, but said it would aim to address concerns about levels of material that would be involved, and the destination and oversight for its shipment out of the country.
Research Associate Ivanka Barzashka of the Washington-based Federation of American Scientists said a successful fuel deal was a necessary condition for further Iran-West engagement and that its confidence-building benefits could still be salvaged.
But, "an increase in the swap amount will surely be seen by Iran as moving goalposts and will likely cause further delays in negotiations," Barzashka said in an e-mailed comment.
Additional reporting by Peter Cooney and Matt Spetalnick in Washington and Fredrik Dahl in Vienna; Editing by Myra MacDonald and Jerry Norton