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Oil Report

Q+A-Outlook for wider sanctions to restrain Iran nuclear drive

VIENNA, Jan 6 (Reuters) - The United States and top EU allies are seeking extended sanctions against Iran over its rejection of a U.N. plan to temper its nuclear ambitions, but Chinese and Russian resistance poses a major stumbling block.

Western concerns have been stoked by Iran’s plan for 10 more uranium enrichment plants, defiantly announced after the U.N. atomic watchdog rebuked Tehran for hiding an underground site near Qom, raising suspicion that it covertly seeks nuclear arms.

But with Iran unlikely to be able to pull off such a nuclear expansion for years if not decades, and technical and supply issues apparently hampering existing enrichment work, Russia and China see ample time for more diplomacy and talks.

WHAT TRIGGERED THE NEW SANCTIONS PUSH?

Iran ignored U.S. President Barack Obama’s deadline of Dec. 31 to accept a U.N.-brokered plan for it to swap most of its enriched uranium stockpile -- potential material for nuclear arms -- for fuel to keep its nuclear medicine reactor running.

WHAT WOULD THE NEW SANCTIONS BE?

It has been clear for months that Russia and China would never agree to sanctions targeting Iran’s energy sector, which could have a devastating impact on the Iranian economy. Diplomats in New York say that key Western powers have accepted this and lowered their sights for a new round of sanctions.

Washington said on Monday it had begun discussions with other big powers about sanctions to zero in on Iran’s ruling elite, above all the Islamic Revolutionary Guards Corps, to avoid harming ordinary people disenchanted with the government.

The corps is the top security apparatus believed to hold major sway over Iran’s nuclear programme. Sanctions could expand curbs on foreign travel by top government and IRGC individuals and on transactions with IRGC-controlled industrial and trading companies whose earnings help bankroll the programme.

U.S. officials have rowed back from the idea of “crippling” sanctions on Iran’s lifeblood oil sector out of concern not to weaken Iranian public support for opposition protests by wrecking the economy.

WHAT SANCTIONS ARE IN PLACE SO FAR?

Iran has been slapped with three rounds of U.N. Security Council sanctions since 2006 for refusing to suspend enrichment, grant unfettered access to International Atomic Energy Agency inspectors and open up to an IAEA probe into intelligence reports suggesting Iran has researched nuclear weapons designs.

Sanctions to date have focused on Iran’s nuclear and missile programmes, imposing asset freezes and travel bans on persons and firms linked to them, including banks that raise financing.

But such sanctions appear to have had scant impact on the nuclear activity of Iran, a master at smuggling over porous borders or deploying a shifting array of front companies on procurement sorties abroad.

Diplomats agree sanctions must be widened and enforcement improved, with Russian-Chinese involvement, to be effective.

WHAT’S THE TIMELINE FOR NEW SANCTIONS?

Security Council diplomats said this week it could take until at least June to craft a fourth sanctions packet palatable to Russia and China, both veto-holders in the highest U.N. body.

WHY ARE RUSSIA, CHINA LOATH TO LOWER THE BOOM ON IRAN?

Neither considers Iran to pose a nuclear threat in the foreseeable future. They believe isolating a paranoid Tehran will only goad it to pursue the bomb. Time and patience for creative diplomacy are the two non-Western powers’ watchwords.

Russia and China also want to protect close arms and energy trade ties with Iran. So the next sanctions round may be watered down and largely symbolic for the sake of six-power unity.

SO IS IRAN A NUCLEAR THREAT, OR NOT?

Iran denies it, saying it wants an enrichment industry only to generate electricity so it can export more oil. U.S., British and French officials say Iran is a threat, citing its record of evading the anti-proliferation regime of IAEA inspectors.

Suspicions have been further stoked by Iran’s policy of squirrelling away nuclear installations inside tunnels or bunkers as a “passive defence” against the risk of air strikes by arch-enemies Israel and the United States.

But intelligence experts agree Iran remains at least a few years away from the capability to make a nuclear weapon. It has taken a good decade just to achieve limited enrichment far below capacity at its Natanz complex.

The number of centrifuges enriching uranium there has shrunk by 20 percent since June, a setback apparently caused by breakdown or maintenance outages.

Iran also may be running short of quality uranium ore -- in November, the latest IAEA report said Iran had not converted any uranium into UF-6 gas for enrichment since August.

IF SANCTIONS OR DIPLOMACY DON’T WORK, IS WAR NEXT?

The failure so far of Obama’s ambitious policy of diplomatic rapprochement with Iran has renewed speculation that Israel might carry out veiled threats of last-ditch pre-emptive attack.

But Israel’s ambassador to Washington told Reuters last week that U.S.-Israeli dialogue was not at the stage of discussing a military option, focusing instead on sanctions in 2010.

Furthermore, some diplomats and strategic analysts believe Iran’s nuclear sites are too distant, far-flung and fortified to be knocked out permanently by conventional bombing.

Additional reporting by Louis Charbonneau at the United Nations; Editing by Elizabeth Fullerton

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