U.S. sees time for Iran diplomacy, says sanctions bite

WASHINGTON (Reuters) - The United States said on Wednesday there is still time for a diplomatic solution with Iran but the increasingly defiant state must take “tangible steps” to address concerns about its nuclear program.

U.S. officials also said economic sanctions imposed on Iran because of suspicions that it may be seeking to develop nuclear weapons are increasingly biting, possibly cutting investment in its crucial energy sector by as much as $60 billion.

A top U.S. diplomat said that major powers that are due to meet Iranian officials in Geneva on Monday and Tuesday were open to reviving a deal struck last year to exchange low-enriched uranium for fuel to run an Iranian medical research reactor but that its terms would have to be modified.

There have been no negotiations between Iran and the so-called P5+1 -- Britain, China, France, Germany, Russia and the United States -- since the proposal on the Tehran Research Reactor (TRR) was floated in October 2009.

The agreement was never carried out.

“The P5+1 will go into what we hope will be a serious round of discussions with the Iranians prepared to engage seriously about our very profound concerns about Iran’s nuclear program,” Undersecretary of State William Burns, the U.S. representative to the talks, told U.S. lawmakers.

“We will continue to emphasize the importance of taking tangible steps to address those concerns, tangible steps which are necessary as a result of Iranian noncompliance over many years and the mistrust that that has created,” he added.

“We are still prepared to consider ... the possibility of making use of that (Tehran Research Reactor) concept but last June we made clear ... (we) had several concerns that would have to be addressed ... because circumstances have changed since this was originally proposed last October,” Burns said.


Officials from the United States and many of its allies suspect Iran is using its civilian nuclear program as a cover to develop bombs. Iran denies this, saying its nuclear program is purely peaceful.

Burns said that Iran’s enrichment of uranium -- a process that can produce fuel for nuclear power plants or atomic bombs -- to as high as 20 percent “would have to be addressed.”

Another U.S. official, who spoke on condition that he not be identified, said the United States would want Iran to hand over more than the roughly 1,200 kg of low enriched uranium agreed last year because it has produced more since then.

As a result of Iran’s failure to stop enriching uranium despite repeated U.N. Security Council resolutions demanding that it do so, international and bilateral sanctions have been imposed on Tehran that U.S. officials say are now biting.

Iran is finding it increasingly difficult to access the financial services it needs to run its economy and may lose up to $60 billion in energy investments due to global sanctions, U.S. officials said on Wednesday.

Iran is the world’s fifth-largest oil exporter and its petroleum sector is estimated to account for more than four-fifths of government revenues. Lower investment could constrain its ability to produce and export oil.

“With great regularity, major companies are announcing that they have curtailed or completely pulled out of business dealings with Iran,” Stuart Levey, U.S. Treasury undersecretary undersecretary for terrorism and financial intelligence, told the House of Representatives Committee on Foreign Affairs.

Levey said the sanctions were restricting Iran’s access to dollars and were the likely cause of a nearly 20 percent plunge in Iran’s rial currency in September, prompting weeks of intervention from Iran’s central bank to stabilize it.

Burns told lawmakers Iran may lose $50 billion to $60 billion in potential energy investments, along with critical technology and know-how from major international companies.

“Sanctions have hindered Iran’s development of a nuclear weapons capability and the means to deliver them, while making it harder for Iran to continue its destabilizing activities in the region,” Burns said in prepared remarks.

Additional reporting by Thomas Ferraro; Editing by Philip Barbara