China: Big powers should talk with Iran, not punish

The U.S. State Department said senior officials from the United States, Britain, France, Germany, China and Russia held a conference call on the issue.

"They discussed both tracks, both the pressure track and the (negotiating track)," State Department spokesman P.J. Crowley told reporters, referring to the twin policy of diplomacy and sanctions which the five permanent U.N. Security Council members and Germany have deployed with Iran.

Western members of the group have been discussing a possible fourth round of U.N. sanctions in response to Iran's refusal to freeze uranium enrichment work as demanded by five Security Council resolutions.

Moscow has indicated it is ready to support new punitive steps but China, which like Russia has close commercial ties to Iran, is resisting. As a permanent Security Council member, China can use its veto to block any new sanctions resolution.

This week, Iranian President Mahmoud Ahmadinejad said his country was ready to send its low-enriched uranium to Russia and France for further purification into fuel for a reactor that makes medical isotopes. Tehran had earlier rejected such an offer.

Ahmadinejad's surprising remarks came after details of U.S. and French documents outlining possible new U.N. sanctions against Iran were leaked. Possible targets include Iran's central bank, Revolutionary Guard Corps and energy sector.

But Beijing, which has reacted furiously to a proposed $6.4 billion arms deal Washington announced with Taiwan, an island China claims as its own, made clear it prefers dialogue.

Referring to Ahmadinejad's remarks, a Chinese diplomat at the United Nations said the six powers should "take that offer and see if the Iranians really mean to want to have a breakthrough in the negotiations."

"This is an open, public ... offer from the highest authorities," the envoy said on condition of anonymity.

Iran rejects Western allegations that it is seeking atomic weapons and refuses to halt its enrichment program. It says its sole aim is to generate electricity.

IRAN TO DISCUSS FUEL PLAN WITH IAEA

Iranian Foreign Minister Manouchehr Mottaki said in Munich that he would discuss Iran's new ideas on the fuel exchange plan with the new International Atomic Energy Agency chief, Yukiya Amano, on Saturday on the fringes of a security conference in the southern German city.

Mottaki said Tehran would set conditions on the exchange and wanted guarantees that it would get its uranium back. Crowley made clear there would be limits on the acceptability of any conditions on the fuel proposal, which Iran agreed to in principle at a meeting in Geneva in October.

"If Iran has an official response, it should be formally presented to the IAEA," the State Department spokesman said. "Any conditions from Iran have to meet the requirements of the many (Security Council) resolutions that underscore the international community's concern about Iran's nuclear program."

Like China, Russia reluctantly supported three rounds of U.N. sanctions against Iran after working hard to dilute the measures during closed-door negotiations on the resolutions.

But Moscow warned on Friday that the Security Council would take up the issue again if Tehran fails to act constructively.

"We confirmed that if we do not see a constructive answer from Iran, we will have to discuss this in the U.N. Security Council," Russian Foreign Minister Sergei Lavrov told reporters at a news conference with his German counterpart, Guido Westerwelle, in Berlin.

Beijing, which appeared to snub the others by sending a low-level representative to a meeting of the six powers in New York last month, had its "assistant secretary for arms control" take part in Friday's conference call. Crowley said this was an appropriate representation.

Chinese Foreign Minister Yang Jiechi, speaking at the same security conference in Munich that Mottaki is attending, said diplomacy remains the best way to resolve the standoff.

"We believe Iran has not totally shut the door on the IAEA proposal on nuclear fuel supply," he said.

A day earlier, Yang said even discussing new sanctions now, let alone imposing them, could be harmful.

"To talk about sanctions at the moment will complicate the situation and might stand in the way of finding a diplomatic solution," he said.

(Additional reporting by Arshad Mohammed in Washington, Michael Nienaber in Berlin, William Maclean, Mark Trevelyan and David Graham in Munich; editing by Alan Elsner and Mohammad Zargham)