The Observer

Peter Beaumont, foreign affairs editor

Frantic diplomatic negotiations took place in Tehran yesterday as Iran weighed up a package of trade inducements offered by world powers in exchange for the abandonment of its uranium enrichment programme.

European foreign policy chief Javier Solana arrived in Tehran with the offer of the last-ditch deal on behalf of Britain, the US, Germany, Russia, France and China. Tehran is being given a month to agree to suspend enrichment of uranium in exchange for economic, technological and political incentives or face further punitive measures, including the prospect of unilateral sanctions by the EU.

Almost as soon as Solana arrived, a senior Iranian government spokesman insisted that the suspension of Iranian enrichment demanded as part of the deal was not 'debatable'. 'Iran's stance is clear. The precondition of a halt and suspension of nuclear activities cannot be brought up,' said Gholam Hossein Elham.

Several hours later a second government official offered a cautiously optimistic account of the talks saying that they had opened 'a new diplomatic path' in the efforts to resolve the long-running nuclear dispute.

Speaking off the record, he said: 'Both sides have reached a preliminary agreement on common points in the two packages,' referring to separate proposals put forward by the two sides. 'This will be a basis for fresh nuclear talks.'

Contributing to the sense that a deal may yet be possible, Mohsen Rezaei, secretary of the powerful Expediency Council headed by former President Ali Akbar Hashemi Rafsanjani, said: 'I think the negotiations should continue to enable the two sides to find rational and legal settlement. All disputes can be resolved through negotiations.'

The apparent contradictions in the Iranian position reflect divisions in the ruling clerical elite - and between messages designed for a domestic audience and those for external consumption.

The visit by the delegation headed by Solana comes amid a ratcheting up of the rhetoric against Iran over its nuclear ambitions - not least in Israel where Shaul Mofaz, a member of the government and former defence chief, stated recently he believed an attack on Iran was 'inevitable.'

President George Bush, in France on the penultimate leg of his European tour, expressed disappointment that Iran had not immediately accepted the 'generous offer' presented by Solana. The package is a reworked and apparently improved version of an initiative rejected by Iran in 2006.

Bush said Iran was isolating its people and endangering the world by continuing its enrichment programme. Iran denies trying to build a nuclear bomb and insists its programme is strictly for electricity generation. A US intelligence report in December concluded, however, that Iran did have a warhead programme but shelved it in 2003. For its part the International Atomic Energy Agency complained earlier this month that Iran had not been sufficiently 'transparent'.

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