By Edith Honan and Patrick Worsnip
NEW YORK (Reuters) - Big power envoys said they held constructive talks Wednesday over new U.N. sanctions to try to halt Iran's nuclear program, but diplomats forecast weeks of haggling over a text the Security Council can pass.
"We got into the substance. We are moving forward and we'll have, of course, other meetings," French Ambassador Gerard Araud told reporters after the three-hour meeting.
"We started to negotiate on the basis of the text. I think the six countries are on board," he added, without elaborating or saying when the next meeting would take place.
Ambassadors from the five permanent Security Council members and Germany met at the U.S. mission to the United Nations for their second meeting in a week since China, which has close economic ties with Iran, agreed to join the talks.
The ambassadors of China and Russia, seen as the countries least keen on sanctions, were less upbeat than Araud but called the talks constructive. "We have had a better understanding of each other's positions," said China's Li Baodong.
The envoys were discussing a U.S. draft resolution, first circulated weeks ago, that provides for a fourth round of sanctions on Iran for its refusal to stop uranium enrichment. The West accuses Tehran of seeking to produce atomic arms but Tehran says it aims only to generate electricity.
The draft proposes new curbs on Iranian banking, a full arms embargo, tougher measures against Iranian shipping, moves against members of Iran's Islamic Revolutionary Guard Corps and a ban on new investments in Iran's energy sector.
Diplomats told Reuters this week that China's Li had indicated displeasure at the proposals affecting Iran's energy sector at a first meeting last Thursday with his U.S., British, French, German and Russian counterparts.
Other diplomats said that meeting had been largely confined to statements of opening positions by the ambassadors. There was no immediate indication of whether the latest session had produced any narrowing of the gaps.
U.S. President Barack Obama pressed 46 countries attending a nuclear security summit in Washington Tuesday for swift sanctions on Iran but acknowledged China had concerns about the economic impact and said negotiations were difficult.
Iran is the third largest crude oil supplier to energy-hungry China.
U.S. Defence Secretary Robert Gates, visiting Peru, hinted Washington might not insist on the toughest possible sanctions, saying the importance of a resolution was "less the specific content than the isolation of Iran by the rest of the world."
"QUITE FAR APART"
One diplomat in New York with knowledge of the negotiations put the chances of an agreement in April at only 25-30 percent. Diplomats see little chance of a resolution in May when Lebanon, whose government includes Iranian-backed Hezbollah, chairs the Security Council, and say June seems more likely.
"We're right at the beginning of the discussion on a text here, and it should be no surprise that they're quite far apart," the diplomat said, speaking before Wednesday's talks.
"The Chinese want something much, much weaker and much, much narrower" than the U.S. draft, he added.
Diplomats say Russia is more keen than China to slap new sanctions on Iran, but it, too, wants to water down the text.
Even if the permanent five can agree, weeks could be spent in further negotiations with the 10 temporary members of the council, three of whom -- Lebanon, Turkey and Brazil -- have indicated they may abstain or vote against a resolution.
But Brazil's President Luiz Inacio Lula da Silva said on Wednesday he would say during a visit to Tehran next month that Iran would suffer the consequences if it seeks nuclear arms.
U.S. Under Secretary of State William Burns told a Senate hearing Wednesday China was likely to agree to sanctions, but it would be "very difficult" to get Beijing or Moscow to agree to cut off refined petroleum products to Iran.
That proposal is backed by many U.S. lawmakers. Democratic and Republican party leaders in the House of Representatives both said Wednesday they intended soon to finish legislation that would impose sanctions on Iran's gasoline suppliers.
Oil industry sources said Wednesday state-run Chinaoil had sold a total of about 600,000 barrels of gasoline worth around $55 million to the Islamic Republic.
German carmaker Daimler said, however, that it would almost entirely sever business ties with Iran because of what chief executive Dieter Zetsche called "the policies of the current Iranian leadership."
Western powers say acquisition by Iran of nuclear weapons would be hugely destabilizing to the Middle East.
Iran could produce enough highly enriched uranium for a single nuclear bomb in as little as one year but would probably need three to five years to build a deliverable weapon, top Pentagon officials said Wednesday.
(Additional reporting by Adam Entous and Susan Cornwell in Washington, Phil Stewart in Lima and Carmen Munari in Sao Paulo; Editing by Vicki Allen)
