Iran, six powers haggle over extending nuclear talks -diplomats

By Louis Charbonneau and Fredrik Dahl

VIENNA (Reuters) - Iran and six world powers haggled on Friday over the terms of extending negotiations on a nuclear deal for four more months after failing to bridge wide gaps on limits for Tehran's atomic programme, diplomats said.

It has been clear for several days that Iran, the United States, Britain, France, Germany, Russia and China would miss a July 20 deadline to reach a long-term accord on curbing Tehran's nuclear activities in exchange for a gradual end to international sanctions that have crippled the Iranian economy.

Before returning to the larger issues that are dividing them - including the permissible scope of Iran's nuclear fuel production capacity and how to address the country's suspected past atomic bomb research - they must iron out the conditions of continuing their talks, which began in February in Vienna.

The negotiations are taking place because of a preliminary agreement reached in Geneva in November 2013 that gave Iran limited sanctions relief in exchange for halting some nuclear activities and created time and space for the negotiation of a comprehensive deal to end the decade-long dispute.

"The prevailing opinion and dominant view is that the new key date should be set for November, a year from ... the signing of the Geneva agreement," Russian Deputy Foreign Minister Sergei Ryabkov was cited by the Itar-tass news agency as saying.

Diplomats said that while the two sides agree on an extension of the interim agreement, they needed to agree on whether Iran should take further steps to restrict its nuclear programme for the duration of the negotiations.

Tehran, for its part, would like more funds in return, in addition to the $4.2 billion in previously frozen assets it received under the preliminary accord, which ran from Jan. 20 and expires on Sunday.

Diplomats voiced confidence that Iran and the six powers would agree on the conditions for continuing the talks past July 20, though it was unclear whether they could complete arrangements on Friday or would have to work into the weekend.

The wider negotiations were likely to resume in September, the diplomats said. But it remains uncertain whether four more months of high-stakes talks will yield a final agreement, since the underlying differences on several major issues remain significant after six rounds of meetings this year.

Western nations fear Iran's nuclear programme may be aimed at developing a nuclear weapons capability. Tehran denies this.

The powers want Iran to significantly scale back its nuclear enrichment programme to make sure it cannot yield nuclear bombs. Iran wants sanctions that have severely damaged its oil-dependent economy to be lifted as soon as possible.

After years of rising tension between Iran and the West and fears of a new Middle East war, last year's election of a pragmatist, Hassan Rouhani, as Iran's president led to a thaw in ties that resulted in November's diplomatic breakthrough.

But Iran's new government still insists that the country has a right to develop a nuclear energy programme that includes the production of atomic fuel. The West fears that this fuel, if further processed, could also be used to make bombs.

Iranian Foreign Minister Mohammad Javad Zarif told reporters this week that Tehran would be willing to delay development of an industrial-scale uranium enrichment programme for up to seven years but keep the 19,000 centrifuges it has installed so far for this purpose.

U.S. Secretary of State John Kerry joined the talks last weekend and held several face-to-face meetings with Zarif, but he said before leaving Vienna on Tuesday it was "crystal clear" that for Iran to keep all of its existing centrifuges was out of the question.

A major speech by Iran's Supreme Leader Ayatollah Ali Khamenei last week made an extension virtually inevitable by limiting the ability of the Iranian delegation at the talks to make concessions, diplomats said. That means Zarif is likely to have to return to Tehran to try to win support for more flexibility.

Khamenei suggested Iran needed over the long term a 10-fold increase in its operational capacity to refine uranium.

(Additional reporting by Parisa Hafezi in Vienna and by Alissa de Carbonnel in Moscow; Editing by Louise Ireland)