World powers strike accord on how to handle Iran

VIENNA, June 2 (Reuters) Major world powers has struck what Britain called a far-reaching agreement to offer Iran incentives to halt sensitive nuclear fuel work, and penalties if it did not.

''We believe (the proposals) offer Iran the chance to reach a negotiated agreement based on cooperation,'' British Foreign Secretary Margaret Beckett told a news conference yesterday, adding the major powers were prepared to suspend UN Security Council action if Tehran halted uranium enrichment.

However, Iran had already insisted it would not suspend enrichment after the United States made this a condition for opening direct talks with Tehran for the first time in decades.

The West fears Iran's nuclear programme includes plans to build atomic weapons, while Iran says it is solely for power generation.

The accord was reached at a meeting in Vienna of foreign ministers from the United States, Britain, France, Russia and China -- all permanent members of the U.N. Security Council -- as well as Germany and EU foreign policy chief Javier Solana.

''We have agreed a set of far-reaching proposals as a basis for discussions with Iran,'' said Beckett.

In the past, Russia and China have opposed punitive measures, but Beckett did not go into details about the package.

''We are prepared to resume negotiations should Iran resume suspension of all enrichment-related and reprocessing activities as required by the IAEA (U.N. nuclear watchdog), and we would also suspend action in the Security Council,'' said Beckett.

''We have also agreed that if Iran decides not to engage in negotiation, further steps would have to be taken in the Security Council ... We urge Iran to take the positive path and to consider seriously our substantive proposals which would bring significant benefits.'' A senior U.S. official in Vienna who declined to be named said Iran had ''weeks'' to respond to the initiative, and that the powers had agreed to take ''measures with teeth'' if Iran rejected the deal. But the official refused to spell out the measures or to call them ''sanctions''.

KEY INGREDIENT Officials said no further details would be issued before the package was presented to Iran, which says its programme to enrich uranium is non-negotiable.

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