Iran, IAEA resume talks to clear up atom questions

VIENNA, July 24 (Reuters) Iran resumed talks with the UN nuclear watchdog today on clarifying the scope of its atomic activities in what diplomats called an effort to head off more painful UN sanctions against Tehran.

European diplomats said last week that Western powers had quietly shelved efforts to toughen UN sanctions against Iran until September to see whether the talks would bring an end to Iranian stonewalling of UN inquiries ongoing since 2003.

Today's meeting between Olli Heinonen, nuclear safeguards chief at the International Atomic Energy Agency, and Iran's deputy nuclear negotiator Javad Vaeedi was intended to build on modest deals reached at an initial round in Tehran 10 days ago.

Neither side commented as the discussions began in the IAEA's highrise headquarters in Vienna.

In gestures towards transparency earlier this month, Iran agreed to let IAEA inspectors revisit a heavy-water reactor under construction and to produce a plan for better IAEA access to Iran's underground uranium enrichment plant by early August.

IAEA Director Mohamed ElBaradei has said Iran's pledge to flesh out an action plan within 60 days to counter suspicions it is secretly trying to build atomic bombs has raised hope of defusing a volatile standoff between Tehran and Western powers.

ElBaradei has also cited what he said was a slowdown in the expansion of Iran's uranium enrichment detected by IAEA inspectors during a visit to the Natanz plant in early July.

TO EXPORT OIL Iran says it is refining uranium only to generate more electricity and allow it to export more of its oil.

But Tehran has threatened to call off its rapprochement with UN investigators if the West moves to pass another sanctions resolution on top of two modest ones enacted since December.

Diplomats and analysts said Tehran could be forthcoming on some issues but hold back on some others to retain as bargaining chips in a drawn-out strategic poker match with Western powers.

Going some way to answering IAEA questions seemed geared to reduce support for more sanctions -- especially among sceptical Russia and China -- and create political capital to retain at least some of its enrichment programme.

Iran has defied several UN Security Council resolutions initiated by EU allies of Washington demanding that it stop all enrichment-related activity in exchange for trade benefits.

Among the issues the IAEA says it wants to get to the bottom of are the origin of traces of highly enriched -- or weapons-capable -- uranium found on some equipment, experiments with plutonium, and the status of Iranian research into advanced centrifuges that can enrich three times as fast as the model Iran now uses.

The talks have also addressed steps Iran could take towards more transparency about its declared nuclear activity.

REUTERS GT RN1537