Agreement reached on incentives for Iran on nuclear program

World powers agreed Friday to try again to lure Iran to the nuclear bargaining table with a repackaged set of carrots to accompany the stick of U.N. sanctions.

Diplomats said the offer contained no major new enticements, but was meant to remind the clerical regime that talking is still an option.

The central terms of a 2006 compromise stand: Iran could trade away worrisome elements of its nuclear program for economic and political incentives and the possibility of a better relationship with archrival Washington. Iran turned down that invitation, saying it came with insulting strings attached, and Western diplomats were hard-pressed to say why the response would be any different today.

The United Nations Security Council has imposed three sets of mild financial and other sanctions on Iran as a cost of spurning the offer.

The strategy session on Iran was part of diplomatic meetings on the Mideast and Kosovo attended by U.N. Secretary-General Ban Ki-moon, Secretary of State Condoleezza Rice and other leaders. Much of the talk revolved around prospects for a political settlement between Israel and the Palestinians, a goal for President Bush before he leaves office in less than a year.

On Iran, details of the amended offer being made by the United States, Britain, France, Russia, China and Germany were not revealed, and the precise text is still a work in progress.

The catch for Iran remains: It would have to shelve its program to enrich uranium before negotiations over possible rewards begin. Enriched uranium can be used for either nuclear power or weapons.

"We very much hope that they will recognize the seriousness and the sincerity with which we've approached this issue," British Foreign Secretary David Miliband said following a meeting of senior diplomats from all six nations.

Miliband did not give Tehran a deadline to respond or say what the group would do if Iran rejects the package again.

The group's offer represents the latest Western-led attempt to head off any ambitions Iran may have to build a nuclear weapon. Iran insists its nuclear program is intended only to produce energy that might help the oil exporting giant relieve internal demand for electricity, but doubters say Iran could use the aboveboard program as cover to build a bomb.

The Bush administration has been the chief advocate for U.N. sanctions against Iran, over the reservations of veto-holding members Russia and China. European allies have also appeared frustrated both by Iran's lack of interest and U.S. zeal to push the regime harder.

As a condition of winning approval for the latest punishments last month, the United States agreed to revisit the list of rewards. Rice has said she doubts Iran is interested, no matter what.

"I don't see any evidence that the Iranians appear to be interested in that track, and that doesn't leave us with any options" apart from sanctions, Rice told reporters Thursday.

European diplomats had said they hoped to sweeten the offer a bit, but Miliband did not characterize it that way. He called the new offer an update. Western diplomatic officials later said the offer restates but does not improve the original offer. They spoke on condition of anonymity to describe the offer not yet presented.

The incentives offered in 2006 included an offer by the United States to provide Iran with peaceful nuclear technology, lift some sanctions and conduct direct negotiations with Tehran.

Earlier Friday, Palestinian Prime Minister Salam Fayyad emerged discouraged following a meeting with donors to the Palestinian cause and Israeli Foreign Minister Tzipi Livni. He warned that peace talks could collapse unless Israel takes a more conciliatory approach and ends Jewish housing expansion on disputed ground. Israel has not complied with any of the obligations set out at the U.S.-backed peace conference in Annapolis, Md., late last year, Fayyad said.

"Unless that changes, the political process is being stripped of its meaning," Fayyad said.

But he said Israel had refused to take steps that would allow normal economic activity in the West Bank and Gaza Strip.

The remarks came after the Middle East peace Quartet - the U.S., Russia, the European Union and the United Nations - urged Israel to cease all settlement activity in the West Bank. The diplomats called for more negotiations in the Israeli-Palestinian conflict.

U.S. diplomats scolded Arab states for lagging on promises of financial aid for the moderate Palestinian leadership in the West Bank. Only three Arab nations - Saudi Arabia, United Arab Emirates and Algeria - have paid up on pledges made last year, the State Department said.

Fayyad said the Palestinian Authority needed roughly $1 billion to meet its obligations for the second half of this year.

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Associated Press Writer Gregory Katz contributed to this report.