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Sat 14 Jun 2008 11:44 AM

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World powers offer Iran deal to end nuclear row

Top EU diplomat to offer of trade and other benefits if Tehran suspends nuclear work.

Top EU diplomat Javier Solana will present Iran with a major powers' offer of trade and other benefits on Saturday if it suspends sensitive nuclear work, something Tehran has repeatedly refused to do.

The European Union's foreign policy chief arrived in Tehran on Friday to outline the incentives package agreed by the United States, China, Russia, France, Britain and Germany in the latest bid to end a standoff over Iran's atomic ambitions.

The offer, including civilian nuclear cooperation, is a revised version of one rejected by Iran two years ago and diplomats played down any hopes of a breakthrough soon.

The world's fourth-largest oil producer has ruled out halting activities it says are for generating electricity but which Western powers suspect are aimed at making bombs.

Seeking to step up the pressure, the United States and the 27-nation EU have threatened more sanctions if the Islamic republic does not stop enriching uranium, which has both civilian and military uses.

"If they were to reject this initiative, then we would expect there to be further EU sanctions imposed before the end of July," a senior British official said in London. "I'm not optimistic that this trip will be successful."

Solana says he hopes the incentives package will start a new process for resolving the long-running standoff, which has helped push up crude prices to record highs.

Solana, who has said he expects no "miracles" in talks with Foreign Minister Manouchehr Mottaki and other Iranian officials, said the offer would support Iran in developing a modern nuclear energy programme and also covered political and economic ties.

"I am travelling to Tehran to present a generous and comprehensive offer," he said in a statement on Friday.

The United States, leading efforts to isolate Iran over its nuclear ambitions, says it wants to resolve the dispute diplomatically but has not ruled out military action.

The incentives package, hammered out by the six major powers in May, is an updated and enhanced version of an offer spurned by Iran in 2006 that also included wider trade in civil aircraft, energy, high technology and agriculture.

Iran's refusal to stop enrichment, which can provide fuel for power plants or material for bombs if refined much more, has drawn three rounds of UN sanctions since 2006.

Solana is accompanied by senior officials from the major powers with the exception of the United States, which cut ties with Iran after its 1979 Islamic revolution.

On a farewell tour of Europe this week, US President George W. Bush said a nuclear-armed Iran would be "incredibly dangerous for world peace" and that "all options are on the table", alluding to military action as a last resort.

Concern in the oil market that Tehran's nuclear dispute with the West may lead to a disruption in its crude exports have helped drive oil to record levels near $140 a barrel, hurting the United States and other consumer nations. (Reuters)