Almaty: World powers hope Iran will respond positively on Wednesday to their new offer to lift some sanctions if Tehran scales back nuclear activity the West fears could be used to build bombs. But any hopes of a significant easing of the deadlock in the decade-old nuclear dispute were dented when Russian media cited a source close to the talks as saying there had been no clear progress in the discussions in Kazakhstan.
"So far there is no particular rapprochement. There is an impression that the atmosphere is not very good," Interfax news agency quoted the source as saying. The United States, France, Germany, Britain, China and Russia presented the offer when their first meeting with Iran in eight months began in Almaty on Tuesday and the Islamic state was considering it, the powers' spokesman said.
The two sides began a second - and what is expected to be the last in this round of negotiations - day of discussions in the Kazakh city shortly after 11 am (0500 GMT) on Wednesday. Western officials described the first day of the meeting as "useful". Iranian state television described the atmosphere in the discussions as "very serious".
Tightened Western sanctions on Iran are hurting Iran's economy and slashing oil revenue.
The outcome of the meeting in the Kazakh city will be closely watched in Israel, which has strongly hinted that it could attack Iran's nuclear sites if diplomacy and sanctions fail to stop the uranium enrichment program. Iran says Israel's assumed nuclear arsenal is the main threat to peace and denies Western allegations it is seeking to develop the capability to make atomic bombs. It says it is only aiming to produce nuclear energy so that it can export more oil.
In their latest attempt to break years of stalemate in the dispute, the powers are offering Iran a relaxation of some of the sanctions that are taking a heavy toll on its economy. "Hopefully the Iranians will be able to reflect overnight and will come back and view our proposal positively," the spokesman for European Union foreign policy chief Catherine Ashton, who represents the powers in the talks, said.
"The ball is in their court," Michael Mann added after the first day of discussions on Tuesday.
He did not give details of the offer, but other Western officials have confirmed it includes some limited sanctions easing if Iran closes a underground site where it carries out its most controversial uranium enrichment work.
Diplomats see scant chances of a conclusive deal with Iran before a June presidential election - with the political elite preoccupied with domestic issues - but they hope to hold follow-up talks to the Almaty meeting soon.
Iran would put forward its own proposal of "the same weight" as that of the other side, a source close to the Iranian negotiating team said on Tuesday, but Western officials said it had not done so during the first day of negotiations.
Iran has shown no sign of willingness to scale back its nuclear work. Its chief negotiator, Saeed Jalili, is close to Supreme Leader Ayatollah Ali Khamenei and is a veteran of Iran's 1980s war against Iraq and the Western powers that backed it. It argues that has a sovereign right to carry out nuclear enrichment for peaceful energy purposes, and in particular refuses to close its underground Fordow enrichment plant, a condition the powers have set for any sanctions relief.
Tightened Western sanctions on Iran are hurting Iran's economy and slashing oil revenue. Its currency has more than halved in value, which in turn has pushed up inflation. But analysts say the sanctions are not close to having the crippling effect envisaged by Washington and - so far at least - they have not prompted a change in Iran's nuclear course.
Western officials said the powers' offer would include an easing of restrictions on trade in gold and other precious metals if Tehran closes Fordow. The Fordow facility is used for enriching uranium to 20 per cent fissile purity, a short technical step from weapons grade.
Western diplomats acknowledge an easing of US and EU sanctions on trade in gold represents a relatively modest step. But gold could be used as part of barter transactions that might allow Iran to circumvent financial sanctions.
Iran's foreign ministry spokesman last week dismissed the reported incentive as insufficient and a senior Iranian lawmaker has ruled out closing Fordow, close to the holy city of Qom. A senior Israeli official said Iran was pressing ahead with its nuclear program while "everyone is talking".
"As of now, the Iranians are thumbing their noses," Sima Shine, head of the Iran desk at the Strategic Affairs Ministry, told Israel's Army Radio. "They are coming to negotiations, speaking hyperbolically, trying to talk about their right to uranium enrichment ... But in parallel they are advancing."