By Sylvia Westall
VIENNA (Reuters) - Iran's foreign minister and the U.N. atomic watchdog chief made no headway on Sunday when they met to discuss a stalled nuclear fuel offer designed to ease tensions with the West, diplomats said.
The months-old plan calls for Iran to ship 1,200 kg (2,646 lb) of low-enriched uranium -- enough for a single bomb if purified to a high enough level -- to Russia and France to make into fuel for a medical research reactor.
Iran agreed to the offer in principle last October but balked at it later, saying it wanted instead a simultaneous swap on Iranian soil, a change which other parties to the deal said they could not accept because it would fail to build trust.
The West believes Iran's atomic program is ultimately aimed at making weapons. Tehran denies this.
"The meeting was held in a business-like atmosphere," the International Atomic Energy Agency said in a statement after the 2-1/2 hour meeting, which was requested by Iran.
Iran's Manouchehr Mottaki and IAEA's Yukiya Amano discussed the agency's inspections in Iran and exchanged views on possible ways to implement the fuel proposal, the IAEA said. It gave no indication of a breakthrough.
"The agency is not in a negotiation process. It is listening to all sides," a diplomat close to the IAEA said.
Mottaki said he discussed with Amano ways to find a deal that would be acceptable to all participants. But it was not clear that any new proposals had been discussed.
"I see very good chances that we will find ways for a fuel swap," Mottaki said. "Now is the time for a new beginning, for new talks." He said successful negotiations would lead to further diplomatic discussions and said sanctions would be the wrong move.
SANCTIONS AHEAD, AUSTRIA WARNS
Mottaki is also visiting Vienna and other capitals to lobby Security Council members to oppose any new U.N. sanctions as closed-door negotiations continue on a draft Iran resolution.
Austria, which is on the council until the end of this year, said Iran had to start cooperating with the international community on its nuclear program or face punitive measures.
"This will be the consequence if something does not change on the Iranian side," Foreign Minister Michael Spindelegger told a joint news conference with Mottaki. "The clock is ticking, time is running out for Iran," he said.
Spindelegger, who also criticized Iran's human rights record, said he had received new information from Iran on the fuel proposal which he would communicate to his European counterparts on Monday.
But he said this did not seem substantial enough to stop the sanctions drive. "Iran should be aware that we want to see actions not just hear words," he added.
Mottaki, who called the sanctions talk "unjust" said his discussions with Spindelegger had nevertheless been "very friendly." He urged Austria and other countries to be "independent" at the Security Council.
Moscow and Beijing have made clear that their decision to join negotiations with the United States, Britain, France and Germany on a fourth round of U.N. sanctions against Tehran was partly due to Iran's refusal to accept the IAEA fuel offer.
U.S. Secretary of State Hillary Clinton and Russian Foreign Minister Sergei Lavrov spoke by telephone on Saturday, Russia's Foreign Ministry said.
"The ministers held a detailed discussion of the situation around Iran's nuclear program, having stated that further steps toward its settlement should be taken on the basis of consensus, taking into account the opinions of all members of the 'six'," it said. It gave no further details.
(Editing by Louise Ireland)