U.N. watchdog, EU's Ashton to press Iran in nuclear dispute

European Union foreign policy chief Catherine Ashton arrives at NATO headquarters after meeting Kosovo's Prime Minister Hashim Thaci (not pictured) and Serbian Prime Minister Ivica Dacic (not pictured) in Brussels April 19, 2013.

aces international pressure over its nuclear program in two separate meetings on Wednesday, but no breakthrough is expected at a time when the Islamic state is focused on next month's presidential election.

In Vienna, the U.N. nuclear agency will once again urge Iran to stop stonewalling its inquiry into suspected atomic bomb research by Tehran, which denies any intent to make such arms.

The talks started around 10 a.m. (0800 GMT) at Iran's diplomatic mission in the Austrian capital.

"Differences remain but we ... are determined to solve these issues," Herman Nackaerts, deputy director general of the International Atomic Energy Agency (IAEA), told reporters.

In Washington, however, a top U.S. diplomat said she did not expect progress in the IAEA talks and expected the agency would eventually urge the U.N. Security Council, which has imposed several sanctions resolutions on Iran, to take further action.

"I don't think they (the IAEA) are going to get a positive response," Under Secretary of State Wendy Sherman, the lead U.S. negotiator with Iran, told U.S. lawmakers, noting that the IAEA board of governors will meet in early June.

"At some point, the director-general of the IAEA will have to return to the Security Council and say: ‘I can go no further. There has been no response. You have to take further action,' she added, saying this could happen in June or in September.

Later over dinner in Istanbul, the European Union's top diplomat will meet Iran's chief nuclear negotiator - also now a presidential candidate - to discuss a broader diplomatic effort bid to resolve a row that could ignite war in the Middle East.

The Istanbul meeting between EU foreign policy chief Catherine Ashton, who represents six world powers, and Iran's Saeed Jalili follows a failed round of big-power diplomacy in Kazakhstan in early April.

The two sets of talks represent distinct diplomatic tracks but are linked because both centre on suspicions that Iran may be seeking the capability to assemble nuclear bombs behind the facade of a declared civilian atomic energy program.

Any movement in the decade-old standoff will probably have to wait until after Iranians vote on June 14 for a successor to President Mahmoud Ahmadinejad, analysts and diplomats say.

Even though it is Supreme Leader Ayatollah Ali Khamenei who decides Iran's nuclear policy, the conservative leadership may want to tread cautiously ahead of a poll in which loyalists will be challenged by two major independents.

With the election coming up, "the Iranians will do everything to keep everything stable," one Western envoy said.

SPECTRE OF MILITARY ACTION

Israel and the United States have threatened possible military action if diplomacy and increasingly tough trade and energy sanctions fail to make Iran curb its nuclear program.

In the latest U.S. step to try to choke off funding for that program, the U.S. Treasury blacklisted an exchange house and a trading company based in the United Arab Emirates on Wednesday, saying they had dealt with Iranian banks that Washington has declared off limits.

Tehran says its nuclear activity has only peaceful purposes and that it is Israel, widely believed to be the Middle East's only nuclear-armed power, that threatens peace and stability.

The IAEA has been trying for more than a year to coax Iran into letting it resume an inquiry into what the U.N. watchdog calls the "possible military dimensions" of its nuclear work.

Wednesday's talks in Vienna will be the 10th round of negotiations between the two sides since early 2012, so far without a framework agreement that would give the IAEA the access it wants to sites, officials and documents.

Iran's IAEA envoy, Ali Asghar Soltanieh, said this week he expected progress to be made in the discussions. But Western diplomats voiced pessimism.

The gap between Tehran and the West is wide: the six powers want Iran to suspend its most sensitive nuclear activity. Iran wants them to recognize its "right" to refine uranium - which can have both civilian and military purposes - and to end tough economic sanctions.