Iran says makes proposal capable of defusing nuclear standoff


* No reply yet from six world powers at Geneva talks

* Iran says proposal "serious", "logical", no details yet

* As sanctions bite, Iran says it's eager for swift deal

* Israel urges powers not to relax sanctions prematurely

* Talks seen as biggest chance in years to resolve stand-off

* Atmosphere brighter since moderate Iran president elected

By Justyna Pawlak and Yeganeh Torbati

GENEVA, Oct 15 (Reuters) - Iran said it presented a proposalin talks with six world powers on Tuesday capable of achieving abreakthrough in a decade-old standoff over its contested nuclearprogramme that has raised the risk of a new Middle East war.

The Islamic Republic began negotiations in earnest with theUnited States, Russia, China, France, Britain and Germany twomonths after President Hassan Rouhani took office promisingconciliation over confrontation in relations with the world.

After years of ideological defiance, Iran appeared keen fora negotiated settlement to win relief from sanctions that havecrippled its economy, slashed 60 percent of its daily oil exportrevenue and wrought a steep devaluation of its rial currency.

Details of the Iranian proposal - unveiled as a nearlyhour-long PowerPoint presentation - were not immediatelyavailable.

Western diplomats have cautioned in the past Tehran hasrefused to offer sufficient nuclear concessions to secure adeal. But both sides signalled that the atmosphere, at least, inTuesday's initial session was positive.

Iranian Deputy Foreign Minister Abbas Araqchi said the powers had a "welcomed" Tehran's proposals and the details wouldbe discussed later in the day. Negotiations led by foreignministry political directors resumed in the afternoon.

"We think that the proposal we have made has the capacity tomake a breakthrough. We had a very serious and good meeting thismorning," he told reporters. "The questions that were askedregarding Iran's plan were completely serious and our answerswere as well."

The West suspects Iran is trying to develop the means tomake nuclear weapons behind the screen of a declared civilianatomic energy programme. Tehran denies this but its refusal tolimit activity applicable to producing atomic bombs, or topermit unfettered U.N. inspections, has drawn severe sanctions.

In a possible sign of the Islamic Republic's determinationto meaningfully address specifics of the powers' concerns, thetalks in Geneva were conducted in English for the first time.

A spokesman for the European Union foreign policy chief,Catherine Ashton, who oversees diplomacy with Iran on behalf ofthe powers, described the Iranian presentation as "very useful"in a carefully worded comment that indicated Iran had gonefurther than in the past in its willingness to engage.

A senior U.S. State Department official said negotiatorswould be examining further details of Iran's proposal in theafternoon session, hinting it was being treated as incomplete.

A State Department spokeswoman said Washington would welcomea bilateral meeting with Iran on the sidelines, suggesting U.S.officials felt a stripped down, separate session with theIranians could be key to bridging differences.

Washington and Tehran have been locked in mutual enmitysince diplomatic ties were broken in 1980 - an estrangement thathas posed a significant obstacle to any nuclear deal - but thetwo revived high-level contact at the United Nations last month.


On Monday, U.S. officials held out the prospect of quicksanctions relief if Tehran acted swiftly to allay concerns aboutits nuclear programme, although both countries said any dealwould be complex and take time.

At the core of the dispute are Iranian efforts to enrichuranium to 20 percent fissile purity, a technological advancethat brings it close to producing weapons-grade fuel.

Iran has previously spurned Western demands that it abandonsuch work as an initial step to build confidence in return formodest sanctions relief, and repeatedly called for the mostpainful limits on trade, such in the oil sector, to be lifted.

Western diplomats have said their demands related to20-percent uranium must be addressed before further progress ismade. But some diplomats acknowledged ahead of the Geneva talksthat their initial offer to Iran might be changed substantiallydepending on what concessions Iran offers.

In comments made to Iranian media, Araqchi said that anyfinal deal should eliminate sanctions on Iran and enshrine its"right" to refine uranium, according to the ISNA news agency.

A U.S. administration official said any potential sanctionsrelief would be "targeted, proportional to what Iran puts on thetable. No one should expect a breakthrough overnight".

Israel, Iran's arch-enemy and widely assumed to harbour theMiddle East's only nuclear arsenal, has warned the West not todilute sanctions before Iran has tackled core concerns -enrichment and lack of transparency - about its nuclear goals.

Israel's security cabinet pressed the powers on Tuesday todemand a complete rollback of Iran's enrichment programme - something some Western diplomats say may nolonger be realistic given its size and identification by theIranian leadership with national pride and sovereignty.

Since 2006, Iran has rebuffed U.N. Security Council demandsthat it shelve enrichment and has continued to expand itsnuclear fuel programme, triggering ever stiffer sanctions.

Hopes of a negotiated settlement of the dispute rose lastmonth when President Barack Obama and Rouhani spoke bytelephone, the loftiest U.S.-Iranian contact since Iran'sIslamic Revolution in 1979.

Iranian Foreign Minister and chief negotiator Mohammad JavadZarif attended the morning session of talks but not theafternoon round. He has been suffering from s back ailment andtold reporters on returning to his hotel: "I'm really in pain."

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