REUTERS SUMMIT-No sanctions easing at front end of Iran talks -U.S.

Reuters

* Rhodes: Iran must take 'concrete steps' for sanctionsrelief

* White House seeks flexibility from Congress to pursuetalks

* Access to frozen funds is one way to ease economic pain

By Arshad Mohammed

WASHINGTON, Oct 24 (Reuters) - The United States is notlooking to ease sanctions on Iran "at the front end" ofnegotiations over the Iranian nuclear program, a senior WhiteHouse official said on Thursday.

The Islamic republic would have to take "concrete steps" toaddress its program before Washington could provide sanctionsrelief, Ben Rhodes, a deputy national security adviser to President Barack Obama, said at the Reuters Washington Summit.

The United States suspects Iran may be using its civiliannuclear program as a cover to develop atomic weapons. Irandenies that, saying its program is solely for peaceful purposes.

Major powers last week held their first formal negotiationswith Iran on its nuclear program since the election in June ofIranian President Hassan Rouhani, a relative moderate, openedthe door to a possible diplomatic resolution.

Obama has said he will not allow Iran to acquire a nuclearweapon and that all options are on the table for dealing withIran, code for the possible use of military force.

But he has made clear his preference is a negotiatedsolution - one that is widely expected to gradually removeeconomic sanctions that have crippled Iran's economy if Tehrantakes steps to demonstrate the peaceful intent of its program.

Sanctions imposed in 2011 by Washington and the EuropeanUnion have slashed Iran's oil exports by more than 1 millionbarrels a day, depriving Tehran of billions of dollars of salesa month and driving up inflation and unemployment.

In an hour-long interview, Rhodes said one way to offer Iransanctions relief would be to give it access to frozen funds. Buthe said that was simply one possibility among many and that hedid not wish to suggest a preferred course had been identified.

The New York Times on Oct. 17 first reported that as a wayto ease Iran's economic pain without dismantling sanctions.

Iran's oil exports have been cut in half over the past yearas the United States has imposed increasingly tough sanctionsbecause of concerns about its nuclear program, which Washingtonsees as a direct threat to Israel and to its Gulf Arab allies.

CONCRETE STEPS

"We are not contemplating anything that removes thosesanctions at the front end of any negotiation or agreement,because it's going to be important to test Iranian intentions,"Rhodes said.

"Before we could pursue sanctions relief, we'd have to seeconcrete steps by the Iranians to get at the state of theirnuclear program," he added at the summit, held at the Reutersoffice in Washington.

Rhodes made clear the Obama administration wanted someflexibility from the U.S. Congress to explore such a deal,saying the White House would like lawmakers to consider theprogress of negotiations as they contemplate any new sanctions.

The White House hosted a meeting on Thursday of U.S. Senateaides seeking to persuade lawmakers to hold off on a package oftough new sanctions against Iran, a senior Senate aide said.

While Congress has sought harsher sanctions on Iran, theWhite House wants time to give negotiations a chance. The talks,which include Britain, China, France, Germany, Russia and theUnited States, are due to resume Nov. 7-8 in Geneva.

"We continue to want to have that flexibility to pursue thisdiplomatic track. There's an opening that we want to test,"Rhodes said.

"That doesn't mean that Congress won't consider newsanctions. It means that as they do, they should take intoaccount the progress we're making on diplomacy, and that we needto have some flexibility to pursue an agreement," he added.

'CAUTIONARY TALE'

Rhodes held up North Korea, which has tested nuclear devicesat least twice, as a cautionary tale for other nations.

"Some people make an argument that North Korea shows thatyou should just get a nuclear weapon because then you have sometype of security guarantee," he said. "I would actually make anopposite argument. ... Would you want to be North Korea today(with a) completely stagnant economy, completely isolated?"

"As we said with Iran, if we were able to resolve this issuethey could rejoin the community of nations and could bringsignificantly more economic opportunity to their citizens," hesaid. "That would be a preferable position to be in than anisolated, impoverished, pariah state as North Korea is."

"It remains to be seen how the Iranian negotiations playout, but I actually think North Korea is a cautionary tale fornations that may want to pursue a nuclear weapon," he said.

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