Breakthrough deal curbs Iran's nuclear activity

Reuters

* Iran gets limited relief from sanctions

* Israel condemns pact as "historic mistake"

* Risk of hardliners on both sides undermining deal (Adds detail of Iranian foreign minister, Obama call withNetanyahu)

By Parisa Hafezi and Justyna Pawlak

GENEVA, Nov 24 (Reuters) - Iran and six world powersclinched a deal on Sunday to curb the Iranian nuclear programmein exchange for initial sanctions relief, signalling the startof a game-changing rapprochement that would reduce the risk of awider Middle East war.

Aimed at easing a long festering standoff, the interim pactbetween Iran and the United States, France, Germany, Britain,China and Russia won the critical endorsement of Iranianclerical Supreme Leader Ayatollah Ali Khamenei.

But Israel, Iran's arch-enemy and a U.S. ally, denounced theagreement as a "historic mistake". Critics in the U.S. Congresswere also quick to voice concern, with some raising the spectreof failure to rein in North Korea on its nuclear programmes, butthey signalled that Congress would likely give the deal a chanceto work.

The agreement was announced in the middle of the night inGeneva after long and tortuous negotiations. U.S. PresidentBarack Obama, who sought to improve ties with Iran even beforehis first election to the White House in 2008, said it cut offTehran's possible routes to a nuclear bomb.

Obama sought to reassure Israel on this point, telling Prime Minister Benjamin Netanyahu in a phone call on Sunday thatthe United States would remain firm in its commitment to Israel,the White House said. Obama said he wanted to beginconsultations with Israel immediately on reaching acomprehensive solution to Iran's nuclear problem.

The agreement, which halts Iran's most sensitive nuclearactivity, its higher-grade enrichment of uranium, was tailoredas a package of confidence-building steps towards reducingdecades of tension and ultimately creating a more stable, secureMiddle East.

Indeed, the United States held previously undisclosed,separate direct talks with Iran in recent months to encouragediplomacy towards a nuclear deal, a senior U.S. officialsaid.

Washington broke off diplomatic relations with Tehran soonafter Iran's 1979 Islamic Revolution and relations have beenfraught since then, dominated in recent years by U.S. concernover Iran's nuclear programme.

Any new U.S.-Iranian detente will be opposed by Washington'sIsraeli and conservative Gulf Arab allies as it could tilt theregional balance of power towards Tehran.

For Full coverage of the accord click on [ID:nL5N0J90SQ}

Iranian Foreign Minister and chief negotiator Mohammad JavadZarif flew home from Geneva to a crowd welcoming him as a herowith flowers and flags, a reflection of the relief felt by manyIranians exhausted by sanctions and isolation.

Zarif said in an interview broadcast on state televisionthat Iran would move quickly to start implementing the agreementand it was ready to begin talks on a final accord.

"In the coming weeks - by the end of the Christian year - wewill begin the programme for the first phase. At the same time,we are prepared to begin negotiations for a final resolution asof tomorrow," Zarif said.

Earlier he said the accord was "only a first step," adding:"We need to start moving in the direction of restoringconfidence, a direction which we have managed to move against inthe past."

U.S. Secretary of State John Kerry, speaking as he began ameeting with British Foreign Minister William Hague in London,also said Sunday's deal was only a start.

"Now the really hard part begins and that is the effort toget the comprehensive agreement, which will require enormoussteps in terms of verification, transparency andaccountability," Kerry said, according to a U.S. reporter whoattended the session.

European Union foreign policy chief Catherine Ashton, whohas been coordinating diplomatic contacts with Iran on behalf ofthe major powers, said the accord created time and space forfollow-up talks on a comprehensive solution.

But Israel's Netanyahu, a steady critic of the talks,condemned the agreement as it left intact Iran's nuclearfuel-producing infrastructure. "What was achieved last night inGeneva is not a historic agreement, it was a historic mistake,"he said.

"Today the world has become a much more dangerous placebecause the most dangerous regime in the world took asignificant step towards obtaining the world's most dangerousweapon," he said in remarks to his cabinet.

He reiterated a long-standing Israeli threat of possiblemilitary action against Iran - even as a member of his securitycabinet conceded that the interim accord limited this option.

Obama made plain in a late-night appearance at the WhiteHouse after the deal was sealed that if Iran did not meet itscommitments during the six-month period covered by the interimdeal, Washington would turn off the tap of sanctions relief and"ratchet up the pressure".

"There are substantial limitations which will help preventIran from building a nuclear weapon," he said. "Simply put, theycut off Iran's most likely paths to a bomb."

GIVING OBAMA ROOM

Some analysts pointed out the risk of hardliners acting toscuttle the breakthrough - whether Iran's elite RevolutionaryGuards who see any opening to the West as dangerous, or criticsin the U.S. Congress.

But although Republican and Democratic U.S. senators voicedskepticism about the deal, Congress looked likely to give Obamaroom to see if it works.

The deal does not need to be ratified by Congress and Obamais using his executive power to temporarily suspend someexisting U.S. sanctions on Iran. Senators have been discussingfor months imposing even tighter sanctions, which could angerTehran and put Sunday's deal reached in Geneva in jeopardy.

But influential Democrats - who control the Senate - madeclear that any new sanctions against Iran would include asix-month window before they took effect.

Democrat Robert Menendez, who chairs the Senate ForeignRelations Committee and is known as a hawk on Iran, saidforthcoming legislation would "provide for a six-month window toreach a final agreement before imposing new sanctions on Iran."

Bob Corker, the senior Republican on the Senate ForeignRelations Committee, told "Fox News Sunday," he would hold theObama administration's "feet to the fire" to ensure that Tehranis not given excessive leeway, and recalled past failed effortsto rein in North Korea's nuclear program.

Corker said the pact allowing Iran to continue to enrichuranium must not "become the norm" for a longer-term agreement."I think you are going to see on Capitol Hill, again, abipartisan effort to try to make sure that this is not a finalagreement," he said.

The West has long suspected that Iran has been seekingcovertly to develop a nuclear weapons capability. The IslamicRepublic, a major oil producer, denies that, saying its nuclearprogramme is a peaceful quest for an alternative source ofelectricity to serve a rapidly expanding population.

LIMITS ON ENRICHMENT

The United States said the deal halts advances in Iran'snuclear programme, including construction of the Arakheavy-water reactor that deeply worries the West as it couldyield plutonium, another atomic bomb ingredient, onceoperational.

The accord would neutralise Iran's stockpile of uraniumenriched to a fissile purity of 20 percent, a higher-level stagenearing the threshold needed for a bomb, and mandates morefrequent U.N. nuclear inspections, U.S. officials said.

A U.S. fact sheet said Iran had also committed to suspendingenrichment above a concentration of 5 percent - the levelsuitable for running nuclear power stations, which is Iran'sstated purpose. Refined uranium provides the core of an nuclearwarhead if refined to a high degree.

In return, Iran could obtain access to $1.5 billion inrevenue from trade in gold and precious metals and thesuspension of some sanctions on its automotive sector, and seeits petrochemical exports revive.

But the agreement, while freezing U.S. plans for deeper cutsto Iranian oil exports, will not allow any extra Iranian oilinto the market or let Western energy investors into thecountry, U.S. officials said.

Iranian oil exports will remain for now at currentlymarkedly reduced levels. "$4.2 billion from these sales will beallowed to be transferred in instalments if, and as, Iranfulfils its commitments," the White House fact sheet said.

Much of the sanctions infrastructure, anchored by a Westernembargo on Iranian crude oil and a ban on Iranian use of theinternational banking system, would remain in place pending afinal deal aimed at removing all risk of an Iranian atom bomb.

"The approximately $7 billion in relief is a fraction of thecosts that Iran will continue to incur during this first phaseunder the sanctions that will remain in place," the White Housesaid. "The vast majority of Iran's approximately $100 billion inforeign exchange holdings are inaccessible or restricted."

CHANGE UNDER ROUHANI

Leaders of the Islamic Republic welcomed the accord.

"This can be the basis for further intelligent actions.Without a doubt the grace of God and the prayers of the Iraniannation were a factor in this success," Khamenei, a veteranhardliner with the ultimate power in Iran, said in a letter toPresident Hassan Rouhani published by state news agency IRNA.

Rouhani, a moderate elected by a landslide in June promising"constructive engagement" with the world and relief fromsanctions, said the "outcome of these negotiations is that the... world powers have recognised Iran's nuclear rights".

Rouhani's attempts to repair diplomatic bridges broken byhis bellicose predecessor Mahmoud Ahmadinejad and his success inwinning the backing of Khamenei reignited negotiations. (Additional reporting by Stephanie Nebehay, Fredrik Dahl, JohnIrish, Arshad Mohammed, Louis Charbonneau in Geneva, AlexeiAnischuk and Katya Golubkova in Moscow, Isabel Coles, JonHemming and Yara Bayoumy in Dubai, Caren Bohen, PatriciaZengerle and Will Dunham in Washington, Dan Williams and JeffreyHeller in Jerusalem; Editing by Mark Heinrich, Frances Kerry andGrant McCool)

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