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By Justyna Pawlak and Fredrik Dahl
ISTANBUL (Reuters) - After a year of sanctions and sabre-rattling over Iran's nuclear programme, negotiators from Tehran and six world powers finally resumed talks and found at least enough common ground to agree to meet again next month.
With threats of war hanging over an already unsettled Middle East, U.S. and other Western diplomats welcomed their Iranian counterparts willingness in Istanbul on Saturday to discuss their nuclear activities - something they had refused since early last year.
But though they will meet again, in Baghdad on May 23, they remained poles apart. Iran called for a lifting of sanctions and recognition its uranium enrichment is for purely peaceful ends. The United States demanded urgent action to prove the Islamic Republic is not seeking the potential nuclear arsenal which Washington and ally Israel threaten to eliminate by force.
"While the atmosphere today was positive and good enough to merit a second round, we continue to stress ... that there is urgency for concrete progress and that the window for a diplomatic resolution is closing," said a senior U.S. official.
Over the past year, Israeli talk of "pre-emptive" strikes if Iran does not stop working on some aspects of nuclear technology have raised fears of war - and oil prices - especially since estimates of how much longer Tehran might need to build an atomic device, should it wish, have shortened to a year or two.
A resumption of dialogue may help dampen anxieties, although hawkish voices in Israel and Western states have long questioned Tehran's good faith and accuse it of using talks to buy time for its nuclear scientists - some of whom have been killed in what Iran says is a covert campaign by Israeli and Western agencies.
Publicly, negotiators on all sides emphasise the positive.
"We expect that subsequent meetings will lead to concrete steps towards a comprehensive negotiated solution which restores international confidence in the exclusively peaceful nature of the Iranian nuclear programme," said Catherine Ashton, the EU foreign policy chief who leads negotiations for the six powers.
The group comprises the five permanent members of the U.N. Security Council - Russia, the United States, China, France and Britain - along with Germany. It is known as the P5+1.
Calling Saturday's talks "constructive and useful", Ashton said: "We want now to move to a sustained process of dialogue."
The meeting in Baghdad, a rare friendly venue for Iranians in the Arab world, would be part of a "step-by-step" approach. Junior officials would meet again before May 23, she said.
One senior diplomat present in Istanbul said agreeing to Iran's request for a meeting in troubled Iraq showed commitment by the negotiators - "Baghdad was a test. They are saying: â€˜If you really want to talk to us, then come and talk to us'."
Sidestepping questions of how long talks could continue before impatient Western powers, or Israel, might cut them short by force, the envoy said: "I would much rather spend a long day in Istanbul than be picking up the pieces at the end of a war."
Chief Iranian negotiator Saeed Jalili made clear that Iran had no intention of accepting a key demand, that it halt plants which enrich uranium to 20 percent fissile material - far beyond the quality needed to generate the electricity which it says the oil-rich country requires to develop economic prosperity.
Nonetheless, however remote a final accord may be between the Islamic Republic and its adversaries, a return to the negotiating table may calm nerves after 15 angry months.
In that time, the West has imposed new crippling economic sanctions while Iran, watching its key regional ally Syria collapse into internal strife, has threatened to blockade oil tankers. Israel, fearful a nuclear Iran would jeopardise its very survival, has been planning possible "pre-emptive" strikes.
One diplomat from the six said Iran's willingness to at least discuss its nuclear programme marked a shift away from the stalemate which marked previous meetings early last year: "We spent the whole day discussing the nuclear issue."
Before, when Westerners raised allegations of a secret weapons programme, "they would have walked away", the envoy said, adding negotiators were not "overly optimistic" but saying there was a "seriousness to discuss the nuclear issue".
Deputy Foreign Minister Sergei Ryabkov, leading the Russian delegation, told Interfax news agency: "The atmosphere is constructive, the conversation is businesslike."
Yet few expect a rapid change of heart in Tehran, even if the weight of new sanctions, notably financial measures by U.S. President Barack Obama and a European Union oil import ban, have made many Iranians keenly aware of the cost of that policy.
Its defiant defence of a right to nuclear energy has proven one of the more popular policies for Iran's clerical leaders at a time when dissatisfaction is growing among the population over economic hardships - aggravated by sanctions - and a lack of the political freedoms being claimed elsewhere in the region.
"We witnessed progress. There were differences of opinion," chief negotiator Jalili said. "But the points we agreed on were important."
Asking for negotiations to include the lifting of sanctions, he said: "The next talks should be based on confidence-building measures which would build the confidence of Iranians."
His defence of 20-percent enrichment did not impress the United States or others who question the justification and say that that level of enrichment makes a "break out" to weapons-grade material much easier and could give Iran the possibility, if it wanted, to build a nuclear bomb in a year or two.
Referring to Iran's rights under the Non-Proliferation Treaty (NPT) on nuclear weapons, Jalili told a news conference:
"Enrichment of uranium is one of these rights that every individual member state should benefit from and enjoy for peaceful purposes." Western governments argue Iran has broken the NPT by conducting secret research on nuclear weapons.
Jalili spoke under a banner showing a map of the region and reading "Nuclear Energy for All. Nuclear Weapons for None", a reference to Iran's complaints that its Israeli foe is widely assumed to have the only nuclear arsenal in the Middle East.
It also bore five photographs, of nuclear scientists Iran says were killed by Israeli or Western agents.
While there was little new heard in Istanbul on the substance of the disputes, the resumption of a process, which its adversaries hope might let Iran's leaders perform a face-saving climb-down and also may stay Israel's hand, was seen by observers as favouring the chances of a peaceful outcome.
"Today's round of P5+1 talks with Iran in Istanbul established a positive foundation for progress on the nuclear question. The talks exceeded initial expectations," said Daryl Kimball of the Arms Control Association, a Washington-based research and advocacy group.
"The further high-level and technical talks announced today are the logical next step to reach agreement on specific, concrete steps that can help prevent a nuclear-armed Iran."
Nonetheless, the U.S. official said Washington would maintain financial sanctions aimed at crippling Iran's oil trade and expected the EU oil embargo take effect on July 1.
"Dialogue is not sufficient for any sanctions relief," the official said.
"I don't want to raise anybody's expectations that all of a sudden large steps will get taken ... We haven't talked to the Iranians for 15 months ... We have not seen them address the concerns of the international community. We have seen instead them proceed forward with their nuclear programme in ways that increase the concern of the international community.
"There is no reason to believe yet that we will make all of the progress that we want to make."
(Additional reporting by Jonathon Burch and Alexandra Hudson in Istanbul; Writing by Alastair Macdonald; Editing by Ralph Gowling)
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