By Zahra Hosseinian
The six powers offered to refrain from steps to impose more U.N. penalties if Iran froze expansion of its nuclear work. The freeze-for-freeze idea was seen as a stepping stone towards starting formal negotiations on a package of incentives.
Western officials, who fear Iran wants to build a nuclear bomb despite its denials, said they had been told Tehran would give a written reply on Tuesday and warned that more U.N. sanctions would follow if the response was not positive.
Iranian media said Iran's letter was handed over earlier on Tuesday, although an official in the office of European Union foreign policy chief Javier Solana, who is representing the six powers, said no written response had yet been received.
The Iranian official told Reuters: "The letter handed over is not an answer to the offered package … The letter does not mention the freeze-for-freeze issue."
He said the freeze idea was also not raised in telephone talks on Monday between Iran's chief nuclear negotiator, Saeed Jalili, and Solana.
"During the call, Jalili expressed his readiness to start formal talks (on the incentives package)," the official said, adding that he expected more telephone contacts between Solana and Jalili in the next few days.
The six powers have said formal talks on the package of nuclear, trade and other incentives can only start once Iran suspends uranium enrichment, the part of the program that most worries the West because it has military and civilian uses.
TOUGH LINE
Iran, the world's fourth largest oil producer, insists it is only seeking to master technology to make electricity, and has repeatedly refused to halt its atomic work.
The U.N. Security Council has imposed three rounds of penalties on Iran since 2006 in response to Iran's repeated refusal to suspend enrichment.
In a letter to the Council, Britain, France and the United States, who have taken the toughest line with Tehran, said Iran's central bank and other financial institutions were trying to dodge sanctions by covering their tracks and must be carefully watched..
Iran's central bank governor, Tahmasb Mazaheri, told Reuters in July that any move to impose sanctions on the bank could "destabilize" an already rattled world financial system.
His remarks followed a call by a U.S. Senate committee for the United States to designate Iran's central bank a supporter of terrorism, a move that would trigger U.S. sanctions.
U.N. and U.S. sanctions have already targeted some big Iranian commercial banks.
Russia and China, two of the six powers, have been reluctant to impose sanctions in the past but have, in the end, voted for all three sanctions resolutions after watering down the draft versions. Germany is also among the six powers.
(Additional reporting by Ingrid Melander in Brussels; writing by Edmund Blair; Editing by Robert Hart)
