As Iran balks at a confidence-building proposal, the five permanent members of the UN Security Council — the United States, Russia, China, France, and Britain — plus Germany are increasingly weighing sanctions.
The negotiating group, known as the P5-plus-1, looks likely to head back to the United Nations.
"The unity of the P5-plus-1 is our major asset, our major aim," a high-ranking European diplomat said on the condition of anonymity.
"I'm not saying it's easy, but I'm confident we'll get to the Security Council," according to the diplomat who is close to the talks on Iran.
The P5-plus-1 has been reaching out to Iran in a bid to force the regime to halt its uranium enrichment.
But Iran has long equivocated in response to an offer from the Vienna-based UN International Atomic Energy Agency (IAEA) to ship abroad low-grade nuclear fuel so it can be further enriched and returned to refuel a Tehran medical research reactor.
In Vienna, diplomats said Wednesday the Islamic Republic had effectively rejected the deal because it refused to accept some of the conditions called for by the West and insisted on a simultaneous exchange of fuel.
Western countries have ruled out such an exchange as unacceptable.
The proposal made by the IAEA last October, "which was supported by France, Russia and the United States, continues to be on the table," said IAEA spokeswoman, Gill Tudor.
The proposal is designed to buy breathing room as the big powers try to halt Iran's uranium enrichment — which the West fears masks a drive to build a nuclear bomb.
Denying the charge, Iran says it seeks peaceful uses of nuclear energy.
The diplomat said the Europeans have never really believed that Iran would accept the IAEA offer.
However, they were convinced that this stage of dialogue was necessary to reinforce the threat of new sanctions, something Western powers increasingly support.
China, which has economic links with hardline Iranian President Mahmoud Ahmadinejad, favors continued dialogue, but it also wants to avoid international isolation, the diplomat said.
"It's difficult when you share a statement… and when everybody agrees on that, to remain isolated. You just cannot stand this position for too long," the senior diplomat said.
Beijing is under all the more pressure, he added, as Russia is now on the same wavelength as the West.
"The Russians have changed their attitude… They are very helpful. They changed after the unveiling of the second site in Qom," the diplomat said.
The United States and other powers forced Iran to come clean in September on a second uranium enrichment site buried in a mountain near the holy city of Qom.
The tightening of ranks among the six powers has already produced results, the diplomat said, citing a unanimous vote by the negotiating group members for an IAEA resolution condemning Iran last November.
The United States and its European allies are hoping that the six powers will be in a position to present a new UN resolution in February.
The Security Council will be chaired then by France, before passing to Gabon in March, then Japan in April. It will then be involved in the review of the nuclear non-proliferation treaty in May.
The Western powers refuse meanwhile to discuss a hard-and-fast deadline for their efforts, aware that convincing Beijing to join them will take time.
In the event of failure, and as the impasse with Tehran lasts for months, the Europeans may end up by having to "take their responsibilities," in other words impose sanctions of their own, the diplomat said.
The idea is one being weighed on both sides of the Atlantic.
"We continue our conversations in terms of options that are available to us, both in terms of the Security Council going forward but also steps that can be taken in a coordinated way on a national basis," State Department spokesman Philip Crowley said Tuesday.
