Last Tuesday, Iran responded formally to the package of incentives proposed by the six powers. It said the 21-page document contained ideas that would allow serious talks, but gave no sign it was prepared to halt or suspend enrichment.

"I repeat that Iran is fully prepared to hold constructive and fair talks anywhere and anytime with the foreign ministers of the (six major powers) over ... the nuclear issue," state television quoted Larijani as saying.

Israeli Foreign Minister Tzipi Livni said: "The world must not delude itself that Iran seeks some sort of real dialogue. They want to buy time. They must not be allowed to do so. Sanctions must be under way. The sooner, the better."

The group of six say they will hold off on any action until after an August 31 report by the U.N. nuclear watchdog, the International Atomic Energy Agency (IAEA), that will judge whether Iran has halted enrichment-related activity or not.

Diplomats close to the Vienna-based IAEA say the verdict is all but inevitable -- Iranian nuclear activity continues -- but that the West could not reasonably have expected otherwise.

"A lot of the media focus has been on Iran's offer being unacceptable because it didn't include the upfront agreement to suspend enrichment," said one diplomat, declining to be named.

"But no one, from (U.S. ambassador to the United Nations) John Bolton to Cinderella's fairy godmother, actually expected that to happen," said the diplomat.

"What Iran did offer -- a thoughtful counter-proposal that did not rule out suspension as part of negotiations -- was as positive as anyone could have hoped for."

European Union foreign policy chief Javier Solana said on Friday he would meet Larijani in coming days to discuss "new elements" raised in Iran's response.

1

2