At the end of the first three-month period of negotiations stipulated in the November 2004 Paris Agreement signed by Iran and the EU Three (Britain, France, and Germany), a steering committee of representatives of all the parties met for a joint assessment of the situation.
It was decided that the negotiations would continue as Iran maintained its suspension of uranium-enrichment activity.  At the same time, the commanders of Iran's Revolutionary Guards and armed forces announced that they were prepared for a possible military attack.
Iran's Reaction to the New U.S. Initiative
The international media recently reported a change in U.S. policy toward Iran, citing as evidence the U.S.'s March 11, 2005 statement that it would agree to offer Iran benefits and incentives, such as dropping its veto of Iran's candidacy for the World Trade Organization, and permitting Tehran to purchase spare parts for civilian airplanes. This would be in exchange for Iran's cooperation in the nuclear issue, with the aim of attaining a permanent cessation of Iran's uranium-enrichment activity. It should be noted that the day before the "change" in U.S. policy was reported, U.S. President George W. Bush extended the sanctions on Iran for another year. 
Iran rejected the U.S. offer, calling it "ridiculous,"  and an Iranian spokesmen claimed that these measures could not be considered "confidence-building" because Iran was in any case entitled to WTO membership, and because there should never have been restrictions on the purchase of spare parts for civilian airplanes in the first place.  Supreme National Security Council Secretary Hassan Rowhani explained: "We will make no deal on enrichment. Economic incentives, including purchasing the Airbus and joining the World Trade Organization, will not compensate for giving up enrichment." 
The U.S.'s willingness to correct its past errors and lift the sanctions it had imposed on Iran would not be considered incentives according to Iranian Foreign Minister Kamal Kharrazi: "No economic incentive is equal to Iran's right [to develop nuclear energy]." 
Furthermore, Iranian spokesmen noted that they were expecting genuine confidence-building measures on the part of the U.S.: removing the freeze on the billions of dollars in Iranian assets in U.S. banks, lifting U.S. sanctions on Iran, and reversing the hostile U.S. policy towards Iran. Only then would Iran reconsider its policy toward the U.S. – but no matter what, uranium enrichment and the development of nuclear energy would remain Iran's right as a sovereign state, and would remain non-negotiable. 
The Iranian-European Deadlock
The Iran-EU Three negotiations currently underway are at a deadlock. According to reports, the EU Three have demanded that Iran permanently suspend all uranium-enrichment activity, while Iran remains uncompromising in its insistence that there be no permanent suspension of such activity and that as a sovereign nation signatory to the Non-Proliferation Treaty it is entitled to enrich uranium. 
In his recent visit to Paris, Iranian President Mohammad Khatami explained the Iranian position: "Our basis for discussions [with the EU Three] is the November 2004 Paris Agreement, which recognizes Iran's right to peaceful use of nuclear technology." "Iran has provided a comprehensive proposal for continuation of the talks, which has been received positively by the Europeans, notably France." 
Iranian officials called the EU Three demand for a permanent suspension "a blatant breach of the [Paris] Agreement" (in which the Europeans agreed to recognize Iran's right to develop nuclear energy).  It should be mentioned that the EU Three did indeed recognize this right in principle because Iran is an NPT member, but still did not agree to Iran enriching uranium in high percentages that would allow the development of nuclear weapons. 
According to an official Iranian spokesman, Iran's Supreme National Security Council Secretary Hassan Rowhani said in a meeting between the Council of Experts with Former President and Expediency Council Chairman Hashemi Rafsanjani, "At no price will Iran consent to a permanent suspension of its uranium-enrichment activity." 
Foreign Minister Kamal Kharrazi was resolute on the issue: "Iran is determined to pursue the enrichment process, and others cannot stop [its] uranium-enrichment program." 
Head of the Iranian negotiating team in the nuclear committee in the EU Three-Iran talks, Sirus Nasseri, recently stated that there is no possibility of Iran permanently relinquishing its uranium enrichment: "This is something we are not willing to consider."  The U.S. and the EU should "get used to the idea of a nuclear Iran." 
French ambassador to Tehran François Nicoullaud made it clear that the referral of the Iranian dossier to the U.N. Security Council was "a real danger," even though the parties have decided to continue negotiations. He made it clear that the European considerations transcend the Iranian issue, saying: "...The decision that will be made regarding the [Iranian] dossier will constitute a model for other countries in the world." 
Iran's Negotiating Positions
Iranian spokesmen said that the negotiations are currently focusing on the issue of "objective guarantees" that Iran is to give the EU Three to assure them that it is enriching uranium strictly for civilian, not military purposes – and not on the EU demand that Iran permanently suspend uranium enrichment. 
Referring to theguarantees offered by Iran during the negotiations, Iranian President Khatami said that his country "presented to Europe five detailed proposals, and they [the Europeans] should provide us with solid security guarantees." 
On another occasion, Khatami added: "Iran is ready to give formal guarantees that it will never produce nuclear arms in return for respect for its legitimate right to possess fuel cycle plants under IAEA safeguards." He also said that Iran wanted nothing more than what the international conventions had authorized. 
Another member of the Iranian negotiation team, Security Council Foreign Affairs Committee Director Hossein Mousavian, told IRNA on March 23 that the nuclear committee had reached a point where no further progress could be made in the attempt to obtain "objective and strong guarantees from Europe to Iran," and that there was a "possibility that the negotiations had reached a dead end." He said the Europeans "have undertaken to provide Iran with strong guarantees about political, economic, technological, nuclear and security cooperation, but, frankly, did not come up with any important proposal except for minor ones to meet Iranian expectations from Europe." 
Elaborating on the objective guarantees that the EU Three want from Iran, Mousavian said that Iran believes that it has already given the international community four guarantees: signing the Non-Proliferation Treaty, signing the IAEA safeguards agreement, signing the Additional Protocol to the NPT, and maintaining transparent cooperation with the IAEA.
Mousavian said: "The European partners wanted objective guarantees to ensure that the fuel cycle will not be diverted to produce nuclear arms, and we expected them to come up with proposals on how to obtain guarantees from Iran. However, in the past three months of negotiations they have not proposed any formula for objective guarantees from Iran." 
Also stating that Iran is ready to give assurances that it will not produce bomb-grade uranium, Foreign Minister Kamal Kharrazi added: "We do not intend to enrich to the level that is needed to make atomic bombs and have imposed a limit... that we enrich [uranium only] to the level we need for nuclear (reactor) fuel." 
According to reports, during the last meeting in March, Iran proposed a limited uranium-enrichment project, under which it would keep 500 centrifuge sets to enrich uranium up to 5.3%, under close IAEA monitoring. The EU Three has rejected this proposal and demanded a permanent suspension of uranium enrichment, arguing that this plan for a pilot centrifuge project for uranium enrichment could be diverted by Iranian scientists to gather findings for military use. 
However, Mousavian said that reports that Iran has proposed limiting uranium enrichment to only 500 centrifuges are totally baseless. 
It should be noted that international treaties and regulations permit NPT member states to produce low-enriched uranium (LEU) solely for civilian purposes. The level of enrichment permitted for these purposes is 3%-7%, and it is subject to IAEA inspection and must follow IAEA notification. In contrast, high-enriched uranium (HEU), necessary for military purposes, is between 20%-90%.
Mousavian elaborated on the Iranian proposal saying: "I do not think there could be any approach other than what Iran put forward on March 23. Iran believes that the two parties have no additional opportunity to successfully conclude the process... Iran's option is clear. The Europeans should put forward proposals for objective guarantees. Of course, they know that it is out of question that Iran halt uranium enrichment forever. Iran welcomes any mechanism Europe can come up with. It is the last chance to proceed with negotiations. And if the Europeans have no proposal for objective guarantees, Iran's March 23 offer is the best, and we know of no alternative." 
In an extensive interview, Sirus Nasseri discussed Iran's position in the negotiations with the EU Three saying: "Iran will soon present its final proposal and will set a target date for the EU to either accept or reject it. We do not want confrontation, but if they cannot respond to what we believe to be rational, they can choose their own path because we are ready to flex our muscles…
"It is clear to me that we are walking on a knife's edge. There is no guarantee that we will reach an agreement. What I can say with certainty is that during the negotiations we witnessed, step by step, more willingness to be flexible on the part of the Europeans. At the same time, this does not mean that they have the ability to reach an agreement with us. The EU must accept Iran's uranium-enrichment program..." 
" For the Europeans, success in these talks – at least at this stage – is vital. For us, it is [merely] an advantage. We'd prefer to reach an agreement and go about our business, because it would improve our relations, but it is not imperative. It is up to the Europeans to choose their path... If these talks fail, and [Europe] is not able to advance them, it would find it difficult to play a major role in any important global political issue. This is a crucial point. This also gives us room to maneuver vis-à-vis Europe and to use it as a buffer – not a mediator – between us and [the U.S.], with which we are in conflict.
"…We truly want to produce fuel. Why should we care that technically speaking, this enrichment-based fuel production can also be used for something else?... What is important is our intention… Moreover, we allow supervision.
"…One thing worries us, and because of it, we told the Europeans that their time is running out. We said: 'We don't know what deal you made with the Americans, and your denial of such a deal is unclear to us.' There is a danger that their offer will improve to a point that if we reject it, they could claim that they made Iran an excellent offer and that its rejection indicates a desire for nuclear weapons. This is indeed a danger. Therefore, the negotiations have become much more difficult, the pressure has increased, there is more tension, and we are getting to a point when we might take the final step. " 
Additional Iranian Threats
Alongside the negotiations, threats have also been made by several top Iranian officials.  Iranian President Mohammad Khatami told a press conference: "The Europeans will suffer more than Iran if they decide to capitulate to U.S. pressure" and that "The enemies will be damaged more if they decide to do something against Iran." 
Khatami said that the EU Three's demand that Iran commit to a permanent halt of its uranium-enrichment activity was "a blatant breach of the Paris Agreement." He added, "The Europeans will bear the responsibility for what might happen." 
Iranian Supreme National Security Council Secretary Hassan Rowhani told a press conference that Iran would "halt all its confidence-building measures" if its dossier was transferred to the U.N. Security Council. "If Europe refuses to accept [the formula Iran has suggested to the EU], it will face problems..." 
At a recent international nuclear technology conference in Tehran, Rowhani added: "If [Iran-EU] negotiations fail because of the U.S. pressure and the Iranian nuclear dossier is referred to the U.N. Security Council, the region will come up against serious problems, and regional security will be jeopardized. " 
Former representative to the IAEA, Dr. Ali Akbar Salehi was even more blunt, telling the Iranian daily Kayhan: "Europe should understand that its security is closely linked to Iran's security." 
Iran Declares its Military Preparedness
In recent months, commanders of Iran's Revolutionary Guards and armed forces have announced their complete preparedness for a possible military attack on Iran's nuclear installations and other sensitive sites. Iranian spokesmen have declared that Iran's response would be formidable. Recently, the London daily Al-Hayat published a report on Iran's preparedness for an American or Israeli attack. The following are excerpts: 
"Iranian military sources say that the armed forces and the Revolutionary Guards have made all the field preparations for handling a surprise attack on targets within Iran. [These preparations] are not limited to the nuclear installations, which are dispersed among the cities and various locations – Bushehr, Isfahan, Arak, Natanz, Tehran, Yazd, and others – but also include military and industrial plants and dams.
"…Iran's military command has taken into account the possibility of a disruption of [communications] between military posts and the central command... As a precautionary measure, the command has ordered all military and Revolutionary Guards sectors to respond swiftly – within no more than an hour and without waiting for orders – against pre-selected targets, [in light of anticipated] international political pressures that might force Iran to not respond.
"The objective is to deliver a harsh blow to the U.S. and its ally Israel at the outset, and then to expand the arena, in light of international efforts to contain the crisis and limit its scope and intensity, so as to ignite the whole region. This way Iran will assure its right to respond.
"…All the countries that host U.S. military forces – particularly Iraq, CENTCOM [U.S. Central Command] in Al-Siliya [Qatar], the Al-'Odeid base in Qatar, and the Fifth Fleet command in Bahrain – are among the sites Iran might consider as targets. However, the biggest fish of all is Israel, which is likely to suffer 'hellfire' – particularly when the Iranian response 'will use [varied] weapons and reach other targets that the aggressors are not expecting them [to reach].'
"These sources added that although Iran anticipates a devastating attack that will destroy a significant part of its economic and industrial achievements of the past 26 years, it is now pondering an issue that seems to it to be justified: Can the Bush administration grasp that it will have to send home at least five [dead] American soldiers per day? And how will the administration respond to the [American] people, who will question the benefit of the attack on Iran..."
According to Al-Hayat, Iranian military sources had reported that during a meeting between a French diplomat and Expediency Council Chairman Rafsanjani, the diplomat asked Rafsanjani whether Iran would relinquish its nuclear program, and was answered with an unequivocal "no." When the diplomat said that the U.S. had selected 325 targets within Iran as the first targets in any possible American attack, Rafsanjani explained to his guest that the Iranian counter-attack would be just as powerful and devastating.
The report continued, "When the Western diplomat asked, 'What if the place in which you are convening (the Marble Palace, a few dozen meters from the Islamic Republic's Presidential Building and the residence of Iranian Leader Ali Khamenei) is also among the targets?' Rafsanjani answered succinctly, 'Even if I am the target, [Iran will not relinquish its nuclear program].'"
*Ayelet Savyon is Director of MEMRI's Iranian Media Project.
 See MEMRI Inquiry and Analysis No. 209, "Iran seeks E.U. Consent for Modeling Its Nuclear Program on the Japanese-German Model – i.e. Nuclear Fuel Cycle Capabilities – Three Months Short of a Bomb," February 23, 2005, http://memri.org/bin/articles.cgi?Page=countries&Area=iran&ID=IA20905.
MEMRI Inquiry and Analysis No. 200, "The Iran-EU Agreement on Iran's Nuclear Activity," December 21, 2004, http://memri.org/bin/articles.cgi?Page=countries&Area=iran&ID=IA20004.
Sirus Nasseri announced that the negotiations had ended without a final accord and that each side remained steadfast in its position. IRNA (Iran), March 24, 2005.
 Iran Daily (Iran), March 12, 2005. President Bush noted that Iran constitutes "an unusual and extraordinary threat." Bush accused Iran of "support for international terrorism, efforts to undermine the Middle East peace process, and acquisition of weapons of mass destruction and the means to deliver them."
 Iranian Intelligence Minister Ali Younesi, ISNA, March 13, 2005.
 Iranian Foreign Ministry Spokesman Hamid Reza Asefi, Aftab-e Yazd (Iran), March 7, 2005; IRNA (Iran), March 13, 2005.
 IRNA (Iran), March 5, 2005.
 IRNA (Iran), March 15, 2005. Similar statements were made by Iranian President Khatami, IRNA (Iran), March 31, 2005; Iranian Supreme National Security Council Secretary Rowhani, IRNA, March 5, 6, 2005. Iranian Foreign Ministry Spokesman Asefi said, "Correction of some mistakes and removal of a few unjustifiable restrictions will never persuade Iran to give up its legitimate rights." IRNA (Iran), March 12, 2005.
 Supreme National Security Council Foreign Relations Committee Secretary Hossein Mussavian, Aftab-e Yazd (Iran),March 15, 2005. Iran rejected U.S. participation in the negotiations. Rowhani said: "We still doubt America's goodwill. They are not fair in negotiations and they use threats against Iran. They intend to transfer the Iranian nuclear file to the Security Council." IRNA (Iran), March 5, 2005. Foreign Ministry Spokesman Asefi also said that U.S. participation would be "destructive." IRNA (Iran), March 13, 14, 2005.
 See Rowhani's statements at a press conference, Kayhan (Iran), IRNA (Iran), March 5, 2005; Khatami during a visit to Venezuela, IRNA (Iran), March 13, 2005.
 IRNA (Iran), April 6, 2005.
 Statements by Iranian President Khatami, Kayhan (Iran), March 15, 2005, IRNA (Iran), March 16, 2005. Sirus Nasseri stated that the E.U. Three demand for a permanent suspension of Iran's enrichment activities was not included in the Paris Agreement and that the E.U. Three should accept Iran's uranium-enrichment activity. Sharq, Tehran Times (Iran), March 15, 2005. See MEMRI Inquiry and Analysis No. 200 on the Paris Agreement, "The Iran-E.U. Agreement on Iran's Nuclear Activity," December 21, 2004, http://memri.org/bin/articles.cgi?Page=countries&Area=iran&ID=IA20004.
 International treaties and regulations permit the production of low-enriched uranium (LEU), at 3%-7%, for civilian purposes, and require prior notification to the IAEA and full IAEA inspection. For military purposes, high-enriched uranium (HEU), at 20%-90%, is required.
 IRNA (Iran), March 15, 2005, Jomhouri-e Eslami (Iran), March 17, 2005.
 Kayhan (Iran), February 24, 2005.
 IRNA (Iran), March 24, 2005.
 Aftab-e Yazd (Iran), March 1, 2005.
 Aftab-e Yazd (Iran), April 5, 2005.
 Rowhani at a press conference, Tehran Times (Iran), February 27, 2005.
 Aftab-e Yazd (Iran), March 16, 2005, IRNA (Iran), March 15, 2005.
 IRNA (Iran), April 4, 2005.
 IRNA, April 6, 2005
 IRNA, April 6, 2005
 IRNA (Iran), March 15, 2005.
 Sharq (Iran), March 16, 2005; Jomhouri-ye Eslami (Iran), April 3, 2005, Frankfurter Allgemeine Zeitung (Germany), April 1, 2005.
 IRNA, April 6, 2005
 IRNA, April 6, 2005
 Sharq, Tehran Times, (Iran) March 15, 2005.
 Sirus Nasseri in an interview with Iranian TV 2. See MEMRI-TV Clip 609, http://memritv.org/Search.asp?ACT=S9&P1=609.
 For previous threats see MEMRI Inquiry and Analysis No. 189, "Iran's Nuclear Policy Crisis," September 21, 2004,
MEMRI Special Dispatch No. 743, "Iran Threatens the West," July 13, 2004,
 Kayhan (Iran), Aftab-e Yazd (Iran), February 24, 2005.
 Kayhan (Iran), March 15, 2005, IRNA, March 16, 2005.
 IRNA (Iran), March 5, 2005. Rowhani was referring to the model proposed by Iran and based on the Japanese/German model. See MEMRI Inquiry and Analysis No. 209, "Iran seeks E.U. Consent for Modeling its Nuclear Program on the Japanese-German Model – i.e. Nuclear Fuel Cycle Capabilities – Three Months Short of a Bomb," February 23, 2005, http://memri.org/bin/articles.cgi?Page=countries&Area=iran&ID=IA20905.
 IRNA (Iran), March 5, 2005.
 Kayhan (Iran), March 9, 2005.
 Al-Hayat (London), March 29, 2005.