VIENNA (AFP) - The EU is now calling on Iran to totally dismantle its nuclear fuel program in order to guarantee it does not seek atomic weapons, according to confidential reports on deadlocked month-old talks with Tehran.

Representatives of Britain, France and Germany told Iran that "nothing short of full cessation and dismantling of Iran´s fuel cycle efforts would give the EU3 the objective guarantees they need that Iran´s nuclear program is peaceful," a diplomat said Wednesday, reading to AFP reports on a meeting held in Geneva on January 17.

Iran has suspended uranium enrichment as a confidence-building measure but the EU now wants the Islamic Republic to definitively abandon enrichment as well as any activities for making plutonium.

Iran insists that the nuclear Non-Proliferation Treaty guarantees its right to peaceful enrichment activities.

The Geneva meeting was the second round of talks on a potentially lucrative trade pact after a deal clinched in November by the European bloc´s three most powerful members -- the so-called EU3 of Britain, France and Germany -- for Iran to suspend uranium enrichment, the key process that makes what can be fuel for nuclear reactors but also the explosive core of atomic bombs.

The trade deal forms part of a package of incentives for Iran if the talks produce "objective guarantees" the country is not seeking to develop nuclear weapons, as the United States charges it is doing.

Iran insists its nuclear program is a peaceful one to generate electric power.

The diplomat said the EU trio had agreed not to give Iran any incentive "goodies until progress was made in the nuclear working group," one of three in the meeting.

The nuclear group "is setting the pace for the package of incentives," which are to come from the political and technology transfer groups, the diplomat said.

The diplomat said Iran had argued that it needs to be able to generate 7,000 magawatts of nuclear power by 2021, and that it needs nuclear power for this.

But the European trio said this made no economic sense in oil-rich Iran.

The Europeans then "presented their views that what would be needed would be cessation/dismantling of sensitive parts of the nuclear program (i.e. the fuel cycle)," a second diplomat said reading from another report on the meeting.

Diplomats said the Europeans told Iran, however, that they would not object to a "safeguarded nuclear program," namely if Iran used fuel it did not make itself.

Iran did offer to limit enrichment to low levels producing fuel that was not weapons-grade and to allow for more intense monitoring by the UN nuclear watchdog International Atomic Energy Agency (IAEA).

"The Europeans said no," the first diplomat said.

The diplomat said Iran had also asked to be allowed to use 20 centrifuges for research, despite the fact that the enrichment suspension is supposed to extend to all related activities, and the Europeans rejected this.

Meanwhile, in the political-security working group, Iran called for a "friendship treaty" with the EU, the diplomat said.

The Europeans offered assistance, with France to help Iran develop an export control regime, Germany to help with Tehran´s counter- narcotics strategy and Britain with counter-terrorism.

The Iranians wanted to discuss Al-Qaeda and Iranian resistance groups but ruled out talks on Hezbollah and Hamas. The EU refused this limitation, the diplomat said.

The second diplomat said that while Iran was blocking the talks with its refusal to abandon the nuclear fuel cycle, the EU was stymied since it needs US backing if it is to offer Tehran key incentives, such as the trade issue of helping the Islamic Republic join the World Trade Organization (WTO).

"The Europans can not offer anything to Iran until the United States comes on board," the diplomat said.

A US diplomat said British Foreign Minister Jack Straw had made this point in recent talks with US Secretary of State Colin Powell.

The United States is not backing, but is also not opposing, the EU talks with Iran.

A third round of talks between the EU3 and Iran is scheduled for February in Geneva. (Copyright © 2005 Agence France Presse. 01/26/05)