Mideast spotlight on EU for Iran, Palestinian moves

Mark John, Reuters:

European Union foreign ministers will seek on Monday to agree initiatives on Iran's nuclear programme and funding for the Palestinians as the EU is thrust centre-stage in Middle East diplomacy. READ MORE

The United States has -- for now -- taken a back seat on both issues, entrusting the Europeans with trying to entice Tehran back to talks over its disputed nuclear programme, and to work out a plan to avert a looming Palestinian economic crisis.

Failure on either count would be a blow to the credibility of the 25-state bloc, whose image in the Middle East was hit by its move last month to suspend direct aid to the Hamas-led Palestinian government for its failure to renounce violence.

EU foreign ministers meeting in the Belgian capital will work on a package of technical, trade and political sweeteners for Iran if it finally acts to allay Western fears it is seeking to produce an atom bomb, notably by halting uranium enrichment.

Either Iran accepts the offer or risks seeing international support harden for a U.N. resolution ordering it to curb its nuclear activities or face consequences, diplomats said.

"The aim is to come up with a very attractive package to make it difficult for the Iranian government to refuse," said a senior envoy from one of the "EU3" group of Britain, France and Germany, who are charged with devising the offer.

Major powers failed last week to agree on a U.N. resolution to up pressure on Iran amid resistance from China and Russia, both veto-holding members of the U.N. Security Council. The EU wants to have its package ready to show to a May 19 meeting in London of the five permanent Council members plus Germany.

A draft statement for Monday's EU meeting obtained by Reuters stated the bloc was ready to help Tehran develop "a safe, sustainable and proliferation-proof civilian nuclear programme" while insisting it halt all enrichment activities on its soil.

EU officials said it was undecided if help could include letting Western firms build nuclear power stations in Iran, an offer sources said was in an earlier package rejected by Iran last August and which also stipulated an end to enrichment.

Iranian President Mahmoud Ahmadinejad said on Sunday Iran would not accept any offer made by European states if it included a demand that Tehran stop what he called peaceful nuclear activities.

Working out how to get much-needed international aid to the Palestinians while refusing contacts with Hamas is no easier.

Diplomats said the EU had not expected to be charged by the Quartet of international peace mediators with devising a plan to funnel aid through, and was now in a race against the clock to get it launched and avert a Palestinian financial collapse.

Key issues remain unsolved, including how any new fund -- known as a "temporary mechanism" -- will operate, which donors would pay into it, and what the cash will be used for.

Washington opposes the fund paying Palestinian Authority salaries, the mainstay of the economy, and envoys said banks were reluctant to take part in anything which might breach a U.S. financial blockade of the Authority.

Diplomats predict it will take weeks to finalise plans and the EU is worried its longstanding efforts to build trust in the region with annual aid worth an average 500 million euros ($644 million) in past years could now be undermined.

"The move to suspend aid to the PA cast us as the villain of the piece despite the fact that we are still the biggest donor," said one EU diplomat, noting that food aid, refugee support and other EU help which did not require PA links was continuing.