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Iran denies that its declared civilian atomic energy program is a front for developing the means to make nuclear weapons.
Iran and world powers locked horns on Wednesday over the fate of a planned Iranian nuclear reactor that could yield plutonium for bombs, diplomats said, although Tehran's foreign minister voiced optimism that their July 20 deadline for a deal is within reach.
The meeting in Vienna is the second in a series that the six nations — the United States, China, Russia, Germany, France, Britain — hope will produce a verifiable settlement on the scope of Iran's nuclear activity, ensuring it is oriented for peaceful purposes, and put to rest the risk of a new Middle East war.
At this week's round, the two sides attempted to iron out their positions on two of the most thorny issues: the level of uranium enrichment conducted in Iran, and its Arak heavy water reactor that the West sees as a possible source of plutonium.
The United States has called on Iran to scrap or radically alter the planned reactor, but Tehran has so far rejected that idea while hinting they could modify it. A Western diplomat said on condition of anonymity that the goal of the current round of negotiations was not to reach any final agreements.
"The goal of these sessions is not to solve any topics at this point (but) to be talking through the gaps and working on how to narrow them," the diplomat told Reuters.
Western nations want to ensure that the Arak reactor, which is still under construction, is modified sufficiently to ensure it poses no bomb proliferation risk. Iran insists the facility will be free to operate under any deal, saying it will be geared solely to producing radio-isotopes for medical treatments.
Possible options that could allow Iran to keep the reactor while satisfying the West that it would not be used for military purposes include reducing its megawatt capacity and altering the way it would be fuelled.
Iran and the six powers aim to wrap up a lasting accord by late July, when their groundbreaking interim deal from last November expires and would need to be extended, complicating diplomacy.
The talks are meant to transcend ingrained mutual mistrust and give the West confidence that Iran would not be able to produce atomic bomb and Tehran — in return — deliverance from economic sanctions that have crippled the OPEC state's economy.
Iran denies that its declared civilian atomic energy program is a front for developing the means to make nuclear weapons, but its restrictions on UN inspections and Western intelligence about bomb-making research raised concerns.
Tehran's chief delegate voiced optimism about the talks.
"At this stage we are trying to get an idea ... of the issues that are involved and how each side sees various aspects of this problem," Iranian Foreign Minister Mohammed Javad Zarif told Reuters at the start of the second day of talks in Vienna.
Asked whether he expected negotiators to be able to meet their deadline, he said: "Yes, I do ... I am optimistic about July 20."
Zarif said talks were going well so far but few details have emerged. One Western diplomat told Reuters on Tuesday that no agreements on any individual issues would be reached at the Vienna discussions, expected to end late on Wednesday.
The sides are conscious it may be difficult to reach gradual deals without having the overall picture in sight and are insisting that "nothing is agreed until everything is agreed."
Much of the progress so far has been achieved since last year's election of Iranian President Hassan Rouhani, a relative moderate who launched a policy of "constructive engagement" to end Iran's international isolation.
"Our ultimate goal is to maintain our peaceful nuclear programs in line with international rules, and at the same time remove all concerns of the international community," the semi-official Fars news agency quoted Rouhani as saying on Wednesday.
"So far we are satisfied with the results and hope that the whole dispute will be settled soon with goodwill of the other side."
Since Rouhani's rise, day-to-day relations between Iranian and six-power negotiators have improved dramatically. Senior officials now address each other by their first names and use English in talks, rather than going through onerous translation.
But the vast gap of expectations about the final deal could still scupper diplomacy.
Both the U.S. and Iranian delegations — the two pivotal players in the negotiations — face intense pressure from hawkish critics back home. In Washington, a big majority of US senators urged President Barack Obama to insist that any final agreement state that Iran "has no inherent right to enrichment under the Nuclear Non-Proliferation Treaty."
That would be a non-starter for Iran, which cites a right under the NPT to produce nuclear energy for civilian purposes.
The final settlement will also have to address the acceptable level of uranium enrichment, the extent of research Iran is allowed to conduct into new enrichment technologies, and its remaining nuclear facilities.
The powers will also want to spread out the sanctions relief over years, or possibly decades, to ensure they maintain their leverage over Tehran and that it meets its end of the deal.
The Islamic Republic has already suspended its most sensitive, higher-grade enrichment — a potential path towards bomb fuel — under the November accord and won modest respite from sanctions.
The Vienna talks were being held under the shadow of the Ukraine crisis, which has pitted the United States and the European Union against Russia over its move to annex the Russian-majority Ukrainian region of Crimea.
Iran's top nuclear negotiator, Abbas Araqchi, said that the crisis in Ukraine — the worst confrontation between the West and the East since the Cold War — had so far had "no impact" on talks with the six nations.
"We also prefer the (powers) to have a unified approach for the sake of negotiations," he told reporters late on Tuesday, noting that the first day of talks was "positive and very good."
A spokesman for European Union foreign policy chief Catherine Ashton, who coordinates diplomacy with Iran on behalf of the six, said the powers were working in a "unified fashion."
Araqchi said that the next round of talks were expected to be held in the Austrian capital as well on April 7-9.
In the past, Russia has generally enjoyed warmer relations with the Islamic Republic and suggested Western fears about any nuclear weapons designs by Tehran are overblown.
As in previous meetings, Deputy Foreign Minister Sergei Ryabkov represented Russia at the talks.
(Reporting by Justyna Pawlak, Parisa Hafezi, Fredrik Dahl and Louis Charbonneau in Vienna; Editing by Mark Heinrich)