BERLIN - The U.N. nuclear watchdog chief urged Iran on Friday to accept an offer to process its enriched uranium abroad by the end of 2009, and advised Western powers not to impose further sanctions on Tehran.

Mohamed ElBaradei, director general of the International Atomic Energy Agency, said a plan brokered by the IAEA in which Iran would send low-enriched uranium to Russia and France for conversion into fuel for a Tehran medical reactor was a rare chance to defuse mistrust over its nuclear program.

I would hope definitely that we'll get an agreement before the end of the year, he told a news conference in Berlin. I believe frankly the ball is very much in the Iranian court. I hope they will not miss this unique but fleeting opportunity.

ElBaradei, who retires on November 30 after 12 tough years trying to stop the spread of nuclear weapons know-how, praised the role in talks with Iran played by U.S. President Barack Obama, saying he had an initiated a complete change of policy.

Noting that under Obama the United States had taken a creative and pragmatic approach to resolving the impasse over Tehran's nuclear program, ElBaradei used the news conference to send a message directly to the Iranian leadership.

You need to engage in creative diplomacy, you need to understand that this is the first time that you will have a genuine commitment from an American president to engage you fully, on the basis of respect, with no conditions.

Don't lose that opportunity, he told Iran.

REJECTION NOT FINAL

On Wednesday Tehran rejected the proposal he had drafted to send the fuel abroad, but he said it was not a written response, he did not think it was Iran's final position, and he remained in touch with his Iranian counterparts.

I do not consider that I have received a final answer, ElBaradei said. What I got is an oral response, basically saying we need to keep all the material in Iran until we get the fuel. That to me is an extreme case of distrust.

Both Western powers and Tehran had let each other down in the past and Iran had every reason to be distrustful, ElBaradei said.

The IAEA chief said he was opposed to the imposition of more punitive sanctions if Tehran did finally reject the proposal.

Are sanctions going to resolve the issue? I don't think so. In my view sanctions are going to make things much worse, he said, adding that this would probably make Iran more hawkish.

Six world powers met in Brussels on Friday to discuss what to do about Iran's spurning of the draft fuel deal, and Obama warned Tehran it would have to face consequences, an allusion to broader international sanctions.

Under the IAEA plan, Iran would ship out some 75 percent of its low-enriched uranium (LEU) for conversion into fuel plates for a Tehran reactor that makes isotopes for cancer treatment.

World powers want to reduce Iran's LEU stockpile below the amount needed -- if refined to high purity -- for a single atom bomb. Tehran has said it could do swaps of LEU for reactor fuel on its own soil, but prefers to buy the fuel from foreign suppliers rather than part with any LEU.
Western powers suspect Iran is using its nuclear program to develop nuclear weapons. Tehran denies this and says its nuclear ambitions are limited to the peaceful generation of electricity.

(Writing by Dave Graham, editing by Tim Pearce)

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