VIENNA/LONDON - Iran has yet to give a formal response to a U.N.-drafted nuclear fuel proposal after signaling it would do so this week, then leaking demands for major changes that could unravel the tentative pact.

Western diplomats complained of stalling tactics by Iran, suggesting it had scant interest in following through on a plan they saw as crucial to demonstrating Tehran wants refined uranium only for peaceful purposes, as it says, not to make nuclear bombs.

They said Iran's initial reply to the International Atomic Energy Agency (IAEA) on Thursday did not form a basis for negotiation and it was urgent that Tehran gave a full, official response to the proposed deal with the United States, France and Russia.

Western officials remained largely quiet on Iran's signals and left IAEA Director-General Mohamed ElBaradei to push the Islamic Republic for more details.

As far as the government's response is concerned, this is still outstanding, a diplomat close to the IAEA said.

The IAEA has to wait until Iran responds (fully) and take it from there. Naturally they are aware of the urgency of their formal reply. Iran missed an initial IAEA deadline for a response last Friday.

Iran's official IRNA news agency said on Friday Tehran had not yet given its final response and was ready for more talks. However, the report suggested Iran would remain evasive.

Even if a next round of talks was held, Iran would announce its opinion and not an answer, IRNA quoted an informed source as saying.

The IAEA draft pact calls for Iran to transfer about 75 percent of its known 1.5 tons of low-enriched uranium (LEU) to Russia for further enrichment by the end of this year, then to France for conversion into fuel plates for a Tehran reactor that produces radio isotopes for cancer treatment.

French Foreign Ministry spokesman Bernard Valero said Iran appeared to have given only a verbal indication of its position and proposed changes which he did not specify.

We call on Iran to give the agency a formal, positive response on the accord without delay, Valero told a regular news briefing in Paris.

According to Iranian media, Tehran wants the LEU to be shipped out in small, staggered portions, not all in one go as the draft text stipulates. Iran also wants to import fuel for the reactor at the same time as sending material out.

This would undo key aspects of the deal for big powers who want to minimize Iran's potential to build atom bombs from its growing stockpile of low-enriched uranium.

They have warned Iran it risks a fourth round of sanctions if it fails to help defuse concerns about its atomic program. Iran insists its nuclear work is for the peaceful generation of electricity.

WEST QUIET

Western powers withheld substantive comment on Iran's delaying and demands for amendments to the pact.
U.S. Secretary of State Hillary Clinton signaled on Friday the United States would allow talks with Iran over its nuclear program to play out before considering fresh sanctions.

EU leaders urged Iran to accept the IAEA deal, saying progress would help open the door to further cooperation.

Diplomats said the ball was now in Iran's court.

Iran is stalling, but it isn't just a negotiation tactic, said Mark Fitzpatrick, senior non-proliferation fellow at the International Institute for Strategic Studies.

It faces real political trouble as all the power centers jockey for position. Nobody wants the rival to get credit for landing the big prize of U.S. relations.

Iran's clerical establishment agreed to talks with world powers to guarantee its credibility after its disputed June presidential election and its turbulent aftermath which harmed the legitimacy of the country's leadership.

Some hardliners have criticized the establishment for succumbing to international pressure to accept the deal, which could prove a litmus test of President Barack Obama's diplomatic outreach and his drive for nuclear disarmament worldwide.

Iran has the tremendous power to help or hurt Obama. He has really gone out on a limb here, Fitzpatrick said. He said this could be a reason for Washington's apparent patience.

But the patience is certainly not open-ended, he said. (Iran's stalling) of course means there is now more pressure from those who think this is all an (Iranian) ruse.

(Additional reporting by James Mackenzie in Paris, Will Dunham in Washington and David Brunnstrom in Brussels; editing by Andrew Dobbie )

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