TEHRAN - Iran and world powers seeking to resolve a dispute over Tehran's nuclear program will start talks on October 1, in what a senior U.S. official described as an important first step.

In Vienna, the head of the United Nations nuclear watchdog urged the U.N. Security Council to give it more powers to prevent the spread of atom bomb technology and avoid relying on sanctions he said often did not work.

Mohamed ElBaradei's call was a clear reference to the case of Iran, which is expanding a declared uranium enrichment program without clarifying allegations of illicit nuclear weapons research.

But the chief U.S. delegate, in contrast with ElBaradei's message, said any nuclear outlaws must face serious consequences at the Security Council, an apparent allusion to sanctions.

Failure to impose meaningful consequences puts at risk everything we have achieved (with non-proliferation rules). We cannot let this happen, said U.S. Energy Secretary Steven Chu.

Israeli Prime Minister Benjamin Netanyahu also said on Monday the time had come for tougher sanctions against Iran.

I believe that now is the time to start harsh sanctions against Iran -- if not now then when? These harsh sanctions can be effective, Netanyahu was quoted by a parliamentary official as telling a legislative committee.

I believe that the international community can act effectively, said Netanyahu, whose country is widely believed to be the Middle East's only nuclear power.

His comments appeared to signal -- amid wide speculation that Israel could opt to attack Iranian nuclear facilities -- that it had not given up on international diplomacy to curb Tehran's atomic ambitions.

In Brussels, a spokeswoman for European Union foreign policy chief Javier Solana confirmed he had talked to Iranian chief nuclear negotiator Saeed Jalili on the phone and that they had agreed on a meeting on October 1.

Solana has been representing the six powers -- the United States, France, Germany, Britain, China and Russia -- in long-running efforts to defuse the row over Iranian atomic activity which the West suspects is aimed at making bombs.

It's an important first step and we are hoping for the best, U.S. Secretary of Energy Steven Chu said in Vienna about the talks announced for early October.

Media in Iran, which says its nuclear program is for peaceful power purposes, said the venue had yet to be decided.

In talks between Saeed Jalili and Javier Solana, October 1 was announced as the starting date of Iran's talks with the 5+1 countries, the semi-official Mehr News Agency said, referring to the group of six powers.

NUCLEAR RIGHTS

Iran last week handed over a package of proposals to the world powers in which Tehran said it was willing to discuss global nuclear disarmament as well as other international issues in wide-ranging talks.
But the document did not mention Iran's own nuclear program, and officials in Tehran have made clear it will not be part of any such discussions.

The United States has said it will accept Iran's offer of talks despite Tehran's stated refusal to discuss its nuclear work, making clear it intended to raise the issue anyway.

Iran's Foreign Ministry spokesman Hassan Qashqavi reiterated Tehran's position at a news conference on Monday:

Iran will not talk about its definite rights, but as you might be aware, a part of the proposed (Iranian) package addresses removal of global concerns ... (and) nuclear disarmament, he said.

U.S. President Barack Obama, who came to office pledging a policy of engagement toward Iran, has suggested it may face harsher international sanctions if it does not accept good-faith talks by the end of September.

The six powers offered Iran trade and diplomatic incentives in 2006 in exchange for a halt to uranium enrichment.

They improved the offer last year but retained the suspension demand, something Tehran has repeatedly ruled out as a precondition. Refined uranium can be used as fuel for nuclear power plants but also provide material for bombs.

ElBaradei, outgoing chief of the International Atomic Energy Agency, welcomed the U.S. offer to revive dialogue with Iran without preconditions. But he suggested threats of tougher sanctions on Iran if the talks fizzled would go nowhere.

We must keep open the channels of communication with those with whom we have issues that need to be resolved rather than seeking to isolate them, ElBaradei said in an address opening the annual meeting of 150 IAEA member nations.

The Council needs to develop a comprehensive compliance mechanism that does not rely only on sanctions, which too often hurt the vulnerable and the innocent, ElBaradei said, referring to the example of Saddam Hussein's Iraq and to North Korea.

ElBaradei reiterated that Iran's stonewalling of requests for IAEA access to check intelligence reports pointing to military nuclear dimensions to the program was unacceptable.

If we are to restore confidence in the exclusively peaceful nature of its nuclear program, Iran needs to engage substantively with the agency to clarify ... the difficult and important questions regarding the authenticity of information relating to alleged weaponization studies, he said.

(Additional reporting by Jeffrey Heller, Reza Derakhshi in Tehran, Sylvia Westall and Mark Heinrich in Vienna, Brussels bureau; writing by Samia Nakhoul)

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