JERUSALEM - Israel offered cautious praise on Friday for a U.N.-drafted, U.S.-backed proposal for dealing with Iran's enriched uranium, calling it a positive first step toward denying Tehran the means to make nuclear weaponry.

Prime Minister Benjamin Netanyahu raised the issue expressly ahead of talks with U.S. President Barack Obama's Middle East envoy George Mitchell, who does not usually deal with Iran, following more skeptical remarks by Israeli defense officials.

I also wanted to take this opportunity to express my appreciation for the president's ongoing efforts to stop Iran from acquiring nuclear military capability, Netanyahu said at a brief welcome session video-taped and published by his office.

I think that the proposal the president made in Geneva, to have Iran withdraw its enriched uranium -- a portion of it -- outside Iran is a positive first step in that direction.

The statement came as Iran, the United States and other world powers tussled over terms for any final fuel-export deal.

Under the proposal drafted by Mohamed ElBaradei, head of the U.N. International Atomic Energy Agency, Iran would send about 75 percent of its known 1.5 tons of low-enriched uranium (LEU) for conversion abroad into fuel for a Tehran research reactor.

Israel fears that anything less than a total halt to uranium enrichment would still leave the possibility of Iran making bomb material, as Defense Minister Ehud Barak stressed in an October 22 speech addressing the international talks in Geneva and Vienna.

Not only should enriched material be removed, but enrichment must be stopped in Iran, Barak said. He added that diplomacy must be given only a short and defined time before serious and immediate sanctions are imposed on Iran.

AMERICAN CONCERN

Barak's misgivings were echoed by his deputy and, according to Israel's biggest newspaper Yedioth Ahronoth, drew U.S. ire.

The Americans did not like, to put it mildly, the statements from Israel's political-security establishment against the nuclear agreement proposed by the United States, Russia and France to Iran, Yedioth reported on Wednesday.

Asked about the Yedioth report, a Netanyahu spokesman said he knew of no such pressure or recrimination from Washington.

Iran says its atomic ambitions are peaceful, but the secrecy around the program and Tehran's vituperation of the Jewish state have stirred regional war fears.

Israel, assumed to have the Middle East's only nuclear arsenal, has hinted at the possibility of attacking Iranian facilities if it deems diplomacy a dead end. The United States has publicly opposed the idea of Israeli preemptive strikes.

Iranian media reported on Thursday that Tehran had delivered requests for changes to the ElBaradei proposal.

This was widely seen in Israel as a stalling tactic.
The engagement will be a process of erosion, of Iranian rejectionism cloaked in lip-service, said Tzahi Hanegbri, head of parliament's Foreign Affairs and Defense Committee.

(Writing by Dan Williams)

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