Nuclear 'Carrots and Sticks' for Iran

WASHINGTON, June 6, 2006 — -- ABC News has obtained a draft of the "carrots and sticks" proposal that the United States, Europe, China and Russia made to Iran to encourage it to stop developing its nuclear program. The four-page document offers a "fresh start" based on "mutual respect."

After initially downplaying any interest in the proposal, Iran now says it needs more time to consider the proposal, a step President Bush says "sounds like a positive step to me."

Iran's change in tone comes after the United States and its allies offered Iran the most generous proposal yet to resolve the nuclear standoff of the past two years.

Among the incentives, or "carrots" for Iran if it ceases its nuclear program:

Iran would get help building new nuclear power plants, specifically light water reactors that cannot be used to make weapons-grade nuclear fuel.

Iran would get a new facility to hold a five-year supply of nuclear fuel.

The deal would also open the door to "guarantees for [Iran's] territorial integrity" -- words meant to assure Iran there would be no invasion by the United States or Israel.

A package of economic incentives so Iran can purchase a new fleet of American and European aircraft, something that it is now forbidden to do. Its aging airline fleet has become a safety threat.

The incentives would all be contingent on Iran agreeing to stop enriching uranium -- making fuel that can be used for bombs or nuclear power. Iran's refusal to do just that has raised tensions with Iran over the past two years.

But even on that point, the proposal says Iran could be allowed to resume uranium enrichment in the future if it can convince the United Nations Security Council it is for peaceful purposes only.

If Iran rejects the deal, the draft proposal threatens a long list of sanctions -- "the stick" approach:

freezing Iranian assets abroad;

a travel ban on high ranking officials;

an arms embargo;

reducing diplomatic relations with all the countries that made the proposal. Very significant, since Russia and China -- two hesitant partners in the sticks approach, both of which have extensive trade with Iran -- have agreed to this proposal.

Secretary of State Condoleezza Rice said Iran has "a matter of weeks" to respond to the offer.

A source close to the Iranian government told ABC News today that Iran may agree to temporarily stop enriching uranium but is unlikely to agree to fully shut down the program. It's unclear if that is enough for a deal on negotiations.