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 In a public address filled with technical detail, Ayatollah Ali
Khamenei said last week Iran needs to significantly increase its
uranium enrichment capacity, clashing with the powers' push for it
to be reduced to minimise the risk of nuclear bombmaking, as a July
20 deadline for a deal nears.
The talks with the United States, Britain, France, Germany, Russia
and China are aimed at a long-term accord on Iran curbing its
nuclear energy program in exchange for a gradual end of sanctions
that have crippled the OPEC member's economy.
In his speech, which analysts compared in importance to a State of
the Union address by a U.S. president, Khamenei said he had faith in
his negotiating team led by Foreign Minister Mohammad Javad Zarif
and his deputy, Abbas Araqchi.
 Several diplomats close to the talks said the speech, which included
many details about the nuclear program and Iranian demands on it,
came as a surprise to the Iranian delegation.
One Western diplomat said the delegation appeared "taken aback" by
Khamenei's remarks at such a sensitive time in the nuclear
negotiations - just ahead of the July 20 deadline for a deal. Two
Iranian sources confirmed that assessment.
"In ostensibly expressing support for the Iranian negotiating team,
close scrutiny of Khamenei's speech shows that in reality his
remarks were aimed at severely curtailing his team's room for
manoeuvre, making it effectively impossible to bridge gaps with the
stance of the (six powers)," according to a Western intelligence
analysis of the speech seen by Reuters.
Khamenei's message was a reminder of the tensions within Iran's
complex power elite between conservative hardliners - like him -
wary of any detente with the West they fear would imperil the
Islamic Revolution - and moderates who see a nuclear deal as Iran's
ticket out of economically crippling isolation.
Pragmatist Hassan Rouhani's landslide 2013 election as Iranian
president on a platform of improving Iran's foreign relations to
revive the economy opened the door to nuclear diplomacy and a
possible improvement of ties with the West. Resolving the
decade-long nuclear standoff with Iran is seen as vital to allaying
fears of a new war in the Middle East.
 Iran and the six resumed talks in Vienna on July 2 and their
negotiators continued meetings in the Austrian capital on Monday,
though there was no immediate sign of any substantive progress.
Western and Iranian officials have complained publicly that the
sides remain far apart on all key issues in the talks.
Iran's capacity to refine uranium lies at the center of the nuclear
stalemate and is seen as the hardest issue to resolve in the Vienna
talks, which began in February. U.S. Secretary of State John Kerry
is in Vienna to help break the deadlock. He met Zarif for a second
day in a row on Monday.
The Islamic Republic denies Western allegations that its declared
program to enrich fuel for civilian nuclear energy is a front for
pursuing the capability to produce atomic weapons.
DISPUTE OVER CENTRIFUGES
A relative of Khamenei's explained to Reuters the motivation for the
speech. "The leader is above all the factions. He felt that it was
essential to state his red lines publicly to avoid any
misunderstanding by either side involved in the talks.
"His speech contained clear technical points," the relative added.
"Now everyone, whether Iranian or non-Iranian, clearly understands
what is negotiable and what is not."
Unusually, Khamenei's July 7 speech included details on what he
described as Iran's enrichment "needs", defending it against what he
indicated was the West's dismissive attitude towards the Islamic
Republic. Western officials say that enrichment on home soil is not
a "need" for Iran and that it can obtain cheaper and better fuel for
civilian reactors from Russia and elsewhere.
Khamenei suggested that Iran needed 190,000 centrifuge machines in
the long term - a 19-fold increase in its current operational
capacity to refine uranium.
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U.S. and European negotiators want Iran to have a figure in the low
thousands to ensure it cannot quickly amass enough for atomic bomb
fuel, should it someday choose to do so.
Some analysts have suggested that Khamenei's speech actually
indicated a level of flexibility because he was talking about
long-term Iranian plans. Others disagree. "(Khamenei's) statement
served both as a directive upon his negotiating team and as an
apparent effort to shift the framework of the debate away from
Western demands, essentially grounding the talks," the intelligence
analysis said.
Earlier this month, Iranian and Western officials close to the talks
said Iran was reducing its demands for centrifuges well below the
figure Khamenei used. But in the wake of Khamenei's speech,
diplomats said, far-reaching compromises by the Iranians will be
more difficult.
"In our assessment, Khamenei's remarks were not coordinated with the
Iranian negotiating team in Vienna at present, and were intended to
cut off their ability to negotiate effectively," the intelligence
analysis said.
 "Furthermore, they were aimed at sending a clear message to the
international community that the negotiating team does not have the
mandate to compromise on the most critical issues under discussion -
above all, Iran's uranium enrichment capacity."
Iran expert Ali Vaez of the International Crisis Group said of
Khamenei's speech that "drawing public red lines won't help the
negotiators to narrow the gaps" in positions.
Western and Iranian diplomats said that after Khamenei's speech it
would be more difficult for Zarif and Araqchi to sell concessions
back in Tehran on centrifuges and other issues, such as Western
demands that Iran shut the Fordow enrichment site. Khamenei said
that demand was "laughable."
President Rouhani's brother Hossein Fereydoun arrived in Vienna to
join the talks and send details of the negotiations back to the
president, Iran's state news agency IRNA reported on Sunday. It was
not immediately clear if that was linked to concerns on Rouhani's
part in the wake of Khamenei's speech.
While Rouhani and Zarif may sincerely want to reach a deal that
would dismantle the sanctions that have devastated Iran's economy,
diplomats and analysts say that Khamenei is wary of reaching a swift
accord with the West, above all with the United States - the "Great
Satan" and Iran's arch-enemy since 1979.
 "Obviously Khamenei does not want to share his power and authority
with Rouhani or anyone else," said a diplomat in Tehran. "For him an
extension is an ideal situation. If he feels that his power might be
challenged by a nuclear deal, Khamenei will ignore its economic
benefits by rejecting it."
The talks on a long-term nuclear deal can theoretically be prolonged
for up to six months if all sides agree. Some analysts and diplomats
say an extension might be necessary but U.S. officials say there
needs to be further progress on key issues in the coming days if an
extension is to be approved.
(Additional reporting by Michelle Moghtader in Dubai and Fredrik
Dahl in Vienna; Editing by Mark Heinrich)
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