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 "The Iranians want the ballistic missile sanctions lifted. They
say there is no reason to connect it with the nuclear issue, a view
that is difficult to accept," one Western official told Reuters.
"There's no appetite for that on our part."
Iranian and other Western officials confirmed this view. The foreign
ministers of the six powers - Britain, China, France, Germany,
Russia and the United States - met on Monday with Iranian Foreign
Minister Mohamed Javad Zarif - and were expected to meet again soon
- to try to strike a deal by Tuesday night.
"The Western side insists that not only should it (Iran's ballistic
missile program) remain under sanctions, but that Iran should
suspend its program as well," an Iranian official said.
"But Iran is insisting on its rights and says all the sanctions,
including on the ballistic missiles, should be lifted when the U.N.
sanctions are lifted."
Separately, a senior Iranian official told reporters in Vienna on
condition of anonymity that Tehran wanted a United Nations arms
embargo terminated as well. A senior Western diplomat said a removal
was "out of the question".
 The deal under discussion is aimed at curbing Tehran's most
sensitive nuclear work for a decade or more, in exchange for relief
from sanctions that have slashed Iran's oil exports and crippled its
economy.
The United States and its allies fear Iran is using its civilian
nuclear program as a cover to develop a nuclear weapons capability.
Iran says its program is peaceful.
An agreement would be the most important milestone in decades
towards easing hostility between the United States and Iran, enemies
since Iranian revolutionaries captured 52 hostages in the U.S.
embassy in Tehran in 1979.
An Iranian official told the semi-official Tasnim news agency that
the talks could continue until July 9, echoing some Western
diplomats. A White House spokesman in Washington said it was
"certainly possible" the deadline could slip.
A deal could reduce the chance of any military strike against Iran's
nuclear facilities, something Washington has refused to rule out,
and the possibility of a wider war in the Middle East, where
conflicts already rage in Iraq, Syria and Yemen.
"FAKE STATE"
Iranian leaders have warned that Iran would respond to any attack by
targeting U.S. interests and Israel.
"Israel is a fake temporary state. It's a foreign object in the body
of a nation and it will be erased soon," the state news agency IRNA
quoted former president Akbar Hashemi Rafsanjani as saying.
Iran refuses to recognize Israel, which is widely believed to be the
Middle East's only nuclear power and has repeatedly described Iran's
nuclear program as a threat to its existence.
Israeli Prime Minister Benjamin Netanyahu said the deal would "pave
Iran's path to a nuclear arsenal".
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"It will give them a jackpot of hundreds of billions of dollars with
which to continue to fund their aggression and terror - aggression
in the region, terror throughout the world," he told reporters in
Jerusalem.
If there is a nuclear deal, it will include a draft U.N. Security
Council resolution that, once adopted, would terminate all U.N.
nuclear-related sanctions while simultaneously re-imposing other
existing restrictions on Iran.
The six powers argue that removing those measures could further
destabilize the region.
"Intense work is going on to try and conclude by the deadline," a
senior Western diplomat said, referring to Tuesday.
A German diplomat, however, said "failure is not ruled out." Iranian
state news agency IRNA quoted an Iranian official saying that
"serious differences" remained after the ministerial meeting.
U.S. President Barack Obama must submit the deal to Congress by July
9 in order to get an accelerated 30-day review. If it is submitted
later, the Republican-led Congress would have 60 days to review it,
providing more time for the deal to unravel.
In parallel with the powers' talks, delegates from the International
Atomic Energy Agency (IAEA) were due to hold talks with Iranian
officials in Tehran on Monday, following a visit from IAEA chief
Yukiya Amano last week.
The powers want Iran to grant more access to IAEA inspectors and to
answer its questions about previous nuclear work that may have had
military purposes.
(Writing by Parisa Hafezi, Louis Charbonneau and Arshad Mohammed;
Additional reporting by John Irish, Arshad Mohammed and Shadia
Nasralla in Vienna and by Bozorgmehr Sharafedin in London; Editing
by Kevin Liffey and Giles Elgood)
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reserved.]
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