U.S. cool on Iran atom offer, experts see chance

* Think-tanks say Iran nuclear proposal should be tested

* But Western powers show little enthusiasm for reviving idea

* Tentative deal on fuel exchange fell apart in late 2009

By Fredrik Dahl

VIENNA, Oct 3 (Reuters) - An Iranian attempt to revive a nuclear fuel deal that fell apart in 2009 has drawn scepticism from the United States, even though two Western think-tanks urged Washington and its allies to pursue the proposal.

On the sidelines of last month's U.N. General Assembly meeting, President Mahmoud Ahmadinejad said Iran would stop producing 20 percent enriched uranium if it was guaranteed fuel supplies from abroad for a Tehran medical research reactor.

Signalling Western suspicion of Iran's motives in making such a proposal, U.S. State Department spokeswoman Victoria Nuland said in Washington on Friday: "From our perspective, at the moment, this looks like a diversion from the real issues."

The Federation of American Scientists (FAS) think-tank last week said Ahmadinejad's initiative was a rare chance to move forward in Iran's nuclear standoff with the West, which suspects Tehran is trying to make atomic bombs.

"For once it is strategically expedient for the United States and its allies to take Ahmadinejad at his word," FAS's Ali Vaez and Charles Ferguson wrote in the New York Times.

Providing Iran with the fuel would be a "humanitarian gesture with strategic benefits: curtailing Iran's enrichment activities and potentially cutting the Gordian knot that has stalled the West's nuclear negotiations with Iran."

Diplomatic efforts to seek a negotiated outcome in the long-running dispute over Iran's nuclear programme have been deadlocked since a fruitless meeting in Istanbul in January.

Tehran now says it is prepared to resume the talks. Western diplomats are sceptical, but the six powers involved -- the United States, China, Russia, France, Britain and Germany -- may once again test Iran's readiness to engage on substance.

Iran has come under tightening international sanctions over its refusal to suspend all its uranium enrichment activities, which can have both civilian and military purposes.

Its move last year to refine uranium to a fissile purity of 20 percent alarmed the West as it took Tehran closer to 90 percent bomb-grade material. It had previously only enriched to the 3.5 percent level usually required to fuel power plants.

Iran, which insists its nuclear aims are peaceful, says it was forced to enrich to 20 percent to make fuel for the Tehran reactor, which makes isotopes to treat cancer patients, after a tentative accord for an exchange collapsed.

"EMPTY PROMISES"

Under the deal brokered by the U.N. nuclear agency between Iran, the United States, France and Russia in 2009, Iran would send 1,200 kg of uranium enriched to 3.5 percent abroad -- roughly the amount needed for a bomb if refined much more.

The material would first be enriched to 20 percent and then turned into fuel assemblies by France before its return to Iran for use in the medical reactor, which is running out of fuel provided by Argentina in the 1990s.

For the West, the idea offered a way to restore a degree of trust in ties with Tehran and help in the search for a comprehensive diplomatic solution to the nuclear dispute.

Analysts believe the deal fell victim to Iran's internal power rivalries. Ahmadinejad's opponents, keen to deny him a diplomatic victory, said it would have forced Iran to part with the bulk of a strategic asset and a strong bargaining chip.

In his comments in New York last month, Ahmadinejad did not say whether Iran would also be willing to ship out some of its uranium stockpile.

A Vienna-based Western diplomat said that any new fuel swap must be updated to take into account Iran's growing LEU reserves in the last two years to determine how much it would need to part with, both of the 3.5 and 20 percent material.

Nuland, the U.S. State Department spokeswoman, said Ahmadinejad "makes a lot of empty promises."

"He knows exactly what has to happen if Iran has a serious proposal to put forward. It has to put it forward to the IAEA (the United Nations' International Atomic Energy Agency), the IAEA and we can study it and then we can respond," she said.

France and Russia have not commented on Ahmadinejad's overture, also indicating a lack of enthusiasm for the idea.

The powers have offered economic and political incentives for Iran to suspend uranium enrichment. Iran's says it is its "inalienable right" to develop the nuclear fuel cycle.

But the Institute for Science and International Security (ISIS), a Washington-based think-tank, said it "would be wise to pursue" Ahmadinejad's offer, even though it would not resolve the wider nuclear dispute.

"Despite the limited nature of such an agreement, capping even temporarily Iran's stock of 20 percent (enriched uranium) would reduce concern that Iran is producing weapons-grade uranium piecemeal," it said in a comment last month.