"I don't have the sense that we're close to an agreement," Gates told reporters in Ankara, where he met Turkish leaders. "If they are prepared to take up the original proposal of the P-5 plus one of delivering 1,200 kilograms of their low enriched uranium, all at once to an agreed party, I think there would be a response to that.
"But the reality is they have done nothing to reassure the international community that they are prepared to comply with the NPT or stop their progress towards a nuclear weapon, and therefore I think various nations need to think about whether the time has come for a different tack," Gates added.
Iran's foreign minister, Manouchehr Mottaki, said yesterday that he saw good prospects for clinching a deal with world powers on exchanging some of its low-enriched uranium for higher-grade fuel.
"I personally believe we have created conducive ground for such an exchange in the not very distant future," Mottaki told the annual Munich Security Conference.
But he said it should be up to Tehran to set the amounts to be exchanged, based on its needs.
The uranium swap deal was first discussed last year between Iran and six world powers, which saw it as a way to ensure Tehran did not further enrich its uranium to a level that would be potentially usable in a nuclear bomb.
But Tehran, which denies any bomb-making intentions, had failed to respond positively to the proposal from the group - the United States, Russia, China, Britain, France and Germany - until this week.
Mottaki said he would discuss the exchange on Saturday with the new head of the International Atomic Energy Agency, Yukiya Amano, on the fringes of the Munich conference.
"We think all parties have shown their political will to fulfil this exchange," he said, without naming specific countries.
Iran would hand over uranium enriched to 3.5 per cent, and receive 20 per cent enriched uranium in return, to use in the Tehran reactor producing the medical isotopes, he said.
"Here there must be a guarantee for both sides that this 3.5 per cent will be given for sure and 20 per cent will be given back for sure," he said.
Mottaki said the three 'components' for a deal were timing, place and quantity.
But Iran wants to hand over its fuel in two batches and says the handover should be conducted on Iranian soil, The Times newspaper said on today citing a copy of Tehran's written proposals given to British parliamentarians.
Both these conditions were part of several previous Iranian initiatives that were rejected by the West, it said.
Mottaki said Iran acknowledged it could take a number of months for its negotiating partners to produce the 20 per cent fuel required for the Tehran reactor. "We can understand this period for production," he said.
Once it was ready, it would be exchanged "simultaneously" with the Iranian LEU. He did not make clear where this should happen.
In a further condition that could pose a stumbling block, he stressed it should be for Iran to determine the quantities involved.
"Our request is the quantity should be announced by the party who is going to use this enriched uranium, and the quantity will be announced based on our need, this is the most important point," he said.
The European Union responded cautiously to Iran's comments on swapping some of its uranium stockpile, saying Tehran must take its response on the proposal to the UN nuclear watchdog.
Western powers see the potential swap as a means to ensure Tehran does not further enrich its uranium for potential use in a nuclear weapon, an intention that Iran denies.
EU foreign affairs chief Catherine Ashton told the Munich conference: "Iran must now respond to the director general of the IAEA on the question of the refuelling of the Tehran research reactor."
U.S. President Barack Obama's 'imaginative' policies towards Iran had so far gone without adequate response, Ashton said.
"There is a need to restore confidence in the peaceful nature of Iran's programme," Ashton said.
"This must be done by dialogue. But dialogue takes two, and I'm ready to engage in meaningful and productive talks that deal directly with the issues that trouble us."
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