BRUSSELS: European foreign ministers held crisis talks Monday on saving the beleaguered Iran nuclear deal as Britain warned the "small window" for success was closing and Tehran issued fresh threats of restarting its atomic programme.
Tensions in the Gulf have soared since last year, when the United States pulled out of the 2015 deal and reimposed sanctions on Iran, hammering its economy and prompting Tehran to break limits on uranium enrichment and stockpiling.
The European Union is desperately trying to prevent the deal unravelling completely, seeing it as the best way to stop Tehran acquiring atomic weapons, and the issue was top of the agenda as ministers from the bloc met in Brussels.
But Iran piled fresh pressure on Europe, demanding concrete measures to give it relief from US sanctions and threatening to return its nuclear programme to where it was before the curbs imposed by the 2015 deal.
British Foreign Secretary Jeremy Hunt who held phone talks with his US and Iranian counterparts at the weekend insisted "the deal isn't dead yet". "Iran is still a good year away from developing a nuclear weapon. We think there is still some closing but a small window to keep the deal alive," Hunt told reporters.
Britain, France and Germany, the three European parties to the deal, on July 14, issued a joint statement calling for dialogue to resolve the crisis.
Iran has repeatedly warned it could leave the deal unless the remaining parties bypass US sanctions to deliver the promised economic benefits and on Monday threatened to take its nuclear programme back to its pre-deal status.
"If the Europeans and the Americans don't want to carry out their duties. we will decrease our commitments and reverse the conditions to four years ago," Iranian atomic energy agency spokesman Behrouz Kamalvandi said, quoted by IRNA state news agency.
The US has vowed to pursue its "maximum pressure" campaign against Iran, but Spanish Foreign Minister Josep Borrell lined up to be the next EU diplomatic chief warned its strategy is only "strengthening the most radical" elements in the Islamic republic.
Current EU diplomatic chief Federica Mogherini said the steps taken by Iran so far including enriching uranium above the 3.67 per cent ceiling set by the deal were reversible. For now, none of the remaining parties have triggered the formal dispute mechanism, meaning that they did not regard Iran's breaches up to now as "significant non-compliance" under the terms of the deal, Mogherini said.
Europe hopes to use a special trading mechanism called INSTEX to enable businesses to deal with Iran without using the US dollar or financial system, thereby helping the Iranian economy while avoiding Washington's sanctions.
But the mechanism is complicated, no transactions have been finalised yet and it can for now only be used for humanitarian goods food and pharmaceuticals, for example, though Mogherini said the shareholding countries were discussing extending it to Iran's crucial oil sector.
The sweeping nature of the US measures has scared many major European businesses out of Iran despite Brussels' insistence that American sanctions do not apply in Europe.
"Iran has taken bad decisions in response to the bad decision of the United States to pull out of the deal and reimpose sanctions, whose extraterritoriality strikes at the economic advantages the country got from the deal," French Foreign Minister Jacques-Yves Le Drian said as he arrived in Brussels.
The Iranian foreign ministry warned in a statement that its compliance with the deal was "rooted in the principle of reciprocity" and demanded Europe come up with "practical, effective and responsible decisions".
EU ministers insisted Iran must return to respecting its obligations under the deal in full, rejecting a suggestion by Iranian President Hassan Rouhani that both sides could reduce their commitments.
"This is a very, very serious situation. We must make it clear once again, in clear language, that there is only a chance if Iran commits itself unreservedly to what is contained in the treaty," Germany's junior foreign minister Michael Roth told reporters.
But the Iranian foreign ministry statement branded the European expectations "unrealistic", demanding a quid pro quo for undoing its recent breaches of the deal including exceeding a 300-kilo (660-pound) limit on enriched uranium stockpiles.
The joint commission overseeing the accord, made up of representatives from the countries still in the deal the Europeans plus China, Russia and Iran -- will meet "very soon" to discuss Tehran's breaches, Hunt said.