Iran pleased with U.S. report on peaceful nukes

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Western incentives may help
China's ambassador to the United Nations, Wang Guangya, said the U.S. report made the prospect of new U.N. sanctions less likely. "I think the council members will have to consider that, because I think we all start from the presumption that now things have changed."

Still, Russian President Vladimir Putin told the top Iranian nuclear negotiator, Saeed Jalili, that Iran must cooperate fully with the U.N. investigation of the nuclear program.

"We expect that your programs in the nuclear sphere will be open, transparent and be conducted under control of the authoritative international organization," Putin said at the start of a meeting with Jalili in Moscow.

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Anthony Cordesman, Mideast expert at the Center for Strategic and International Studies in Washington, said there could be a window of opportunity if the West puts forward incentives for Iran, "such as investment with Europe and the U.S."

But "negotiations will probably grow harder rather than easier in the near future," he said.

That view was echoed by Maloney, who said the report could make both sides less willing to compromise.

"The U.S. doesn't want to be in a supplicant position to Iran ... and if anything the Iranian reaction has been to exult in what they describe as an American mistake," she said.

Other disputes may flare up
Movement on the nuclear issue could also become tangled in other disputes between the U.S. and Iran, as Washington tries to stem what it says is increasing Iranian influence in the Middle East.

Last week's U.S.-sponsored Mideast peace conference was widely seen as an attempt to rally Arab moderates to isolate Iran and even try to woo away Tehran's close ally Syria. Iran denounced the meeting.

U.S. officials accuse Iran of supporting Palestinian and Lebanese militants and of arming Shiite militants in Iraq who have been involved in attacks on U.S. forces.

In recent weeks, U.S. military officials said the flow of weapons from Iran to Iraqi Shiite militias appeared to have been curtailed, although the Americans were careful to say it was too early to say whether this represented a change in Tehran's policy.

Iraqi officials say the Iranians pledged to stop the weapons flow during a visit to Tehran last August by Iraqi Prime Minister Nouri al-Maliki.