UN Secretary-General Kofi Annan on Monday urged the world to avoid confrontation with Iran over its nuclear goals, after Tehran told him it wanted a negotiated solution but would not halt uranium enrichment before any talks.
But Germany said that if talks between the EU foreign policy chief and Iran's top nuclear negotiator failed to persuade Iran to change its behaviour, further negotiations would be pointless and UN Security Council action would have to be considered.
"This is not the time for anyone to take independent decisions," Annan said during a visit to Qatar. "We want to avoid confrontation. Confrontation is not in the interest of anyone in the region or in the international community."
Annan has been touring the Middle East for a week to shore up a cease-fire that halted more than a month of fighting between Israel and Iranian-backed Lebanese Hizbollah guerrillas.
During a stop in Tehran on Sunday, Annan said Iranian President Mahmoud Ahmadinejad had "reaffirmed to me Iran's preparedness and determination to negotiate and find a solution to the (atomic) crisis", but would not stop making nuclear fuel.
Annan visited Tehran three days after Iran failed to meet a Security Council deadline to stop enriching uranium, which the United States says is aimed at producing nuclear weapons but which Tehran says is to fulfil civilian energy needs.
EU foreign policy chief Javier Solana is to meet Iranian negotiator Ali Larijani later this week to clarify Iran's hint - made in a reply to big powers' offer of incentives not to enrich - that the extent of its programme could be negotiated.
"If another conversation with Solana does not bring about a change in their attitude, then further negotiations will certainly not bring us further," German Foreign Minister Frank-Walter Steinmeier said on Monday. "Then we have to refer this matter to the Security Council," Steinmeier told a meeting of the heads of German diplomatic missions around the world.
He voiced frustration at Iran's refusal to suspend enrichment as a precondition for talks to implement the trade and technology incentives. Steinmeier said he was "running out of arguments" for Iran and that he was not very hopeful that Solana's meeting with Larijani would yield much.
Iranian newspapers said legislators had moved a step closer to approving a bill to ban inspectors of the watchdog International Atomic Energy Agency (IAEA) from Iranian nuclear sites, in response to Security Council pressure.
In parliament on Sunday, "the bill for suspending the entry of IAEA inspectors was received by the presiding board and handed over to the National Security and Foreign Policy Committee for study," the daily Jomhouri-ye Eslami reported.
The head of the committee Allaeddin Boroujerdi was quoted as saying by Sharq newspaper: "If the Security Council decides to deprive the Iranian nation of its legal rights, we will obligate the government to suspend all of the inspections of the IAEA inspectors that are going on at the moment."
Although conservatives who dominate parliament are vocal foes of compromise with the West, the final say in nuclear policy lies with Supreme Leader Ayatollah Ali Khamenei.
Asked about the row at a weekly news conference, government spokesman Gholamhossein Elham said: "We think a logical atmosphere is starting to prevail and we are optimistic." The United States said on Friday it was consulting European allies about possible sanctions against the Islamic Republic.
But the EU, wary of isolating a major oil supplier and export market, has signalled it wants more dialogue with Iran and has agreed to try to clarify its stance within two weeks.