EU reviews possible Iran sanctions

LUXEMBOURG (Reuters) - European foreign ministers reviewed options for steps against Iran for the first time on Monday, including possible visa bans and financial sanctions if Tehran presses on with sensitive nuclear activity.

European Union foreign policy chief Javier Solana, who drafted a confidential options paper for the 25 ministers, and British Foreign Secretary Jack Straw insisted it was just a contingency-planning exercise and sanctions were not imminent.

The ministers appealed to Iran in a statement to comply with U.N. calls to suspend all nuclear enrichment-related activities and reaffirmed their support for a diplomatic solution. It made no mention of possible sanctions.

But EU officials said that among steps envisaged in Solana's paper were a travel ban on individuals involved in Iran's nuclear programme, tighter export controls on dual-use technologies, a ban on Iranian students studying sensitive sciences in European universities and, ultimately, a ban on export credit guarantees to companies trading with Iran.

In Iran, President Mahmoud Ahmadinejad promised "good news" in the next week on the nuclear program -- perhaps, a newspaper said, that Iran had enriched uranium to a level used in power plants.

"(Iran) will not step back one iota from the right of the Iranian nation," he told a rally.

Solana -- who dismissed a media report of increased U.S. planning for a possible air strike on Iran -- told reporters his plan, details of which were first reported by Britain's Financial Times, was not for immediate sanctions.

"What we are doing today is a reflection on what may happen if at the end of the day what is going (on) now in the Security Council does fail," Solana said. "We have plenty of time, but we have to be prepared just in case they fail."

Asked if a visa ban on Iranian officials was among the possibilities, he replied: "There are many things, (a) visa ban is a classical type of measure."

Britain's Straw told reporters: "We're looking at the issue, but entirely on a contingency basis."

MILITARY ACTION NOT ON AGENDA

French European Affairs Minister Catherine Colonna said no decisions were taken on Solana's "reflection paper".

The next step would depend on what the U.N. nuclear watchdog reports to the Security Council later this month.

French Foreign Minister Philippe Douste-Blazy said it was "essential" Iran suspends sensitive nuclear activity.

"It is necessary to listen perfectly to what the head of the International Atomic Energy Agency says," he told a news conference on an official visit to Algiers.

German Foreign Minister Frank-Walter Steinmeier said the EU would only adopt restrictions of its own against Iran if there was deadlock in the United Nations.

Nevertheless, diplomats said the fact EU ministers had held a first substantive exploration of possible sanctions sent a signal to Tehran that they were growing impatient.

The Solana paper noted that Iran had moved backwards in all areas of concern to the EU -- the nuclear program, human rights and domestic reform, its attitude toward the Middle East peace process and its alleged support for terrorism.

It advocated closer ties with Iranian civil society and satellite television to give Iranians alternative information.

Solana dismissed a report in the New Yorker magazine that Washington was stepping up plans for a possible air strike.

"It has nothing to do with reality," he said. "Any military action is absolutely out of the table for us."

The White House, without denying the report, reiterated that it was pursuing a diplomatic solution to the nuclear row.

On Sunday, Straw said a military strike on Iran was not on the agenda and the United States was committed to a negotiated solution.

He told BBC television the idea Washington could launch a nuclear strike against Iran was "completely nuts".