Iran calls for Israel to be "punished"

(Reuters) - An ally of Iran's supreme leader called on Friday for Israel to be "punished" for killing a nuclear scientist and the top U.S. general urged his Israeli ally to coordinate with Washington as crisis builds in the Middle East.

Alarmed Arab neighbors in the Gulf made a plea to scale back confrontation over Iran's nuclear program. France, calling on China and Russia to back Western sanctions, said time was running out for diplomacy to deflect Tehran from a course that Washington and Israel have threatened to stop by war.

One diplomat told Reuters that the major powers seeking to negotiate an end to Iran's suspected pursuit of nuclear weapons would probably issue a statement later on Friday laying out what Tehran would need to do to resume talks. The group was expected to provide details of an offer it made to Iran in October in an effort to bring Iranians back to the negotiating table.

An Iranian lawmaker, however, had said earlier there was no chance of resuming negotiations with the group - the five U.N. Security Council permanent members plus Germany - unless they agreed in advance to exclude the nuclear issue from the agenda.

After Supreme Leader Ayatollah Ali Khamenei paid his respects to the families of two scientists assassinated on what Tehran believes were Israel's orders, one of them just last week, a close ally who is a former nuclear negotiator and currently speaker of parliament demanded retribution.

"Terrorism has a long history in some countries like the Zionist regime," Ali Larijani said of Israel, which views an atomic bomb in the hands of the Islamic Republic as a threat to the survival of the Jewish state.

"The Zionist regime should be punished in a way that it can not play such games with our country again."

Such threats have been made before in Tehran and it is unclear how or when they might be carried out. Israel, widely assumed to have the only nuclear arsenal in the Middle East, is on guard against attacks on its borders and within, notably by Lebanon's Hezbollah movement, which is supported by Iran.

STRAINS

Israel's deputy foreign minister has denied accusations that it deployed the hit squad which blew up Mostafa Ahmadi-Roshan on a busy Tehran street last week. But the country has a record of such attacks and is widely presumed by Western analysts to be engaged, along with allies, in a covert war against a nuclear development program which Iran insists is entirely civilian.

Sharp U.S. disavowal of American involvement in the killing have drawn some analysts to see it as a form of rebuke to Israel, amid speculation that President Barack Obama is wary, while he campaigns for re-election in November, that Israel could launch unilateral action that might inflame the region.

Obama's top military official, chairman of the Joint Chiefs of Staff General Martin Dempsey, paid a brief visit to Israel and was quoted by its defense ministry as telling officials there that Washington was keen to coordinate on strategy.

"We have many interests in common in the region in this very dynamic time and the more we can continue to engage each other, the better off we'll all be," Dempsey was quoted as saying in a statement issued by the Israeli defense ministry.

The United States has led Western pressure on Tehran to curb uranium enrichment that might provide material for weapons. In November Dempsey said he did not know whether Israel would give him advance warning if it decided to strike Iran.

Dan Shapiro, the U.S. ambassador to Israel, was quoted as saying on Thursday that the Obama administration would be ready to move beyond sanctions against Iran if they fail to curb the Islamic Republic's suspected nuclear weapons ambitions.

"We know that the sanctions on Iran might fail to work, and therefore we are leaving all the options on the table, as the president has said explicitly, and has instructed the top military officers to do everything necessary to be prepared for any action at any stage," Shapiro said in remarks at Haifa University that were relayed by a member of the audience.

Shapiro later told reporters that consultations were intended to "coordinate efforts ... toward the goal of preventing Iran from acquiring nuclear weapons."

SARKOZY WARNING

French President Nicolas Sarkozy said on Friday that time was running out to avoid a military intervention, however, and he appealed to China and Russia, veto-wielding U.N. powers who have been reluctant to back tightening Western embargos let alone military force, to support new sanctions.

"Time is running out. France will do everything to avoid a military intervention," Sarkozy told ambassadors gathered in Paris. "A military intervention will not solve the problem, but it will unleash war and chaos in the Middle East."

"We need stronger, more decisive sanctions that stop the purchase of Iranian oil and freezes the assets of the central bank, and those who don't want that will be responsible for the risks of a military conflict," Sarkozy warned.

"Help us guarantee peace in the world. We really need you," he said, in an appeal to Moscow and Beijing.

France has been at the forefront of international efforts for tougher measures to increase pressure on Iran to halt its nuclear program after talks between Tehran and six world powers -- the P5+1 of the United States, Russia, China, Britain, France and Germany -- stalled a year ago.

Following Obama's approval of U.S. sanctions on New Year's Eve that are intended to choke Tehran's oil sales, European Union foreign ministers are expected to agree on Monday to an oil embargo.

The United States, like other Western countries, says it is prepared to talk to Iran but only if Tehran agrees to discuss halting its enrichment of uranium.

Western officials say Iran has been asking for talks "without conditions" as a stalling tactic while refusing to put its nuclear program on the table.

Hossein Naqavi, a member of parliament's national security and foreign policy committee, was quoted by the semi-official Fars news agency as saying on Friday that using the P5+1 to discuss the nuclear issue was unacceptable:

"Iran will on no account attend the negotiations if the P5+1 is looking to make any comments on Iran's nuclear activities or wants to make any decision about that," he said, repeating however Tehran's willingness to cooperate with the U.N.'s International Atomic Energy Agency.

With tensions, including mutual threats of disrupting the oil trade, creating worries across the region, the foreign minister of the United Arab Emirates, the wealthy, U.S.-allied state sitting across the Gulf from Iran, offered a warm welcome to a call for calm on Thursday by his Iranian counterpart.

"It's important to get far away from any escalation and we stress the stability of the region," Sheikh Abdullah bin Zayed al-Nahayan was quoted as saying by state news agency WAM.

"I welcome the comments of my colleague the Iranian foreign minister to create distance from any escalation.

"What matters to us is that stability prevail in the region. We don't want anything to damage stability in the region and there is an effort from all to work towards stability."

(Writing by Alastair Macdonald)