A major speech by Iran's Supreme Leader has limited the ability of the Iranian delegation at high-level nuclear talks to make concessions with six world powers and this could scuttle chances for Tehran to reach an accord to end sanctions, diplomats said.

In a public address filled with technical detail, Ayatollah Ali Khamenei said last week Iran needs to significantly increase its uranium enrichment capacity, clashing with the powers' push for it to be reduced to minimise the risk of nuclear bombmaking, as July 20 deadline for a deal nears.

The talks with the United States, Britain, France, Germany, Russia and China are aimed at a long-term accord on Iran curbing its nuclear energy programme in exchange for a gradual end of sanctions that have crippled the OPEC member's economy.

In his speech, which analysts compared in importance to a State of the Union address by a U.S. president, Khamenei said he had faith in his negotiating team led by Foreign Minister Mohammad Javad Zarif and his deputy, Abbas Araqchi.

Several diplomats close to the talks said the speech, which included many details about the nuclear programme and Iranian demands on it, came as a surprise to the Iranian delegation.

One Western diplomat said the delegation appeared "taken aback" by Khamenei's remarks at such a sensitive time in the nuclear negotiations - just ahead of the July 20 deadline for a deal. Two Iranian sources confirmed that assessment.

"In ostensibly expressing support for the Iranian negotiating team, close scrutiny of Khamenei's speech shows that in reality his remarks were aimed at severely curtailing his team's room for manoeuvre, making it effectively impossible to bridge gaps with the stance of the (six powers)," according to a Western intelligence analysis of the speech seen by Reuters.

Khamenei's message was a reminder of the tensions within Iran's complex power elite between conservative hardliners - like him - wary of any detente with the West they fear would imperil the Islamic Revolution - and moderates who see a nuclear deal as Iran's ticket out of economically crippling isolation.

Pragmatist Hassan Rouhani's landslide 2013 election as Iranian president on a platform of improving Iran's foreign relations to revive the economy opened the door to nuclear diplomacy and a possible improvement of ties with the West. Resolving the decade-long nuclear standoff with Iran is seen as vital to allaying fears of a new war in the Middle East.

Iran and the six resumed talks in Vienna on July 2 and their negotiators continued meetings in the Austrian capital on Monday, though there was no immediate sign of any substantive progress. Western and Iranian officials have complained publicly that the sides remain far apart on all key issues in the talks.

Iran's capacity to refine uranium lies at the center of the nuclear stalemate and is seen as the hardest issue to resolve in the Vienna talks, which began in February. U.S. Secretary of State John Kerry is in Vienna to help break the deadlock. He met Zarif for a second day in a row on Monday.

The Islamic Republic denies Western allegations that its declared programme to enrich fuel for civilian nuclear energy is a front for pursuing the capability to produce atomic weapons.

 

DISPUTE OVER CENTRIFUGES

A relative of Khamenei's explained to Reuters the motivation for the speech. "The leader is above all the factions. He felt that it was essential to state his red lines publicly to avoid any misunderstanding by either side involved in the talks.

"His speech contained clear technical points," the relative added. "Now everyone, whether Iranian or non-Iranian, clearly understands what is negotiable and what is not."

Unusually, Khamenei's July 7 speech included details on what he described as Iran's enrichment "needs", defending it against what he indicated was the West's dismissive attitude towards the Islamic Republic. Western officials say that enrichment on home soil is not a "need" for Iran and that it can obtain cheaper and better fuel for civilian reactors from Russia and elsewhere.

Khamenei suggested that Iran needed 190,000 centrifuge machines in the long term - a 19-fold increase in its current operational capacity to refine uranium.

U.S. and European negotiators want Iran to have a figure in the low thousands to ensure it cannot quickly amass enough for atomic bomb fuel, should it someday choose to do so.

Some analysts have suggested that Khamenei's speech actually indicated a level of flexibility because he was talking about long-term Iranian plans. Others disagree.

"(Khamenei's) statement served both as a directive upon his negotiating team and as an apparent effort to shift the framework of the debate away from Western demands, essentially grounding the talks," the intelligence analysis said.

Earlier this month, Iranian and Western officials close to the talks said Iran was reducing its demands for centrifuges well below the figure Khamenei used. But in the wake of Khamenei's speech, diplomats said, far-reaching compromises by the Iranians will be more difficult.

"In our assessment, Khamenei's remarks were not coordinated with the Iranian negotiating team in Vienna at present, and were intended to cut off their ability to negotiate effectively," the intelligence analysis said.

"Furthermore, they were aimed at sending a clear message to the international community that the negotiating team does not have the mandate to compromise on the most critical issues under discussion - above all, Iran's uranium enrichment capacity."

Iran expert Ali Vaez of the International Crisis Group said of Khamenei's speech that "drawing public red lines won't help the negotiators to narrow the gaps" in positions.

Western and Iranian diplomats said that after Khamenei's speech it would be more difficult for Zarif and Araqchi to sell concessions back in Tehran on centrifuges and other issues, such as Western demands that Iran shut the Fordow enrichment site. Khamenei said that demand was "laughable."

President Rouhani's brother Hossein Fereydoun arrived in Vienna to join the talks and send details of the negotiations back to the president, Iran's state news agency IRNA reported on Sunday. It was not immediately clear if that was linked to concerns on Rouhani's part in the wake of Khamenei's speech.

While Rouhani and Zarif may sincerely want to reach a deal that would dismantle the sanctions that have devastated Iran's economy, diplomats and analysts say that Khamenei is wary of reaching a swift accord with the West, above all with the United States - the "Great Satan" and Iran's arch-enemy since 1979.

"Obviously Khamenei does not want to share his power and authority with Rouhani or anyone else," said a diplomat in Tehran. "For him an extension is an ideal situation. If he feels that his power might be challenged by a nuclear deal, Khamenei will ignore its economic benefits by rejecting it."

The talks on a long-term nuclear deal can theoretically be prolonged for up to six months if all sides agree. Some analysts and diplomats say an extension might be necessary but U.S. officials say there needs to be further progress on key issues in the coming days if an extension is to be approved.