European Union negotiators Britain, France and Germany -- the EU-3 -- are drawing up a package of incentives to be discussed with Russia, China and the United States, as well as sanctions that could follow if a deal is not reached.

The package will be finished "over the next 10 days, with the goal of securing P5 plus 1 (permanent five members plus Germany) endorsement for the EU-3 to then present the combined package to Iran," a Western diplomat said Wednesday in explaining the May 19 meeting.

French Foreign Minister Philippe Douste-Blazy said early Tuesday the incentives included civilian nuclear energy cooperation, trade and technological exchanges "and, why not, in the area of security." Washington has refused to give Iran security guarantees.

Iran, which insists its nuclear program is peaceful, spurned earlier efforts by the EU-3 to wean it off its alleged weapons ambitions with economic and other incentives. It has also waffled at a proposal by Moscow to enrich uranium for the Iranians on Russian soil.

The five permanent Security Council members plus Germany are deadlocked over how to crack down on Iran's nuclear program, after Tehran failed to comply with a Council call on May 29 for the Islamic Republic to halt uranium enrichment, which makes nuclear reactor fuel but also atom bomb material.

The United States says Iran is using a civilian nuclear program to hide the development of atomic weapons.

Washington, along with Europe, favors a tough Security Council resolution that would require Iran to comply. This could open the door to sanctions, and even military action, if Iran continues to enrich uranium. Iranian allies Russia and China oppose such a resolution, as they fear an escalation of the crisis.

European incentives would give Iran a choice, says US

The United States said it would wait "a couple of weeks" before pressing for tough UN action against Iran while European negotiators draft the new incentives.

"We agreed that we will continue to seek a (UN) Security Council resolution, but that we would wait for a couple of weeks while the Europeans design an offer to the Iranians that would make clear that they have a choice that would allow them to have a civil nuclear program," US Secretary of State Condoleezza Rice told ABC television.

But she said Washington was not abandoning efforts to seek a forceful response to Iran's suspected efforts to build a nuclear bomb, despite opposition from Russia and China to any punitive measures.

US wants Council to send strong message

"We are all in agreement that the Security Council has got to send a very strong message to Iran that it can't continue to defy the international community. And that's what we're going to do," Rice said. "And we felt that waiting a couple of weeks is the way to allow diplomatic options to be fully pursued."

"Iran can either defy the international community and face isolation and UN Security Council action; or Iran can accept a path to a civil nuclear program that is acceptable to the international community."

The major powers are now trying to see if the EU-3 can come up with a package in which Iran would get both carrots and the threat of sticks, namely a promise of security, political and trade benefits if it complies but a warning of sanctions if it does not.

The Europeans, backed by the United States, had already offered benefits last August but Iran rejected this offer.

"The challenge is this: the revised incentives have to be good enough to persuade Russia and China that Iran has to accept them but not too good to scare off the United States from endorsing them," a diplomat with the European negotiating team told AFP.

Doubts already over the viability of EU-3 proposals

A senior European diplomat said the Europeans hoped to finalize their proposal by Friday, present it to their capitals and then get the P5 plus 1 to review the package on May 19.

The diplomat said however that he did not think "a serious package can be prepared on such short notice."

Tehran this week made an apparent attempt to open a direct dialogue with Washington in a letter from its hard-line leader Mahmoud Ahmadinejad to President George W. Bush.

Ahmadinejad's letter to Bush dismissed by Washington

But Rice again dismissed the letter as falling short of a serious attempt to address issues between Iran and the West. "It really doesn't offer a solution to the nuclear impasse," she told ABC. "It doesn't talk about Iran's role in terrorism around the world. And there really isn't anything there to consider it a diplomatic overture."

She said that "no-one in the international system is prepared to allow the Iranians to get a nuclear weapon" and again refused to rule out military action if diplomacy fails.

"We fully believe that a diplomatic course of a unified international community will bring the Iranians to understand that they have no choice but to agree to a civil nuclear program that the international community can support."