"I have to admit that after two and a half years of negotiations, we are not as far along as we would like to be," Steinmeier said when asked about European efforts to convince Iran to halt uranium enrichment.

"The situation requires not only creativity on our part, but also more flexibility on the Iranian side," he said at a joint press conference with his Kuwaiti counterpart Sheikh Mohammed al-Sabah al-Salem.

"The Kuwaitis' concerns -- and not only the Kuwaitis, but of all the Gulf states -- are obvious," Salem said, reflecting the Gulf monarchs' bid to remain neutral while preferring to avoid any military confrontation in the region.

"There are real concerns in the Gulf in terms of Iran's nuclear activities."

Britain, France and Germany are preparing a package of trade, technology and security benefits if Tehran stops enriching uranium, a process which creates fuel for power plants but can also form the core of a nuclear bomb.

A draft proposal by the so-called EU-3 says world powers should support Iran's building several light water reactors and set up a nuclear fuel bank that would guarantee the country access to reactor fuel but not the sensitive fuel cycle technology.

Split with Washington

But the EU's offer of incentives to Iran has caused a split with Washington, which has serious reservations about the plan, EU diplomats said.

On Sunday, US Secretary of State Condoleezza Rice said that the United States was not prepared to offer security guarantees to Iran in order to end the dispute.

"Security assurances are not on the table," Rice told the Fox News.

"It's obvious that in addition to the nuclear issue, we have other issues with Iran. We have a state in Iran that is devoted to the destruction of Israel. We have a state in Iran that meddles in the (Middle East) peace process," she said.

Rice also denied that the EU3 of Britain, France and Germany had asked Washington to provide guarantees that no threat would be made to the Iranian government.

"First of all, let me just set the record straight. We haven't been asked to provide security assurances to Iran," she said.

"What we're talking about is a package that will make clear to Iran that there are choices to be made, either that there will be sanctions and actions taken against Iran by the international community, or there's a way for them to meet their civil nuclear concerns."

Iran remains stubborn

Iran vowed again on Sunday it would not suspend uranium enrichment.

Iran says it wants to enrich only to make reactor fuel but the US in particular accuses Iran of using an atomic energy drive as a cover for acquiring an atomic bomb.

Steinmeier arrived in Kuwait late Saturday on the first leg of a six-country Gulf tour that comes amid a growing international crisis over Iran's nuclear ambitions.

He was to arrive in Oman later Sunday. Later this week he is also to visit the United Arab Emirates, Saudi Arabia, Bahrain and Qatar before leaving for Berlin on Thursday.