At a security conference in Munich, Germany, US Vice President Joe Biden said the Islamic republic would win incentives to stop uranium enrichment but stressed that it could face isolation if it turned them down.

"We will be willing to talk to Iran, and to offer a very clear choice: continue down the current course and there will be continued pressure and isolation; abandon the illicit nuclear programme and your support for terrorism and there will be meaningful incentives," he said.

The new US administration of President Barack Obama was "reviewing" Iran policy, Biden told an audience of world leaders and decision-makers.

"The Iranian people are a great people, and Persian civilisation is a great civilisation," he said.

"But Iran has acted in ways that are not conducive to peace in the region or to the prosperity of its own people; its illicit nuclear programme is but one of those manifestations."

The United States and its Western allies believe Tehran is aiming to develop atomic weapons under the guise of a civilian nuclear energy programme.

Iran denies its nuclear programme is military in nature and has pressed on with uranium enrichment, insisting that it will be used solely for peaceful purposes geared toward electricity generation.

To convince Iran to suspend enrichment, which at highly refined levels can be used to make an atomic bomb, major powers have offered it a package of political and economic incentives.

Biden's comments marked a break between Obama and his predecessor, George W. Bush, who once labelled Iran a member of the "Axis of Evil". US-Iran relations have been frozen for three decades.

German Chancellor Angela Merkel, whose country has joined the five permanent UN Security Council members in trying to resolve the standoff, warned Iran that diplomacy could not drag on as it has for around six years.

Cyprus ship violates UN sanctions on Iran: Cypriot official A United Nations committee has ruled that a Cypriot-flagged ship intercepted in the Red Sea two weeks ago was in breach of UN sanctions on Iran, a senior Cypriot official told AFP on Saturday. "The shipment was found to be in violation of Security Council resolutions against Iran," the official told AFP on condition of anonimity. The Russian-owned Monchegorsk, currently docked off Limassol port, is reportedly laden with Iran weapons, which the Islamic Republic is barred by the UN from exporting. According to Israeli media, the vessel was taking the munitions to Gaza. The Cypriot official added: "Cyprus can continue the search to find new evidence as only 30 of the 60 containers have been searched and this will be done and a decision taken in the next couple of days." Sending the shipment back does not "appear to be an available option" so Cyprus needs to decide whether it will confiscate the cargo or send it somewhere else following consultations with Security Council members, he said. Cyprus President Demetris Christofias told reporters on Saturday that the position of the UN sanctions committee was "one of the clearest that could be made". He did not elaborate but said it is up to Cyprus to decide on the next step. Nicosia sought a UN ruling after carrying out two searches on the Monchegorsk on January 29 and February 2. Israeli news reports said the ship was suspected of carrying a shipment of Iranian arms for Gaza and was detained by Cypriot authorities in response to requests from the US and Israeli authorities. The US military reportedly boarded the ship two weeks ago in the Red Sea and discovered Iranian munitions.

Last week in Germany a meeting of top diplomats from the five Security Council members -- the US, China, Russia, France and Britain -- plus Germany met for the first time since Obama took office.

"We need to be ready for tougher sanctions," she said. "It is a must to stop Iran having nuclear weapons."

But sanctions require the agreement of all five security council veto-holders, and Russia and China have proved difficult to bring on board.

Russia has been building a nuclear power plant in Iran and has resisted calls for tougher sanctions, but French President Nicolas Sarkozy urged Moscow to help mediate with Tehran.

"It's up to Russia to demonstrate what face it wants to show the world. If it wants peace, it should show it. If it wants to be a major world player, then it should help us resolve the crisis with Iran," he said.

British Foreign Secretary David Miliband urged Iran to seize the opportunity presented by the change in US administration.

"It is not going to get any better than this. It's not going to get better than an American administration saying we want normal relations with Iran," he said.

On Friday, Iranian parliament speaker Ali Larijani -- once Tehran's top nuclear negotiator -- railed here against past US policy but left the door ajar to the Obama administration.

"If there were a change in strategy by the United States... and they would come to the chess game, it would be in their interests and the interests of the whole region," he said.

On the sidelines of the meeting, Larijani held talks Saturday with EU foreign policy chief Javier Solana, who has been negotiating with Tehran on behalf of the major world powers.

Solana declined to comment to reporters on the details of the meeting, but he urged Iran, where presidential elections are fast approaching, to respond to the US offer or talks.

"That is a very, very important change that the Iranians have to think about," he said.

earlier related report
Russia, Iran signal openness to new US administration
Iran and Russia hinted at warmer ties with Washington under the new Obama administration as top world decision-makers gathered Friday for a major security conference in Munich.

Tehran saw a positive signal in US President Barack Obama's decision to send a special envoy to the Middle East, a top Iranian official said, while a Russian minister said it was "time we move further" on nuclear disarmament.

US National Security Advisor James Jones, an Obama appointee, cautiously welcomed the comments.

Iranian parliament speaker Ari Larijani praised Obama's decision to dispatch special envoy George Mitchell to the Middle East.

"Recently the US president said he would send people to listen and not to dictate," Larijani said, referring to the new US envoy who recently ended a week-long trip to Egypt, Israel, the West Bank, Jordan and Saudi Arabia.

British FM urges Iran to seize chance of better relations British Foreign Secretary David Miliband urged Iran on Saturday to seize the chance of achieving better relations with the West, saying conditions are "not going to get any better." "It is not going to get any better than this. It's not going to get better than an American administration saying we want normal relations with Iran," Miliband told an international security conference in Munich, Germany. He also urged his European allies to do more to back the new US administration of President Barack Obama, by ensuring that Iran could face sanctions if it does not seize this opportunity. "We in Europe, while applauding the determination of the United States to stretch out a hand to Iran, have got to realise that the United States will be far, far better off in reaching out that hand if they're able to say: 'if we're not met by an outstretched hand from Iran, very serious and very tough sanctions will follow'," he said. Major world powers have offered the Islamic republic a package of political and economic incentives to suspend uranium enrichment, which at highly refined levels can be used to fuel an atomic bomb. But Iran maintains that it is only trying to develop a civilian energy generation programme, and refuses to suspend enrichment as a condition for any talks, even as it labours under UN sanctions. "All our experience with Iran suggests that if it's incentives only, it's not going to work," said Miliband, whose country is a permanent member of the UN Security Council. He said that he had hoped to deliver the message in person to Iranian parliament speaker and former top nuclear envoy Ari Larijani, who was also taking part in the meeting.

"This is a positive signal," Larijani added, speaking to an audience that included officials from the United States and Europe who had gathered for the first day of the annual Munich Security Conference.

But he also said that the peace process could not move forward if the international community continued to label Hamas a terrorist organisation, and that it was an "honour" for Tehran to support the Islamist group.

Larijani -- a former nuclear negotiator for Iran -- also signaled that Tehran would preserve a tough stance over its nuclear programme, lashing out at Washington for what he called past "double standards" on disarmament.

Russian Deputy Prime Minister Sergei Ivanov, meanwhile, urged the Obama administration to help renew a key nuclear disarmament pact, but warned that the US missile shield expansion into Europe would not help matters.

"It is time we move further," with renewing the strategic arms reduction treaty (START), said Ivanov, a close ally of Prime Minister Vladimir Putin.

Talks on renewing START, which led to huge reductions of the US and Russian nuclear arsenals after its signing in 1991, stalled under the administration of former US president George W. Bush.

But in January, prior to her confirmation as US secretary of state, Hillary Clinton promised to quickly renegotiate the treaty.

"The leaders in this should be the United States and Russia because we are the biggest nuclear missile powers," Ivanov said.

Jones said he was encouraged by the "messages" sent at the conference.

"We have a new administration, people are sending us messages. We are forming up and trying to get our teams together. I think it is encouraging," he told AFP when asked about Larijani's and Ivanov's speeches.

Moscow has in recent years pressed Washington to open talks on a successor to the 1991 START accord, which calls for reducing the number of US nuclear warheads from 10,000 to 8,500 and Russia's arsenal from 10,200 to 6,450.

But the Bush administration refused -- until its final days late last year -- to agree to enter new talks on a legally-binding treaty, as Moscow insisted.

Moscow has also sought to broaden the negotiations to limits on conventional forces and US plans to extend its missile shield, with a bank of interceptors in Poland and a radar in the Czech Republic.

Referring to the deployment of missile defences, Ivanov said: "If one does it unilaterally without due respect of the interests of the strategic ability of other parties ... the situation cannot but result in increased tension."

Ivanov is due to meet US Vice President Joe Biden in Munich, in the highest-level contact between US and Russian officials since Obama's inauguration last month.

Speculation is rife that Biden, who is giving a speech here Saturday, will announce a review of the missile defence shield programme, a signal that would be welcomed by Moscow.

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