In Washington, a senior State Department official hinted at a softening of the US position saying Friday: "I'm not sure frankly, that referring it to the Security Council is something that we are insisting on in our negotiations" for a meeting at the Vienna-based UN atomic agency.
Kenneth Brill, the US ambassador at the International Atomic Energy Agency (IAEA), on Friday presented the hardline US stance blasting Iran for two decades of "brazen and systematic" breaches of nuclear safeguards, including making plutonium, and said Tehran was trying to develop nuclear weapons.
The United States has been trying to get the IAEA to declare Iran in "non-compliance" with the nuclear Non-Proliferation Treaty (NPT), a move that could bring the issue before the UN Security Council, which could then slap sanctions on Iran.
But at a meeting of the IAEA's 35-nation board of governors Europe's big three -- Britain, France and Germany -- presented a draft resolution that goes easy on Iran, as they claim that antagonizing Tehran could prompt it to cut off cooperation with the IAEA.
The IAEA meeting was adjourned on Friday until Wednesday after the United States and the so-called Euro 3 failed in two days of closed-door talks to agree on a resolution.
The adjournment will give time for the issue to be discussed "by home governments in their capitals," a Western diplomat said, with traditional hardline allies such as Australia, Canada and Japan backing the US position and even EU states such as Italy, the Netherlands and Spain differing with the Euro 3.
The IAEA board is considering a report from its director general Mohamed ElBaradei that outlines 18 years of hidden suspect nuclear activities by Iran, including making small amounts of plutonium and enriched uranium.
ElBaradei said the IAEA has no "evidence," however, that Iran is developing nuclear weapons, with investigations continuing.
But Brill said the IAEA was damaging its credibility since all signs from Iran's nuclear program pointed to "just one purpose -- the pursuit of nuclear weapons."
Diplomats said Saturday that the United States, which had been sitting back due to initial hostility to its hardline position, was now getting directly involved in the drafting of the resolution.
The idea is to balance the US hardline of not letting Iran off the hook with the Euro 3's soft line of keeping Iran cooperating by not punishing it.
This is why the United States is dropping the Security Council demand, and will even accept that the word "non-compliance" is not mentioned, as long as a synonym such as "breaches" of NPT obligations is in the text, diplomats said.
One proposal being floated is setting an end-of-February deadline for the IAEA to conclude its verification process, which started with inspections in Iran in February.
"The basic thinking is to have everything wrapped up before the board meets again in March," a diplomat said.
A Western diplomat said "the timetable would be for Iran to continue complying so that after the end of February, ElBaradei could submit a new report."
The cut-off point would mean that "Iran can not do whatever it wants. They should know there is pressure on them," the diplomat said.
He was echoing the US line that Iran has only complied when pressure was put on it, such as the last deadline set by the IAEA board of October 31.
Another item to be revised in the draft resolution is making sure there is a strong "trigger mechanism" so that if further Iranian breaches in non-compliance are discovered, the matter would then automatically go to the Security Council, diplomats said.