By Fredrik Dahl
VIENNA (Reuters) - Arab states are expected to refrain from targeting Israel over its assumed nuclear arsenal at the U.N. atomic agency's annual conference next week so as not to undermine wider efforts for a nuclear weapons-free Middle East, diplomats said.
This would be welcomed by Western states, which have been concerned that an Arab move against Israel would discourage the Jewish state from attending talks due to be held this year on banning such weapons of mass destruction in the volatile region.
"It is certainly positive," one Western envoy said.
The diplomats said Arab countries would as usual criticize Israel in the debate but, like last year, not submit a joint resolution on the issue to the September 17-21 General Conference of the U.N.'s 155-nation International Atomic Energy Agency (IAEA).
Western powers had been urging Arab envoys accredited to the IAEA not to put forward a non-binding but symbolically important resolution singling out Israel, which is widely believed to possess the Middle East's only nuclear arsenal.
They said this would have dashed any hopes for a proposed conference late this year, probably in Helsinki, on creating a zone without nuclear arms in the Middle East. Israel, like its arch-adversary Iran, has yet to say whether it will take part.
In a surprise move at last year's IAEA gathering, the Arab group decided not to zero in on Israel with a resolution on "Israeli Nuclear Capabilities" in what was called a "goodwill gesture" ahead of the planned 2012 talks.
Israel welcomed this as a "positive" development, in a rare conciliatory exchange in an otherwise heated debate that underlined deep Arab-Israeli divisions on nuclear issues.
An Egyptian plan for an international meeting to lay the groundwork for the possible creation of a Middle East free of weapons of mass destruction was agreed at a review conference on the nuclear Non-Proliferation Treaty (NPT) in 2010.
But the Western official organizing the conference, Finnish diplomat Jaakko Laajava, said in May he had yet to secure the needed attendance of all countries in the region. Even if it goes ahead, Western diplomats don't expect substantial progress any time soon due to deep-rooted regional animosities.
Israel's refusal to become party to the NPT or to place its nuclear installations under IAEA safeguards is "exposing the region to nuclear risks and threatening peace", Arab states said in a statement ahead of the General Conference.
Israel has drawn frequent Arab and Iranian condemnation over its presumed nuclear arsenal, and it is the only regional state not to belong to the NPT.
Israel and the United States regard Iran as the world's main proliferation threat, accusing Tehran of covertly seeking a nuclear arms capability, something the Islamic state denies.
Arab states scored a diplomatic victory in 2009 when IAEA members narrowly endorsed a resolution urging Israel to join the NPT and place all its atomic sites under agency supervision.
Brought up again in 2010 to keep up pressure on Israel, the resolution was defeated after a bruising diplomatic battle.
Israel has never confirmed or denied having nuclear weapons under a policy of ambiguity aimed at deterrence.
The Jewish state says it would only join the NPT after a comprehensive Middle East peace settlement. If it signed the 1970 NPT pact, it would have to renounce nuclear weaponry.
(Editing by Mark Heinrich)