By Justyna Pawlak and Fredrik Dahl
ALMATY (Reuters) - Major powers will offer Iran some sanctions relief during talks in Almaty, Kazakhstan, this week if Tehran agrees to curb its nuclear program, a U.S. official said on Monday.
But the Islamic Republic could face more economic pain if it fails to address international concerns about its atomic activities, the official said ahead of the February 26-27 meeting in the central Asian state, speaking on condition of anonymity.
"There will be continued sanctions enforcement ... there are other areas where pressure can be put," the official said, on the eve of the first round of negotiations between Iran and six world powers in eight months.
A spokesman for European Union foreign policy chief Catherine Ashton, who leads the talks with Iran on behalf of the powers, said Tehran should understand that there was an "urgent need to make concrete and tangible progress" in Kazakhstan.
Both Russia and the United States stressed there was not an unlimited amount of time to resolve a dispute that has raised fears of a new war in the Middle East.
"The window for a diplomatic solution simply cannot by definition remain open forever. But it is open today. It is open now," U.S. Secretary of State John Kerry said in London.
"There is still time but there is only time if Iran makes the decision to come to the table and negotiate in good faith," he added in a news conference in London. "We are prepared to negotiate in good faith, in mutual respect, in an effort to avoid whatever terrible consequences could follow failure."
It was not clear what he meant by "terrible consequences." Top U.S. officials have repeatedly said the United States will not take any options off the table, code for the possibility of a military strike. They also fear Iran's getting a nuclear weapon could set off an arms race across the Middle East.
Russian Deputy Foreign Minister Sergei Ryabkov said there was "no more time to waste", Interfax news agency quoted him as saying in Almaty.
The immediate priority for the powers - the United States, Russia, China, Germany, Britain and France - is to convince Iran to halt its higher-grade enrichment, which is a relatively short technical step away from potential atom bomb material.
Iran, which has taken steps over the last year to expand its uranium enrichment activities in defiance of international demands to scale it back, wants a relaxation of increasingly harsh sanctions hurting its lifeline oil exports.
Western officials say the Almaty meeting is unlikely to produce any major breakthrough, in part because Iran's presidential election in June may make it difficult for it to make significant concessions before then for domestic reasons.
But they say they hope that Iran will take their proposals seriously and engage in negotiations to try to find a diplomatic settlement.
"No one is expecting to walk out of here with a deal but ... confidence building measures are important," one senior Western official said.
The stakes are high: Israel, assumed to be the Middle East's only nuclear-armed arsenal, has strongly hinted at possible military action to prevent its old foe from obtaining such arms. Iran has threatened to retaliate if attacked.
GOLD SANCTIONS RELIEF?
The U.S. official said the powers' updated offer to Iran - a modified version of one rejected by Iran in the unsuccessful talks last year - would take into account its recent nuclear advances, but also take "some steps in the sanctions arena".
This would be aimed at addressing some of Iran's concerns, the official said, while making clear it would not meet Tehran's demand of an easing of all punitive steps against it.
"We think ... there will be some additional sanctions relief" in the powers' revised proposal," the official said, without giving details.
Western diplomats have told Reuters the six countries will offer to ease sanctions on trade in gold and precious metals if Iran closes its Fordow underground uranium enrichment plant.
Iran has indicated, however, that this will not be enough.
Tehran denies Western allegations it is seeking to develop the capability to make nuclear bombs, saying its program is entirely peaceful. It wants the powers to recognize what it sees as its right to refine uranium for peaceful purposes.
The U.S. official said the powers hoped that the Almaty meeting would lead to follow-up talks soon.
"We are ready to step up the pace of our meetings and our discussions," the official said, adding the United States would also be prepared to hold bilateral talks with Tehran if it was serious about it.
Ashton's spokesman, Michael Mann, said the updated offer to Iran was "balanced and a fair basis" for constructive talks.
(The story corrects headline to make clear offer contingent on nuclear program curbs)
(Additional reporting by Yeganeh Torbati and Dimitry Solovyov and by Arshad Mohammed and Mohammed Abbas in London; Editing by Jon Hemming)