Iran nuclear talks continue as Khamenei stresses limits to concessions

Iran's supreme leader voiced support Wednesday for the negotiations over his country's nuclear program, but insisted there are limits to the concessions Iran will make in exchange for an easing of the sanctions choking its economy.

Ayatollah Ali Khamenei, speaking before a paramilitary group in Tehran, aimed to placate hard-liners and show his backing for the Iranian officials preparing to meet with international negotiators.

"There are red lines. There are limits. These limits must be observed," the he old the Basij force, which is controlled by Iran's powerful Revolutionary Guard. "We have told the authorities, and they are required to observe the limits and should not fear the blusters of the enemies and opponents."

Khamenei also blasted what he called the U.S. government's "warmongering" policies, including threats of military action, and he said sanctions cannot force unwanted concessions by Iran. At the same time, Khamenei said his country has "no animosity" toward the American people and seeks "friendly" relations.

"Instead of using threats, go and repair your devastated economy so that your government is not shut down for 15 or 16 days," he said, referring to the recent U.S. government closure amid a congressional budget standoff. "Go and pay your debts."

Ayatollah Ali Khamenei also blasted Israel as being "the rabid dog" of the region, bent on besmirching Iran's reputation. French President Francois Hollande rejected those comments as "unacceptable," saying they will only complicate the nuclear talks that began on Wednesday in Geneva, spokeswoman Najat Vallaud-Belkacem said.

Rouhani wants to move quickly: Western sanctions have slashed Iran's daily oil export revenue by 60 percent since 2011 and led to a devaluation of its rial currency.

But diplomats say Iran has so far refused to meet all of the powers' demands, which include suspending enrichment of uranium to 20 percent fissile purity — a significant advance toward the threshold for bomb fuel — as well as limiting its enrichment capacity and mothballing the Arak reactor project.

The Iranian assets that would be unfrozen as part of any deal this week would amount to less than $10 billion, U.S. national security adviser Susan Rice told CNN.

If an agreement is struck in Geneva in the coming days, it is intended to be the first step on the road toward a broader settlement that would avert the threat a new Middle East war.

In crafting a deal, Western governments are wary of critics across the Middle East, especially in Israel and Saudi Arabia, who view Iran as a deadly threat, and of hawks in the U.S. Congress who want stiffer sanctions and terms for Tehran.

Obama warned Congress on Tuesday that Iran would make progress toward nuclear arms status if there were no deal to halt or roll back its program and urged lawmakers to hold off on tightening sanctions while talks continue.

"The president underscored that in the absence of a first step, Iran will continue to make progress on its nuclear program by increasing its enrichment capacity, continuing to grow its stockpile of enriched uranium, installing advanced centrifuges and making progress on the plutonium track," White House spokesman Jay Carney told reporters.

Prime Minister Benjamin Netanyahu warned Washington, Israel's main ally, to avoid making a "historical mistake" when negotiators appeared close to a deal this month. Israel wants Iran to scrap its entire nuclear energy infrastructure.

"Instead of yielding to their smile offensive, it is important that they yield to the pressure that can be wielded against them until they abandon their military nuclear program," Netanyahu said in Tel Aviv this week.

Israel, widely assumed to be the only nuclear power in the Middle East, has warned it may bomb Iranian nuclear facilities if it deems diplomacy futile in reining in Tehran before it attains nuclear "breakout" capability

Zarif, the Iranian foreign minister, said that Israel did not seem to be interested in a solution to the dispute and accused it of "lifting tension and spreading distrust."

Western diplomats have kept much of the details of the proposed deal under wraps but said Iran would not win relief from the most painful sanctions on oil trade and banking that many believe finally forced into serious negotiations.

Under an initial deal the OPEC producer is likely to regain access to precious metals markets and trade in petrochemicals, an important source of export income, and could see the release of some of its oil revenues frozen in oversees accounts.

Oil markets bet on progress in Geneva this week, with Brent slipping below $108 a barrel on Tuesday.

Robert Einhorn, the U.S. State Department's non-proliferation adviser until earlier this year, said the talks remained on track. "The main question mark now is what happens away from the negotiation table — in the halls of Congress, in the U.S.-Israeli relationship and in Tehran," he said.

Wire services