European powers France, Germany and Britain are planning to offer Iran a fresh package of incentives for curbing its nuclear program. But, the European strategy would threaten sanctions should Iran refuse.

From left: Sergei Lavrov, Kofi Annan, Condoleezza Rice, Javier Solana

British, French and German diplomats are said to be developing what is called a "carrot and stick" approach aimed at persuading Iran to halt its uranium enrichment program.

Word of the fresh initiative came after ministers of key U.N. Security Council nations and Germany failed to resolve differences over Iran strategy.

Diplomats say the new initiative would postpone further consideration of a European-sponsored draft resolution that would legally require Tehran to give up its controversial nuclear activities.

Secretary of State Condoleezza Rice said the United States supports the European effort, and an earlier proposal by Russia, to help Iran achieve a civilian nuclear capability.

"The United States has long supported an effort by Russians, and efforts by the European Union to make available to the Iranian regime should they choose to do so, a way to fulfill aspirations for a civil nuclear program, and that is what is being discussed, is how that might be made available again," said Condoleezza Rice.

President Bush Tuesday reaffirmed that diplomacy remains the primary option in dealing with Iran. But he said the international community would isolate the Tehran government if it refuses to give up uranium enrichment.

Secretary Rice later attempted to reassure the Iranian people that efforts to prevent their government from gaining nuclear weapons were not aimed at them.

"I would just like to say to the people of Iran, obviously, if there is a way for Iran to accept the will of the international community, to accept proposals for civil nuclear power, this is the time for Iran to take that possibility, because no one wants to isolate the Iranian people," she said. "The Iranian regime is isolating the Iranian people. The international community is not doing so."

European diplomats on the Security Council say the corrot of incentives offered to Iran would be backed up by the stick of penalties if Iran refuses to halt its uranium enrichment."

But Russia and China expressed skepticism about the proposal. Russia's Foreign Minister Sergei Lavrov cautioned that any threat of penalties could backfire, and suggested it would be better to demand Iranian cooperation with the International Atomic Energy Agency.

"I don't like terms like carrots and sticks, I prefer to speak about reasonable proposals which would show a positive alternative," said Sergei Lavrov. "Iran should cooperate with the IAEA Board of governors, and I'm convinced that if Iran cooperates, with the governing board of the IAEA and IAEA inspectors, as is required of Iran, this would be possible."

The Vienna-based IAEA has said it cannot confirm whether Iran's nuclear power program is entirely for peaceful purposes. The United States suspects the Tehran government is attempting to achieve a nuclear weapons capability, but Iran maintains its program is for civilian energy use.