The Bush administration said Wednesday Iran must suspend uranium enrichment if it accepts big-power incentives and returns to talks on the future of its nuclear program. But the State Department would not rule out a negotiated settlement that would allow enrichment in some form.

U.S. officials have been adamant that Iran would have to stop enriching uranium if it is to benefit from incentives being offered by the five permanent U.N. Security Council member countries and Germany.

However, the State Department is not entirely ruling out Iranian enrichment in the future under a negotiated solution that resolves all concerns by the United States and others that Iran has a secret nuclear weapons program.

The Washington Post reported Wednesday that the big-power diplomatic package formally presented to Iran this week does leave open the possibility that Tehran will be able, at some point, to enrich uranium on its own soil.

The Post described the prospect as a concession to Iran, which while denying weapons ambitions has said it has a right to enrichment as part of a civilian nuclear program.

Sean McCormack

At a news briefing, State Department Spokesman Sean McCormack held to a refusal to discuss precise terms of the so-called "carrots and sticks" offer to the Iranians.

But he said an enrichment suspension is a fundamental condition for Iran to reap the benefits of the package and to have nuclear negotiations with the United States and the other major powers.

"They would need to suspend all enrichment and reprocessing related activities," he said. "All enrichment and reprocessing activities. So that's the prerequisite for negotiations. Let's suppose, just for a second, take it one step further that there were negotiations. That condition would have to hold throughout any negotiating period. Beyond that, I am not going to speculate, beyond that we are truly into the realm of hypothetical and theoretical."

European chief diplomat Javier Solana presented the offer to officials in Tehran Tuesday and later said he was more optimistic about a possible solution to the Iranian nuclear issue than he was previously.

The package is widely reported to include, among other things, an offer of European assistance to Iran in building safeguarded light-water nuclear reactors and support for Iranian membership in the World Trade Organization.

Iran would be penalized with U.N. Security Council action and possible sanctions if it did not accept the offer. But under questioning, spokesman McCormack left it unclear if Solana had spelled out a program of disincentives during his Tehran visit.

McCormack said the six powers gave the European envoy considerable leeway in how to present the initiative but that in any case the Iranian government is well-aware of the potential disincentives and what, generally, the penalties might be.