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WASHINGTON - France and Germany were prepared in spring 2005 to negotiate on an Iranian proposal to convert all of its enriched uranium to fuel rods, making it impossible to use it for nuclear weapons, but Britain vetoed the deal at the insistence of the United States, according to a new account by a former top Iranian nuclear negotiator.
Seyed Hossein Mousavian, who had led Iran's nuclear negotiating team in 2004 and 2005, makes it clear that the reason the offer was rejected was that the George W Bush administration refused to countenance any Iranian enrichment capability, regardless of the circumstances.
The British and US refusal to pursue the Iranian offer, which might have headed off the political diplomatic crisis over the Iranian nuclear program since then, is confirmed by a former British diplomat who participated in the talks and former European ambassadors to Iran
From the OP's source.
The Iranians had made clear to the European three that they could not agree to any loss of their right to enrich, according to Jenkins, but the Europeans hoped that it was merely an opening negotiating position.
"I don't think we realized fully in March 2005 that Iran was not prepared to give up enrichment as the price of a settlement," Jenkins recalled. "We believed that if we could come up with sufficient incentives and scare Iran with the threat of referral to the [United Nations] Security Council, they would give in."