By Fredrik Dahl and Justyna Pawlak
VIENNA (Reuters) - Six world powers and Iran appeared to make some progress at a second day of talks in Vienna on Wednesday to hammer out an agenda for reaching an ambitious final settlement to the decade-old standoff over Tehran's nuclear program.
The United States, Russia, China, Britain, France and Germany want a long-term agreement on the permissible scope of Iran's nuclear activities to lay to rest concerns that they could be put to developing atomic bombs. Tehran's priority is a complete removal of damaging economic sanctions against it.
The negotiations will probably extend at least over several months, and could help defuse many years of hostility between energy-exporting Iran and the West, ease the danger of a new war in the Middle East, transform the regional power balance and open up major business opportunities for Western firms.
Both sides were relatively upbeat about the first meeting.
"The talks are going surprisingly well. There haven't been any real problems so far," a senior Western diplomat said.
A European diplomat said Iran and the world powers were "committed to negotiating in good faith" and that they had discussed the schedule for future meetings and other issues.
"Experts had detailed discussions on some of the key issues which would have to be part of a comprehensive settlement," the diplomat added.
A senior Iranian official, Hamid Baidinejad, told Reuters: "Talks were positive and generally (were about) the framework for the agenda for further talks."
The talks had originally been expected to run for as long as three full days but might be adjourned as early as Thursday morning due to the crisis in Ukraine, according to Western diplomats.
European Union foreign policy chief Catherine Ashton, who coordinates official contacts with Iran on behalf of the six, was due to attend an extraordinary meeting of EU foreign ministers in Brussels on Ukraine on Thursday afternoon.
Ashton's deputy Helga Schmid chaired the Vienna talks during the day with Iranian Deputy Foreign Minister Abbas Araqchi, flanked by senior diplomats from the six powers. Separately, Ashton met Iranian Foreign Minister Mohammad Javad Zarif.
The powers have yet to spell out their precise demands of Iran. But Western officials have signaled they want Tehran to cap enrichment of uranium at a low fissile concentration, limit research and development of new nuclear equipment, decommission a substantial portion of its centrifuges used to refine uranium, and allow more intrusive U.N. nuclear inspections.
Such steps, they believe, would help extend the time Iran would need to make enough fissile material for a bomb and make such a move easier to detect before it became a fait accompli. Tehran says its program is peaceful and has no military aims.
Graham Allison, director of Harvard University's Belfer Center, said the aim should be to deny Iran an "exercisable nuclear weapons option".
"Our essential requirement is that the timeline between an Iranian decision to seek a bomb and success in building it is long enough, and an Iranian move in that direction is clear enough, that the United States or Israel have sufficient time to intervene to prevent Iran's succeeding," he said.
COMPLEX PROCESS AHEAD
Highlighting wide differences over expectations in the talks, Araqchi was cited by Iran's English-language Press TV state television on Tuesday as saying that any dismantling of Iranian nuclear installations would not be up for negotiation.
The talks could also stumble over the future of Iran's facilities in Arak, an unfinished heavy-water reactor that Western states worry could yield plutonium for bombs, and the Fordow uranium enrichment plant, which was built deep underground to ward off any threat of air strikes.
"Iran's nuclear sites will continue their activities like before," the official IRNA news agency quoted Iranian Atomic Energy Organisation spokesman Behrouz Kamalvandi saying.
During a decade of on-and-off dialogue with world powers, Iran has rejected Western allegations that it has been seeking the means to build nuclear weapons. It says it is enriching uranium only for electricity generation and medical purposes.
As part of a final deal, Iran expects the United States, the European Union and the United Nations to lift painful economic sanctions on the oil-dependent economy. But Western governments will be wary of giving up their leverage too soon.
Ahead of the talks, a senior U.S. official said getting to a deal would be a "complicated, difficult and lengthy process".
On the eve of the Vienna round, both sides played down anticipation of early progress, with Iran's clerical Supreme Leader, Ayatollah Ali Khamenei, saying he was not optimistic - but also not opposed to negotiations.
The six powers hope to get a deal done by late July, when an interim accord struck in November expires.
That agreement, made possible by the election of relative moderate President Hassan Rouhani on a platform of relieving Iran's international isolation by engaging constructively with its adversaries, obliged Tehran to suspend higher-level enrichment in return for some relief from economic sanctions.
Zarif, also quoted by Press TV on Tuesday, sounded an optimistic note. "It is really possible to make an agreement because of a simple overriding fact and that is that we have no other option."
(Additional reporting by Parisa Hafezi and Louis Charbonneau in Vienna; Editing by Mark Heinrich and Janet Lawrence)