Officials from Iran and the six countries had originally said a breakthrough in New York was unlikely on a nuclear deal to end sanctions on Tehran, although they had hoped substantial progress could be made in narrowing disagreements.
That, the diplomats said, did not happen at talks this week on the sidelines of the United Nations General Assembly.
"On the core issues we remain pretty far apart," a Western diplomat told reporters on condition of anonymity. "On enrichment, we are not there yet. On sanctions, we are not there yet."
The diplomat said that Iran and the United States, Britain, France, Germany, Russia and China would likely meet again in the coming weeks, but no date and venue have been set. The negotiators have set a November 24 deadline for an agreement.
Iran President Hassan Rouhani said at a news conference on Friday in New York that the "progress we have witnessed in recent days has been extremely slow." Rouhani said, "We must look forward to the future and make the courageous decisions vis-a-vis this problem."
Rouhani said any deal without lifting all sanctions against Tehran was "unacceptable."
US secretary of state John Kerry told reporters in New York that an interim deal approved in Geneva last November under which Iran had halted higher-level enrichment in exchange for limited sanctions relief "has made the world safer."
Regarding the pursuit of a long-term deal, Kerry said "it remains our fervent hope that Iran" and the six powers "can in the next weeks come to an agreement that would benefit the world."
Iran and the six hope that a resolution of the more-than-decade-long nuclear standoff with Iran will reduce regional tensions and remove the risk of another war in the Middle East.
At the General Assembly earlier in the week, Rouhani said a deal that ends sanctions will open the door to deeper cooperation on regional peace and stability and the fight against militants such as Islamic State, a group that has seized parts of Iraq and Syria. The United States has made clear it will not link the two issues.
Israel has repeatedly threatened to use military force against Iranian atomic sites if diplomacy fails to defuse what it sees as the threat of a nuclear-armed Iran.
Iran rejects allegations from Western powers and their allies that it is seeking a nuclear weapons capability but has refused to halt uranium enrichment, inviting multiple rounds of US, European Union and UN Security Council sanctions. Enrichment is a process of purifying uranium for use as fuel for power plants or, if enriched to a very high purity, for bombs.
Senior foreign ministry officials from the six countries and Iran began meeting in New York last week. They are trying to hammer out a long-term deal that would gradually lift sanctions against Tehran in exchange for curbs on its nuclear program.
Despite a generally positive atmosphere in the negotiations, the Western diplomat said neither side has much confidence in the other.
"The level of mistrust is still pretty high," the Western diplomat said.
French Foreign Minister Laurent Fabius told reporters there had been "no significant advances" in the latest talks, prompting the parties to cancel a scheduled negotiating session on Friday.
Kerry and European Union foreign policy chief Catherine Ashton met with Iranian foreign minister Mohammad Javad Zarif late on Thursday and again on Friday to discuss next steps in the deadlocked negotiations, the Western diplomat said.
In addition to enrichment, diplomats said the speed of lifting sanctions is a difficult issue, one on which Iranian and Western delegations have sharp differences.
The Western diplomat said the United States and Europeans were prepared to lift their unilateral sanctions very quickly in the event of an acceptable agreement, but UN measures would be ended gradually based on Iran's compliance with any future deal.
"What they would like to see is to get rid of the Security Council sanctions very quickly, immediately," he said. "But this is not exactly how we think." He added, however, that Iran was underestimating the speed at which the Western powers were prepared to move on sanctions relief if an agreement is reached.
The diplomat said Iran's President Rouhani, who held bilateral meetings with top European officials in New York, had nothing to offer to move the talks forward.
"There was nothing really new from him," the diplomat said. "He said we should not miss this historic opportunity over a couple of centrifuges. And by the way, we think the same way."
Iran's enrichment program, above all the number of enrichment centrifuges Tehran would be permitted to keep for the duration of any deal, is one of the major sticking points.
Rouhani, widely seen as a pragmatist, was elected last year on a platform of improving foreign relations. Rouhani and his government have adopted a more conciliatory stance compared to his hard-line predecessor, Mahmoud Ahmadinejad, raising hopes there might be avenues to reach an agreement.
The head of the US delegation, under secretary of state for political affairs Wendy Sherman, said in an interview with Voice of America that "I believe we are making progress." But she added that there are "still some very crucial decisions that need to be made."
The Western diplomat echoed those remarks, saying: "We are expecting significant moves on the Iranian side" if there is to be an agreement over the next two months.
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