The heads of state and government of the European Union (EU) on Friday threatened Iran with economic sanctions if Iran fails to suspend uranium enrichment.

"In the absence of action by Iran to meet its obligations, the European Council supports work in the (UN) Security Council toward the adoption of measures under Article 41 of Chapter VII of the UN Charter," reads draft conclusion of the EU summit.

Article 41 of Chapter VII provides for measures "not involving the use of armed force" to implement Security Council decisions.

"The European Council deplores Iran's failure to take steps required by the IAEA (International Atomic Energy Agency) Board of Governors and the UN Security Council, and agrees that this could only have negative consequences for relations between the EU and Iran," reads the draft document.

A UN Security Council resolution required Iran to suspend its uranium enrichment by Aug. 31, 2006. But Iran ignored the deadline.

In parallel with the threat, the EU leaders struck a reconciliatory note, saying that they fully support a negotiated solution of the Iranian nuclear issue.

"The European Council reiterates its full support for efforts to find a negotiated solution to the nuclear issue and regrets that Iran has not engaged seriously with the far-reaching proposals presented to Iran by the High Representative (Javier Solana) on June 6."

The package was drawn up by three EU countries -- Britain, France and Germany -- plus China, Russia and the United States.

The six-nation package could serve as a basis for a long-term agreement, which would give Iran everything it needs to develop a modern civil nuclear power industry while addressing the concerns expressed by the IAEA Board of Governors and the UN Security Council, says the draft conclusion.

The EU leaders also expressed concern about "the negative impact of Iranian policies on stability and security in the Middle East" and asked Iran to play a responsible role in the region.

They condemned the Iranian authorities' denial of the Holocaust.

"The EU condemns any denial of the Holocaust as a historical fact, either in whole or in part, and therefore firmly rejects the underlying premise and the objectives of the conference on the Holocaust organized by the Iranian authorities."

The EU leaders also expressed concern over Tehran's threats toward Israel and the "continuing deterioration of human rights and political freedoms" of Iranian citizens.

In this context, the leaders deplored Iran's cancellation of a bilateral human rights dialogue scheduled for December 2006.

The leaders indicated they will adopt a wait-and-see policy toward Iran.

"The EU will keep all of these issues and its policies under close review and will calibrate its approach in the light of Iran's actions," says the draft document.

Source: Xinhua