Key European nations put finishing touches Tuesday on a proposal meant to enlist the support of Russia and China for possible U.N. Security Council sanctions against Iran should Tehran refuse to abandon uranium enrichment, diplomats said.

Iranian President Mahmoud Ahmadinejad (front row C) sits with commanders from the Basij Militia in Tehran May 7, 2006. The United States aims to resolve the Iran nuclear stand-off peacefully and diplomatically, President George W. Bush said on Tuesday. [Reuters]

The compromise, which would drop the automatic threat of military action if Iran remains defiant is part of a proposed basket of incentives meant to entice Iran to give up enrichment, a possible pathway to nuclear arms. It also spells out the penalties if it does not.

France, Britain and Germany discussed the final form of the package Tuesday ahead of submission for hoped-for approval Wednesday at a formal meeting of the five permanent Security Council members and Germany.

If accepted, the compromise would resolve wrangling within the Security Council since it became actively involved in March, two months after Iran's file was referred to it by the 35-nation board of the International Atomic Energy Agency.

Russia and China have opposed calls by America, Britain and France for a resolution threatening sanctions and enforceable by military action.

The compromise proposal is meant to break that deadlock, said the diplomats, who demanded anonymity in exchange for discussing the package with The Associated Press.

If Iran remains defiant, the proposal calls for a Security Council resolution imposing sanctions under Chapter VII, Article 41 of the U.N. Charter. But it avoids any reference to Article 42, which is the trigger for possible military action to enforce any such resolution.

And in an additional reassurance to Moscow and Beijing, it specifically calls for new consultations among the five permanent Security Council members on any further steps against Iran. That is meant to dispel past complaints by the Russians and Chinese that once the screws on Iran are tightened, it would automatically start a process leading to military involvement.

The proposed language represents compromise by the United States, Britain and France, which for weeks had called for a full Chapter VII resolution automatically carrying the threat of military action if ignored by Iran.

Still, it was unclear whether the changes would be enough to satisfy Russia and China at the six-nation meeting Wednesday because any such resolution would still declare Iran a threat to international peace,something also opposed by both Moscow and Beijing. Russia and China also have until recently spoken out against possible sanctions on Tehran, their economic and strategic partner.

On the eve of the meeting, Russian news agencies cited Foreign Minister Sergey Lavrov as again calling for political and diplomatic means to solve the Iranian nuclear impasse.

Still, Lavrov also said Moscow favors the approach of the three European Union countries in handling the crisis, a possible suggestion that it was ready to accept the modified proposal for a council resolution as part of the package of carrots if Iran cooperated and sticks if it didn't.

The draft European proposal, shared in part with The Associated Press, listed among possible sanctions to imposed by the council banning travel visas for government officials; freezing assets; banning financial transactions of key government figures and those involved in Iran's nuclear program; an arms embargo, and an embargo on shipping refined oil products to Iran. While Iran is a major exporter of crude it has a shortage of gasoline and other oil derivatives.

If Tehran agrees to suspend enrichment, enter new negotiations on its nuclear program and lift a ban on intrusive inspections by the IAEA, they would be offered rewards including agreement by the international community to "suspend discussion of Iran's file at the Security Council."

The package also promised help in "the building of new light-water reactors in Iran," offered an assured supply of nuclear fuel for up to five years, and asked Tehran to accept a plan that would move its enrichment program to Russia.

A European official said Washington was unlikely to compromise beyond giving up insistence that any council resolution be automatically militarily enforceable.

Concern has been building since 2002 when Iran was found to be working on large-scale plans to enrich uranium. Iran insists it is only interested in generating electricity, but the international community increasingly fears it plans to build a nuclear bomb.

A series of IAEA reports since then have revealed worrying secret activities and documents, including drawings of how to mold weapons-grade uranium metal into the shape of a warhead.

Iran heightened international worries by announcing on April 11 that it had enriched uranium with 164 centrifuges. Experts estimate that Iran could produce enough nuclear material for one bomb if it had at least 1,000 centrifuges working for more than a year.