Iran and six powers failed yesterday for a second time this year to resolve their 12-year dispute over Tehran’s nuclear ambitions, and gave themselves seven more months to overcome the deadlock that has prevented a historic deal.

Western officials said they were aiming to secure an agreement on the substance of a final accord by March but that more time would be needed to reach a consensus on the all-important technical details.

Iranian President Hassan Rouhani, who is trying to win relief from crippling international economic sanctions by patching up relations with the West, said that “many gaps were narrowed and our positions with the other side got closer” at talks in Vienna, state TV quoted him as saying.

US Secretary of State John Kerry gave a more sombre assessment, saying “real and substantial progress had been made but adding that “some significant points of disagreement” remained.

“These talks are not going to get easier just because we extend them. They’re tough. They’ve been tough. And they’re going to stay tough,” he told reporters.

Under an interim deal reached by the six powers and Iran a year ago in Geneva, Tehran halted higher level uranium enrichment in exchange for a limited easing of the financial and trade sanctions which have badly hurt its economy, including access to some frozen oil revenues abroad.

Yesterday marked the second self-imposed deadline for a final settlement to have passed without any deal. “We have had to conclude it is not possible to get to an agreement by the deadline that was set,” British Foreign Secretary Philip Hammond told reporters, adding that the target date had been extended to June 30, 2015.

These talks are not going to get easier just because we extend them

Tehran dismisses Western fears that its nuclear programme might have military aims, saying it is entirely peaceful. However, the six powers – the United States, France, Germany, Russia, China and Britain – want to cut back Iran’s uranium enrichment programme to lengthen the time it would need to build a bomb.

Rouhani said he had no doubt there would be an agreement eventually. An unashamed pragmatist, he won election by a landslide last year on promises to work to end Iran’s international isolation.

But he made clear that Tehran was taking a tough line at the talks. “There is no question the nuclear technology and facilities of the Islamic Republic of Iran will remain active and today the negotiating sides know that pressure and sanctions against Iran were futile,” he told state TV.

Rouhani faces heavy pressure from hardline conservatives at home who have already blocked his drive to ease restrictions on Iranians’ individual freedom.

The administration of President Barack Obama must also overcome strong domestic misgivings.

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