Iran on Monday agreed to swap a major part of its low enriched uranium stocks on Turkish soil for an equivalent amount of uranium enriched to 19.75 per cent, potentially ending a stand-off with the U.S. and Europe that threatened to spiral into sanctions.

Iran needs the higher grade enriched uranium to fuel the Tehran Research Reactor, used by it to produce medical isotopes.

The deal was reached after 18 hours of negotiations ending 4 a.m. between Iran, Turkey and Brazil, leaving Washington and its allies red faced. The U.S. and Europe are pressing for the punitive route and Secretary of State Hillary Clinton had predicted last week that the Brazilian-Turkish attempt at mediation would fail.

This point was rubbed in by the Brazilian and Turkish Foreign Ministers who flanked their Iranian counterpart, Manoucher Mottaki, at a press conference just before the commencement of the G-15 summit to announce a trilateral agreement that will now be sent to the Vienna Group and the International Atomic Energy Agency for further action. "The success achieved by Iran, Turkey and Brazil shows there is room for diplomacy. There is no ground anymore for new sanctions," Turkish Foreign Minister Ahmet Davutoglu said. He gave an assurance that till the uranium swap took place, Turkey would safeguard the Iranian LEU stock as its own property.

India, whose Foreign Minister S.M. Krishna was present in Tehran, was out of the loop and had no comments to offer on a deal that overshadowed the presence of six heads of state and nearly a dozen Ministers for the G-15 summit.

"We have done this to open the way for constructive dialogue," Mr. Davuoglu stressed. "This [talks] is the route to peace…we have established the principles of cooperation in future," observed Brazilian Foreign Minister Celso Amorim. He cautioned that the new agreement would not solve all the problems but is the "passport" to broader discussions that would create confidence in the international community and permit Iran to exercise the "legitimate right to nuclear energy for peaceful purposes, including enrichment."

Under the deal, Iran is ready to ship the LEU for safekeeping in Turkey within a month of the U.S. and its allies agreeing to the swap.

The stalemate had arisen after Iran said it would only swap its LEU for higher grade material and only on its own soil. On its part, the U.S. has been insisting that Iran must immediately send 1,200 kilos of LEU to Russia and France for conversion into fuel rods for the TRR.

The path to Monday's agreement was smoothened by the arrival here of Brazil's President, Luiz Inacio Lula da Silva, and his private conversations with Iranian Supreme Leader Seyyed Ali Khamenei and President Mahmoud Ahmadinejad on Sunday. With Lula seeming to indicate Iran's amenability on the enrichment issue, Turkish Prime Minister Recep Tayyip Erdogan cancelled his scheduled visit to Azerbaijan to join the talks. "There are no more excuses left for the other side to impose further pressure," said the Iran Atomic Energy Organisation chief Ali Akbar Salehi.

For the feisty Brazilian President — whose efforts to break the deadlock over Iran's nuclear programme took centrestage at the G-15 summit — this was a vindication of his style of politics. Ahead of his departure for Iran, he was quoted as saying that he did business "eye to eye" while wondering why leaders from the U.S., France and England had never talked to Mr. Ahmadinejad.

Turkey and Brazil are non-permanent members of the UN Security Council and have been attempting to find a solution since last month through the diplomatic route.

"We welcome the efforts of countries such as Turkey and Brazil which are friends, and said we are ready and flexible. However, the other parties should show that they are sincere, fulfill our requirements and provide guarantees," said Iranian Foreign Office spokesperson Ramil Mehmanparast.

Russian President Dmitry Medvedev had said the Turkish-Brazilian attempt at mediation was the last chance before the West pressed for sanctions against Iran at the United Nations Security Council meeting next month when the U.S., France and England were expected to press for a crackdown on Iran. Tehran has consistently denied Western charges of developing nuclear weapons under the cover of a civilian nuclear programme.