U.N. nuclear chief Mohamed ElBaradei said Thursday he was hopeful that a Russian proposal could help solve the international crisis over Iran's nuclear program.

Speaking at the World Economic Forum's annual meeting, ElBaradei said he was pleased that Tehran's top nuclear negotiator, Ali Larijani, on Wednesday called Russia's proposal to move Iran's enrichment program to Russian territory "positive."

ElBaradei said he also was encouraged that all parties still were discussing a diplomatic solution. His comments came amid quickening diplomatic negotiations ahead of a crucial Feb. 2 meeting of his International Atomic Energy Agency, which could refer the issue to the Security Council. The 15-member council has the power to impose economic and political sanctions on Iran.

Britain, France and Germany have been leading efforts to get Iran to abandon uranium conversion and enrichment activities — which it refuses to do. The United States and European powers fear Iran is using what it says is an atomic energy program as a front to build weapons.

The three countries declared that negotiations had reached a "dead end" two days after Iran broke U.N. seals Jan. 10 at a uranium enrichment plant and said it was resuming nuclear research after a two-year freeze.

Moscow has suggested that uranium could be enriched in Russia and then returned to Iran for use in the country's reactors. But haggling has continued over the specifics.

President Bush has said Russia's proposal offered the best chance for resolving the impasse.

"We need Iran to use maximum transparency because there are a lot of question marks about its program," ElBaradei said at the World Economic Forum. "They need to be assured that they can use nuclear power for electricity, but the international community needs to be assured that the Iran program is exclusively for peaceful purposes.

"And that's why the Russian proposal is a very attractive proposal.

"I was happy today to see Mr. Larijani ... saying that the Russian proposal is a positive one and they continue to discuss it," he said. "I am hoping the Russian proposal could provide the beginning of a solution."

Larijani said earlier this month that Iran would discuss the proposal with the Russians at a meeting in Moscow next month. On Thursday, he was in Beijing, where Chinese officials expressed support for the Russian proposal.

Still, Larijani warned of "consequences" should the United States and its European allies move to refer Iran to the Security Council.

"It would be a disgrace to condemn with sanctions a country for peaceful research. Surely the world would not accept such an action," Larijani said. "But if this kind of mistake happens, the consequences of the wrong actions will return back to those who put Iran under pressure."

Also Thursday, Pakistan President Gen. Pervez Musharraf said Iran should not be allowed to develop nuclear weapons.

"Their security is not threatened," Musharraf told the forum.