Iran said on Sunday that the West's 'carrot and stick' method for getting it to halt sensitive atomic work was doomed to failure.
Iran's case has been returned to the UN Security Council because the Islamic Republic failed to heed a UN demand to suspend uranium enrichment, a process the West believes Tehran is using to develop nuclear weapons, despite Iran's denials.
The United States and European states back UN sanctions, although European officials say this will be an incremental process which Iran can curtail by halting enrichment.
At the same time, the five permanent members of the Security Council -- the United States, France, Britain, Russia and China -- plus Germany have offered Iran trade and other incentives if it suspends enrichment as a precondition for atomic talks.
"Our negotiating partners have always emphasised the need for talks, but they are moving in two different directions," Foreign Ministry spokesman Mohammad Ali Hosseini said.
"Iran's position is that you cannot use the policy of 'carrot and stick' at the same time because it is an incompetent policy and it will result in failure."
Hosseini said imposing sanctions would have an impact beyond the region. "But if they choose sanctions, we will make appropriate decisions in proportion with that," he said.
Iran's chief nuclear negotiator has said its response could involve halting UN checks of atomic sites.
Hosseini said a suspension of uranium enrichment "has no place in Iran's nuclear policies".
"But we have said also that, if the conditions are fair, this issue could be discussed during negotiations like other issues," he added.
Iran has said it would discuss suspension during talks, rather than as a precondition. But officials have also said such discussions would examine why Iran saw such a step as illogical.
France, Britain and Germany are drafting a Security Council resolution on sanctions and have been discussing it with the United States, which wants tougher measures. Russia and China, which can veto a resolution, are wary of imposing penalties.
"We are witnessing a positive position by the Russians compared to some other Western countries," Hosseini said.