Reactions to Iran's post-election violence have taken over the agenda of the talks that are intended to prepare the ground for the G8 summit taking place in the Italian city of L'Aquila on July 8-10.
Italian Foreign Minister Franco Frattini said Iran was "at a turning point" following the post-election street clashes, in which at least 17 people have been killed.
''It must choose whether or not to keep the door open to dialogue with the international community," he said. "The hand extended by the United States, which we have supported, cannot come back with blood on it," Frattini said.
''We will adopt a particularly tough and clear position."
German Foreign Minister Frank-Walter Steinmeier too said he expected foreign ministers from the industrialized nations of the Group of Eight to take a common line on the violence in Iran.
Russia against isolating Iran
But Russian Foreign Minister Sergei Lavrov said that isolating Iran would be the "wrong approach" for the G8.
After a meeting with Frattini, Lavrov said "no-one" wanted to condemn Tehran.
Rome had originally invited Iran to attend the three-day gathering, arguing that Tehran could have an important role to play in stabilizing Afghanistan - a key focus of the meeting.
But Rome retracted the invitation after Tehran failed to respond and after days of violent clashes with demonstrators protesting Iran's disputed June 12 elections.
"I think it's a missed opportunity for the Iranian government," European Union External Relations Commissioner Benita Ferrero-Waldner said.
She condemned "the excessive use of force by the security forces against any peaceful demonstrators."
Unrest in Tehran continues
Millions of Iranians accuse the government of fraud in the June 12 election which gave President Mahmoud Ahmadinejad an verwhelming landslide victory, prompting protest demonstrations in which at least 17 people were killed.
In another development on Thursday, Iranian state media said that eight members of the pro-government Basij militia had been killed and dozens more wounded in the protests. The eight deaths were in addition to 17 other people whose deaths have already been reported.
The figures cannot be verified due to severe reporting restrictions inside Iran.
Meeting to focus on Afghanistan-Pakistan border unrest
Another topic at the talks in Trieste on Friday would be developments in Afghanistan and Pakistan, whose foreign ministers will both be present.
Germany launched the "Afpak" regional cooperation programme during its G8 presidency two years ago. Berlin now expects this dialogue to enable significant cooperation between the two countries in combating terrorism.
Germany has also committed 90 million euros ($127 million) in aid to the border region between Afghanistan and Pakistan.
Taliban militants have stepped up their attacks as fears grow that Islamist extremists are exacting revenge for a six-week military offensive against them in three northwest districts. Taliban-linked attacks have killed around 2,000 people in Pakistan since July 2007.
The EU said that it would call for international support for Pakistan's efforts against Taliban-led extremists but also an "integrated long-term strategy, which includes social economic development, civilian law-enforcement structures and the rule of law, in order to secure the gains of the present counter-insurgency operations on a permanent basis."
"In contrast to US military power, the EU has been concentrating on the civilian aspect; a soft power surge," said Shada Islam, head of the Asia program at the European Policy Center in Brussels.
"This is done through a 'hearts and minds' approach, using development aid and the promotion of a more balanced counter insurgency policy."
According to Daniel Korski, a senior policy fellow at the European Council on Foreign Relations, the EU's involvement in other aspects of the counter-insurgency mission has proved to be as important as any military investment.
More help needed for Swat valley residents
The fighting in the Swat Valley and northern provinces has taken a huge toll on the people of the region with UN figures suggesting as many as 2.5 million Pakistanis have been displaced by the conflict.
G8 leaders are expected to provide additional financial assistance to help the refugees on top of the 5.5 million euros ($7.6 million) the EU pledged in May.
"The EU was fast in reacting to the crisis but much more urgently needs to be done and it has recognized that," Shada Islam said. "What the EU needs to do, apart from increasing its aid, is be very visible in the refugee camps and show its support. The religious groups fighting the government are already in these camps and if there is a sign that the West's help is slow, they will strengthen their grip."
"Also, as is the case in Asia, refugees are being taken in by family members which puts families under immense strain. The EU can provide financial assistance to these families. Public opinion is in favor of this offensive and it's very important to get aid to the refugees quickly to keep this support going."
Author: Nick Amies/Rob Mudge
Editor: Sonia Phalnikar