U.S. military broke into the Iranian consulate in Irbil in Iraq's Kurdish-controlled north in January, seizing documents and computers, and arrested the Iranians, saying they were not diplomats but were linked to militants operating on Iraqi territory. Iranian authorities said the detainees were employees of the Iranian consulate.
"We have made it clear to the Iraqi leadership that until the Iranian diplomats are released, Iran's participation in any conference on Iraq, attended by U.S. representatives, will be difficult," Deputy Foreign Minister Abbas Araghchi said.
The Islamic Republic said earlier that it had not as yet made the final decision on whether to attend an international conference on Iraq, due to be held in Egypt May 3-4.
The Russian Foreign Ministry said previously the format for the meeting had already been determined, and would include foreign ministers of the five permanent members of the UN Security Council - China, Russia, Britain, France and the U.S. - who had attended the Baghdad conference in March.
Last month's conference for the first time gathered representatives from outside forces involved in the Iraqi standoff - the U.S. and Britain on one side, and Syria and Iran on the other.
Originally, the meeting was planned as a foreign ministerial event, but it was later decided to hold the conference at a lower level for security reasons, a decision that proved to be a wise one after a mortar shell exploded in the area before the conference opened.