UPDATE 2-US Sees Iran Rift, Says Strike Would Unite Country

* Sanctions biting harder than Iran expected - Gates

* Ahmadinejad, Khamenei rift?

* Iran has agreed to new nuclear talks, analysts skeptical

(Adds Iranian exercises)

By Phil Stewart

WASHINGTON (Reuters) - Sanctions against Iran are biting hard and triggering divisions among its leadership, U.S. Defense Secretary Robert Gates said Tuesday, as he argued against a military strike over Tehran's nuclear program.

Iran has agreed to meet with a representative of the six big powers for the first time in more than a year over its uranium enrichment drive, but diplomats and analysts see little chance of a breakthrough in the long-running dispute.

Gates said he saw little choice, however, to pursuing a political strategy that includes sanctions and renewed his concerns that a military strike would only delay Iranian nuclear capabilities by two or three years.

He added that sanctions "have really bitten much harder than (Iranian leadership) anticipated," and suggested Iranian President Mahmoud Ahmadinejad was increasingly at odds with Supreme Leader Ayatollah Ali Khamenei.

"We even have some evidence that Khamenei, now, (is) beginning to wonder if Ahmadinejad is lying to him about the impact of the sanctions on the economy. And whether he's getting the straight scoop in terms of how much trouble the economy really is in," Gates told the Wall Street Journal CEO Council in Washington.

The West believes that Iran aims to use its uranium enrichment program to build atomic weapons, which Iran denies. Both Israel and the United States have said all options remain on the table to deal with its nuclear ambitions.

Israeli Prime Minister Benjamin Netanyahu ratcheted up rhetoric last week by calling on the West to convince Iran that it would be willing to take military action to prevent Tehran from producing nuclear weapons. He said economic sanctions had so far failed to do the job.

Gates has publicly disagreed with Netanyahu about the need to put forward a military threat.

Although he acknowledged on Tuesday that Iranian leaders "are still intent on acquiring nuclear weapons," he said military action was not a long-term answer.

"A military solution, as far as I'm concerned ... it will bring together a divided nation. It will make them absolutely committed to obtaining nuclear weapons. And they will just go deeper and more covert," Gates said.

"The only long-term solution in avoiding an Iranian nuclear weapons capability is for the Iranians to decide it's not in their interest. Everything else is a short-term solution."

The Iranian air force started a five-day military exercise Tuesday meant to test Iran's defenses against air strikes. Tehran said it was the biggest exercise of its kind it had ever staged. (Additional reporting by Robin Pomeroy in Tehran, Editing by Eric Beech)