As Iran toughens stance, hopes for nuclear thaw before June diminish

The odds of Washington and Tehran making progress to revive the 2015 nuclear deal before Iran's June elections have dwindled after Iran opted to take a tougher stance before returning to talks, diplomats and officials said.

US President Joe Biden's administration has said it is ready to talk to Iran about both nations resuming compliance with the accord, which scrapped broad economic sanctions against Iran in return for curbs intended to prevent it from acquiring nuclear weapons - something Iran says it does not want.

But the parties cannot agree who should make the first move.

Tehran says Washington must lift sanctions that then-President Donald Trump, Biden's predecessor, imposed after he withdrew from the deal in 2018, while Washington says Tehran must first resume compliance with the deal, which Iran has progressively violated since 2019.

Foreign Minister Javad Zarif has said unless progress is made soon on restoring the deal, diplomacy would be halted for months by Iran's presidential election scheduled for June 18.

Iran's nuclear policy is ultimately determined by Supreme Leader Ali Khamenei, who is not on the ballot.

However, the privations suffered by voters could influence Iran's approach by reducing turnout and bolstering those who believe the establishment must moderate its policy.

Two Western diplomats and two Iranian officials said Iran's foreign ministry crafted a step-by-step proposal by which Tehran and Washington would come back into compliance with the deal.

The plan advanced internally in Iran in February hinged on a quid pro quo under which Tehran would stop enriching uranium to 20% when Washington acquiesced in the release of some of the $15 billion of Iranian funds frozen abroad, one of the Western sources said.

An Iranian official close to the nuclear talks said the initial proposal centred on unblocking funds in Japan, South Korea and Iraq and was initially approved by Khamenei and the Supreme National Security Council (SNSC).

It also called for Biden, who took office in January, to issue an executive order removing the economic sanctions imposed by Trump, an idea US and other officials view as a non-starter, the Western source said.

That proposal was rejected by Iranians pushing for a tougher stance partly because an order would not guarantee sanctions relief in practice, the source said.

A tougher subsequent plan for Iran to suspend 20% enrichment only for a month or two was also rejected, the source said.

A source close to Khamenei's office said he, the SNSC and the head of Iran's atomic agency had had several meetings to discuss what should be done.

The source said Khamenei initially agreed the plan before deciding at a meeting in early March that the signals from the US administration were insufficient. A tougher stance now prevailed demanding the lifting of US sanctions first.

"So far, Iran has not managed to come up with an agreed plan," said one Western diplomat on condition of anonymity who believed diplomacy would stall until later this year.

In one of its key breaches, Iran has begun enriching uranium to 20%, well above the deal's 3.67% limit but below the 90% purity that is regarded as weapons grade.

More recently US officials have suggested both sides might take "reciprocal" steps, but Iran has not embraced the idea.

In a speech on Sunday, Khamenei said Iranian officials should assume sanctions would not be lifted soon.

"The Americans must lift all sanctions. We will verify it and if sanctions are ... really cancelled, we will return to our obligations without any problems," he said. "We have a lot of patience."

A senior European diplomat said things were "stuck" and time was running out before the election but France, Britain and Germany - the European parties to the deal - were still working to make progress.

A European Union official put the chances of a pre-election breakthrough at 50-50. He also played down the importance of direct talks, saying indirect contacts could advance matters.

One of the Western diplomats said that his nation's assessment was that Khamenei would not back down for now, though Iran could put forward a proposal before June, albeit one Washington and its European partners might not accept.

"Khamenei's comments underscore our call that the US and Iran will not revive the nuclear agreement prior to the Iranian presidential elections," said Eurasia Group analyst Henry Rome, saying a US-Iran meeting was possible but not probable before June.

A US official said his nation had not concluded Iran had given up on talks before the elections, though he saw the window closing in April as Iranian politicking picks up in May.

"Our posture and ... the posture of others, including Iran, is we are still going to explore what can be done in the coming weeks," he said, saying the West had not yet concluded it was time to "shut the door, nothing is going to happen until the election."