The US has for 10 months been stalling over an Iranian offer of landmark talks that would see the Islamic republic address Washington's concerns on nuclear weapons, terrorism and Israel - because of divisions within the Bush administration.
US officials and go-betweens say the talks, which could in return establish normal diplomatic relations between the countries, have been resisted by hawks in Washington who adamantly oppose opening a dialogue with the clerical regime in Iran, which George W. Bush, the US president, branded part of the "axis of evil".
However, Colin Powell, the secretary of state, recently told an internal meeting that Mr Bush was looking for an "opening" with Iran, raising the possibility of a positive reply. The recent example of Libya has shown how some countries that Washington has labelled "rogue nations" can begin to rehabilitate themselves in US eyes.
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Under the plan, Iran would address US concerns over nuclear weapons and terrorism, co-ordinate policy on Iraq and consider a two-state solution to the Israeli-Palestinian conflict. In return, Iran expected a lifting of sanctions, recognition of its security interests, dropping of "regime change" from the official US lexicon and eventual re-establishment of relations. "There was a lot of detail to be worked out," said one American familiar with the proposal. "They proposed concrete steps on how to work on this. The substance of the agenda was pretty reasonable."
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Senator John Kerry, the Democratic presidential challenger, says he would deal with Iran directly and hinted at talks on restoring relations. The Bush administration is holding out the prospect of "grand bargains" with Libya and North Korea, but there is powerful opposition - led by Dick Cheney, the vice-president, and Donald Rumsfeld, the defence secretary - to a deal with Iran.
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