World powers to discuss Iran crisis as deadlines loom

World powers and Iran resume nuclear crisis talks Monday amid fears that failure on this occasion may lead to a permanent breakdown and push the sides ever closer to the use of force. The two-day meeting follows a bruising May session in Baghdad during which Iran nearly walked out of negotiations aimed ultimately at keeping it from joining the exclusive club of nations with an atomic bomb. Host Russia however is keen to flex its diplomatic muscle and make Iran an example of how Moscow's influence over Soviet-era partners could be used to avoid foreign military intervention in the 16-month crisis in Syria. "There are reasons to believe that the next step will be taken in Moscow," Russia's Deputy Foreign Sergei Ryabkov said. Failure in Moscow could leave the process in tatters and raise the threat of air raids from arch-foe Israel -- a fateful scenario in which broader conflict would lead to a spike in oil prices that could tip over the world's teetering economy. But a July 1 deadline for a full EU oil embargo and the June 28 rollout of tough US sanctions against a host of Iranian oil clients is providing added pressure for Tehran to bargain more seriously. Two of the biggest bones of contention involve the speed with which world powers lift existing sanctions and the recognition of Iran's "right to enrich" uranium. The latter is emerging as a key demand that Iranian negotiator Saeed Jalili is likely to present to EU foreign policy chief Catherine Ashton when she represents the five permanent UN Security Council members and Germany in Moscow. "We expect that Iran's right to nuclear technologies, including uranium enrichment, will be recognised and respected," Jalili told Russia's RT state-run world news channel in comments translated from Farsi. Diplomats said Iran had agreed to discuss the idea of limits to its enrichment programme under a proposal initially outlined in Baghdad. "Their message on enrichment has been received," said a Western diplomat close to the negotiations. "I think that much will depend on how Iran reacts to our proposals as well. But we're ready to discuss theirs," the Western diplomat said. Yet Western officials have also made clear that Iran's current position would leave them no choice but to go ahead with the oil sanctions while considering new measures in the months to come. "If Iran remains unwilling to take the opportunities these talks present, it will face continuing and intensified pressure and isolation," said another Western official. The offer outlined by the powers last month and under discussion in Moscow would see Iran stop enriching uranium to 20 percent -- seen as being just steps away from weapons-grade -- and ship out its existing stock while shuttering its Fordo bunker. The nuclear enrichment site is buried deep in the Iranian mountains and is believed to be bunker-buster proof. The tough terms would not lead to the quick lifting of sanctions but instead see the West extend some forms of peaceful nuclear energy cooperation and provide assistance for Iran's battered aircraft industry. Europe would also help Iran export oil to key client Asia by easing an EU ban on tanker insurance. Iran has previously scoffed at the idea of accepting only reactor fuel and civil aviation parts in immediate return. But calls are growing on US President Barack Obama from both Israel and the US Congress ahead of his November re-election bid to reject any compromise.