World powers sought Wednesday to pave the way to ending the decade-old and escalating Iran nuclear crisis by laying out a new package of proposals they said would be "of interest" to Tehran.
The P5+1 -- the United States, Russia, China, Britain, France and Germany -- were however expected to tell Iran that its demand for sanctions relief is out of the question until it has taken concrete steps to ease their suspicions.
EU foreign policy chief Catherine Ashton laid out at the start of the talks a new package of P5+1 proposals that were thought to include Iran suspending the enrichment of uranium to 20 percent in return for various sweeteners.
"We are putting proposals on the table that are also of interest to Iran," Ashton's spokesman Michael Mann told reporters. "There are things we can do for Iran."
"We hope the Iranians will come back with a positive reaction to our proposals to deal with the concerns of the international community ... The ball is in their court now."
A P5+1 source said that the Iranians' response so far had been 25 minutes of "all rhetoric rather than positive response."
Media reports said the package included a revival of previous attempts at a deal whereby Iran would ship abroad its stockpiles of enriched uranium in return for fuel for a reactor producing medical isotopes.
In return the P5+1 are expected to demand that Iran suspend what they see as the most worrying part of Tehran's nuclear programme, namely 20-percent enrichment.
Iran however on Tuesday announced it was loading domestically produced, 20-percent enriched uranium fuel into the reactor.
The capability to enrich to that level has raised fears in much of the international community that Iran could relatively quickly refine uranium to 90 percent purities -- the level needed for a nuclear weapon, if it decided to.
The media reports, described by one P5+1 diplomat as "pretty spot on", said the world powers would not offer to relax existing sanctions or postpone other restrictions due to come into force, as Iran wants.
Instead, Iran could be given a pledge of no new sanctions, easier access to aircraft parts and a possible suspension of an EU insurance ban on ships carrying Iranian oil.
Russian Foreign Minister Sergei Lavrov said in Moscow that Iran "is ready to agree on concrete actions."
Russia has urged that new talks be based on a formula under which nations gradually lift four sets of UN sanctions on Iran once it begins meeting specific concerns.
Lavrov said this process should last "until we reach the stage where it becomes clear to everyone that Iran's nuclear programme does not have a military dimension".
Diplomats from the six powers and Iranian media said the meeting in the fortress-like Green Zone of the Iraqi capital would likely go into a second, unscheduled day.
The West fears that a nuclear-armed Iran would destabilise the already volatile Middle East and sound the death knell for 60 years of international efforts to prevent the spread of atomic weapons, sparking a regional arms race.
Israel, Washington's closest ally in the region, feels its very existence would be under threat and has refused to rule out a pre-emptive strike on Iran's nuclear facilities.
Iranian President Mahmoud Ahmadinejad insisted on Wednesday that the "production and use of weapons of mass destruction is haram (forbidden) and have no place in the Islamic Republic of Iran's defence doctrine."
US President Barack Obama took office in January 2009 offering a radical change in approach to his predecessor, George W. Bush, in dealings with Iran, famously offering an "extended hand" to Tehran if it "unclenched its fist."
This failed, however, and Iran has since dramatically expanded its programme, including by starting in 2010 to enrich uranium to 20 percent and from January in the Fordo site deep inside a mountain near the holy city of Qom.
As a result, talk of war has increased and the UN Security Council has imposed more sanctions on Iran. Additional US and EU restrictions targeting Iran's oil sector and central bank are due to come into force from July 1.
But now, both sides "have walked up to the abyss and they have both decided they don't want to go down it," said Trita Parsi, author of an acclaimed book about Obama's dealings with Iran called "A Single Roll of the Dice."
One key way for Iran to win the confidence of the P5+1 was implementing the additional protocol (AP) of the nuclear Non-Proliferation Treaty, which allows for more intrusive inspections by the International Atomic Energy Agency.
The IAEA also wants Iran to address allegations made in its November report that until 2003, and possibly since, Tehran had a "structured programme" of "activities relevant to the development of a nuclear explosive device."
IAEA chief Yukiya Amano said on Tuesday after talks in Tehran that a deal on ways to go over these accusations with the Iranians would be signed "quite soon." Western reaction though was circumspect.
Ashtons's spokesman meanwhile played down expectations of a dramatic breakthrough, saying that the Baghdad talks were part of what will need to be a lengthy process.
"This is the second meeting. Istanbul kicked off the process (in mid-April) of discussions. Now we're getting on to the real substance of the matter," Mann said. "We are keen to get a move on but these things can't be solved overnight."
Iran made a counter-proposal to the P5+1 group of world powers during talks between the two sides over its nuclear programme on Wednesday, and talks will run into a second day, an Iranian official said.
"Iran proposed a package with five items based on the principles of step-by-step and reciprocity, and we are waiting for the reaction of the P5+1 during meetings this afternoon," the official said, speaking on condition of anonymity.
The official said talks would continue Wednesday evening and into Thursday.