Major powers and Iran have signaled readiness to try and revive a plan to swap atom fuel, seen by the West as a possible way to reduce mistrust and help pave the way for broader talks on Tehran's nuclear program.
But the two sides, which began a meeting in Istanbul on Friday, still appear to have major differences on how to carry out such an exchange, possibly dooming any renewed effort on a proposed deal that fell apart in late 2009.
Western diplomats have made clear they want Iran to send out most of its low-enriched uranium (LEU) -- potential weapons material if refined further -- as part of any fuel swap.
Iran has made equally clear it is not prepared to part with more LEU than it agreed to under the original plan, 1,200 kg, even though its stockpile has since grown to more than 3,000 kg -- enough for about two bombs if enriched much more.
Proliferation expert Shannon Kile at the Stockholm International Peace Research Institute (SIPRI) said he believed the fuel swap idea would be discussed in Istanbul.
"But it seems that they are so far apart on how that would take place," he said. "The most likely outcome is that they will agree to have further talks, to keep talking."
A tentative pact brokered by the U.N. nuclear watchdog over a year ago to exchange Iranian LEU for higher-refined fuel from abroad, to be used in a medical research reactor in Tehran, collapsed after Iran backed away from its terms.
Western officials have suggested the idea could be revived if the Islamic state also accepts wider discussions they hope will lead to it agreeing to curb nuclear enrichment work which they fear has military aims, a charge Tehran denies.
They say any new accord must be updated to take into account Iran's bigger LEU stockpile and escalating enrichment activity since last February. Iran has rejected any toughening of the terms.
The following looks at the plan's main elements and how it fits into the broader nuclear row between Iran and the powers:
WHAT WAS THE IDEA BEHIND THE FUEL SWAP PLAN?
Under the initial agreement brokered by the U.N. nuclear agency between Iran, the United States, France and Russia in 2009, Iran would send 1,200 kg of its LEU abroad -- roughly the amount needed for a bomb if refined to a high degree.
The material would first be enriched to 20 percent fissile purity by Russia and then turned into fuel assemblies by France before its return to Iran for use in a medical research reactor, which is running out of fuel provided by Argentina in the 1990s.
For the West, which suspects Iran is seeking covertly to develop nuclear weapons, the proposal offered a way to restore a degree of trust in relations with Tehran and help in the search for a diplomatic solution to the eight-year nuclear dispute.
At the time, 1,200 kg of LEU represented about 75 percent of Iran's stockpile so it would also have ensured that it did not have enough left over for a weapon, at least temporarily.
For Iran, it would have provided fuel for a reactor it says helps in treating hundreds of thousands of cancer patients.
President Mahmoud Ahmadinejad would also have been able to hail it as a foreign policy success, with Iran striking a deal with the powers without backing down over its enrichment work.
The U.S. envoy to the International Atomic Energy Agency (IAEA), Glyn Davies, has described it as a "beautiful" agreement for Iran.
SO WHY DID THE DEAL COLLAPSE?
Analysts and diplomats believe it fell victim to Iran's internal power rivalries. Ahmadinejad's opponents, keen to deny him a diplomatic victory, said it would have forced Iran to part with the bulk of a strategic asset and a strong bargaining chip.
Iranian politicians raised new conditions for the swap, saying it must take place on Iranian soil and simultaneously.
This was unacceptable for the West as it would fail to remove potential bomb material from Iran, which says its nuclear program is a peaceful drive to generate electricity.
Iran, Turkey and Brazil resurrected parts of the original plan last May in a bid to avert a tightening of sanctions on Tehran. Under this proposal, Iran would still send out 1,200 kg of LEU, this time to Turkey, in return for reactor fuel.
But the United States, Russia and France -- known as the Vienna Group -- voiced deep concerns about Iran's new offer and the move failed to prevent the introduction of more sanctions.
Their main worries included Iran's growing LEU stockpile and its decision in February to escalate enrichment to 20 percent itself, an advance toward weapon-grade material.
Iran said it was forced to take this step to prepare the way for producing reactor fuel itself. But many analysts doubt its technical ability to convert the uranium into special fuel rods, heightening suspicions.
COULD IT BE REVIVED?
Ahmadinejad said in December Iran was prepared to discuss a possible fuel swap again. But Iran later said the idea was losing its appeal because it would soon be able to make the fuel itself.
Western diplomats stress that even if the fuel exchange arrangement is revived, Iran must also agree to address their core concerns about its nuclear activities.
They fear that Iran may use any fuel swap talks as a way to distract attention from the West's main worry -- the uranium enrichment program -- and buy time to perfect the process.
In October, the New York Times reported that intelligence analysts had concluded last year's deal was scuttled by Iran's supreme leader, Ayatollah Ali Khamenei, and that many officials therefore suspected any new effort would also fail.
The Times said Washington and its European allies have prepared a new swap offer to Iran, which would require Iran to send about 2,000 kg of LEU out of the country.
Tehran quickly dismissed the report, saying it only needed reactor fuel for the equivalent of 1,200 kg. It announced this month that it will make its own fuel for the research reactor later in 2011.
Iran's IAEA envoy, Ali Asghar Soltanieh, reiterated Tehran's position on Thursday: "We are ready to (provide) 1,200 kg of uranium ... and receive 120 kg of uranium enriched up to 20 percent," he said in Moscow.
If Iran "is confident that it can make reliable fuel elements, it will have no motivation to go through with the complex swap deal offered by France, Russia and the United States," nuclear expert Ivanka Barzashka of Federation of American Scientists (FAS) said.
