(Adds details on proposed measures, quotes, Ashton's arrival)
* World powers and Iran meet in Baghdad for nuclear talks
* West hopes for outline of deal on curbing enrichment
* Sanctions relief for Iran a key question
(Adds details on arrivals, Iraqi foreign minister)
By Justyna Pawlak and Patrick Markey
BAGHDAD, May 23 World powers will test Iran's
readiness under pressure of sanctions to scale back its nuclear
programme at talks on Wednesday aimed at easing a decade-old
standoff and averting the threat of a Middle East war.
The stakes could scarcely be higher: global oil markets are
edgy over toughening sanctions on Iran's vital crude exports and
the possibility of Israeli strikes against its defiant arch-foe,
which has threatened reprisals if it comes under attack.
Wednesday's meeting between Iran and six world powers - the
United States, Russia, China, Germany, France and Britain - will
be the second since diplomacy resumed in mid-April in Istanbul
after a 15-month hiatus during which tensions soared.
Around 15,000 Iraqi police and troops will protect the venue
inside Baghdad's heavily fortified Green Zone, which has been
the target of attacks. Tehran's suggestion of a meeting in
troubled Iraq, whose leadership is friendly to Iran, was seen by
some diplomats as testing Western commitment to seeking a deal.
Formal talks are expected to start around noon (0900 GMT).
"Istanbul was important because for us it was a test of the
Iranians' willingness to engage. Baghdad should focus on
concrete substance," a European diplomat said. "The ball is in
their court. It is they who must make the first step."
One senior Western official said the six, led by EU foreign
policy chief Catherine Ashton, would make Iran "a detailed
proposal that will include confidence-building measures".
Ashton arrived in Baghdad on Wednesday morning after last-minute
talks with her negotiating partners in Jordan.
Among the proposed measures will be an updated version of an
idea first put forth in 2009 that envisaged Iran shipping out
its stockpile of low-grade uranium in return for higher-enriched
fuel for a medical research reactor in Tehran, another diplomat
The main goal of the six powers - known as the P5+1 for the
five permanent U.N. Security Council members plus Germany - is
expected to be an Iranian agreement to shut down the
higher-grade uranium enrichment that it launched in 2010 and has
since expanded in an underground plant at Fordow that, to
Israeli alarm, would be largely impervious to attack from the
Producing such highly enriched material in such quantities
has shortened the time Iran might need to build an atomic bomb.
Iran says its nuclear programme is a peaceful bid to
generate electricity and has repeatedly ruled out suspending
its enrichment of uranium, an activity which can have both
civilian and military purposes.
But it has indicated possible flexibility on the
higher-grade enrichment of uranium to a fissile concentration of
20 percent, the part of Iran's work that most worries the West.
INSPECTION DEAL "CLOSE"
In a possible sign of a new Iranian willingness to address
concerns about its atomic ambitions, the U.N. nuclear supervisor
said on Tuesday he expected to sign a deal soon to unblock an
investigation into suspected work on atom bombs.
But Western diplomats will be wary of past failures to carry
out extra inspection deals between the International Atomic
Energy Agency and Iran, and their patience is wearing thin.
They want Iran to cease work at the Fordow site and export
its stockpile of higher-grade uranium - demands that analysts
say Tehran would be unlikely to accept while sanctions remain.
"The key issue is the 20-percent enrichment potential. This
has to be addressed in order to have a productive outcome," said
one Western diplomat. "The marching orders for Baghdad are to
have concrete ideas on the table, maybe not necessarily agree on
all details of these ideas, but to have a clear commitment."
Iran maintains that it needs uranium refined to a fissile
concentration of 20 percent for its medical isotope reactor.
Enrichment to 5 percent of fissile purity is suitable for power
plant fuel, while 90 percent constitutes fuel for bombs. The
technical leap from 20 to 90 percent is easier than that to
reach 20-percent purity from the lower levels around 5 percent.
"The meeting may not produce any miracles," Iraqi Foreign
Minister Hoshiyar Zebari told Reuters. "The Iranians are coming
with a positive attitude. This is what we are hearing from both
sides. They are coming to move, not just to talk."
But Iranian officials kept up a defiant tone.
"The wall of distrust between Iran and the West is high and
our public opinion has serious doubts about their compliance
with their obligations. The negotiations ... are a good litmus
test to prove the West's goodwill," Iranian Press TV quoted
Kazem Jalili, spokesman for parliament's national security and
foreign policy committee, on Wednesday.
SANCTIONS, CARROTS AND STICKS
Iran has suggested it will try to leverage its reported
rapprochement with the IAEA into a deal in Baghdad to relax
sanctions inflicting increasing damage on its economy, including
a European Union oil embargo due to take effect in July.
But Western officials ruled out such a weighty concession so
soon, even though their call for a "step-by-step" negotiating
process is widely seen as a tacit admission that sanctions will
have to be eased at some point.
"Sanctions are only going to be lifted if we have
significant and genuine progress," one diplomat said.
Emanuele Ottolenghi of the Washington think-tank Foundation
for the Defense of Democracies said some concessions from the
West would be crucial. "Maybe the U.S. and the EU should agree
to suspend measures of minor nature," he said.
"They don't want these negotiations to fail."
Israel, widely assumed to have the Middle East's only atomic
arsenal, has made clear its scepticism about the chances for
diplomacy to rein in its arch-enemy.
Defence Minister Ehud Barak said Israel was concerned that
the world powers would not press hard enough to put a full stop
its nuclear programme and that Israel would keep all options
open to achieve that goal.
"This is the time for the entire world to join hands and
stop them," Barak told Israel Radio. "We know the Iranians are
talented chess players and will try to achieve a nuclear option.
Our position hasn't changed. The world has to stop the Iranian
nuclear programme. All options remain on the table."
Clara O'Donnell, at Washington's Brookings Institution,
said: "The likelihood of an Israeli military strike will remain
lower while the talks are ongoing. But they are likely to keep
talking about it, to keep up the pressure."
(Additional reporting by Sebastian Moffett in Brussels, Fredrik
Dahl in Vienna, William Maclean and Andrew Quinn in Baghdad,
Adrian Croft and Mark Heinrich in London and Allyn Fisher-Ilan
in Jerusalem; Editing by Alastair Macdonald and Philippa