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In a surprise announcement today, the head of the U.N.'s nuclear agency says he's close to signing an agreement with Iran. The plan would allow inspectors to asses Iran's nuclear activities. The move comes just one day ahead of talks about that nuclear program between Iran and six world powers. NPR's Peter Kenyon reports that negotiators are cautiously hopeful.

PETER KENYON, BYLINE: There has been some of the usual hard-line bluster in the run-up to the Baghdad talks. Senior Iranian officials are insisting they will never give up their inalienable rights, which include the right to enrich their own uranium. Israeli Prime Minister Benjamin Netanyahu, meanwhile, dismissed the talks as another opportunity for Iran, in his words, "to deceive and delay, as North Korea did."

But there's also a new strain of optimism boosted by business-like preparatory meetings and signals that Tehran is prepared to move beyond rhetoric and deal with substance.

GEORGE PERKOVICH: Well, I think the chances of productive diplomacy are better than they've been probably in the last seven years.

KENYON: George Perkovich directs the nuclear program at the Carnegie Endowment for International Peace in Washington. He says there are a number of reasons for the positive trend, not least the painful economic sanctions that have been wearing down the Iranian economy, and the threat of even more punitive oil sanctions due to kick in July 1st.

PERKOVICH: Sanctions have started to have a significant impact in Iran. And also, the Iranians have accomplished enough in the development of their nuclear capability that they might be able to say, OK, we've demonstrated a capability, let's make a deal.

KENYON: The delicate question now is whether this more positive atmosphere can lead to confidence-building steps, and then toward a diplomatic agreement to diffuse the crisis. The likely first step will involve Iran's recent focus on enriching uranium to 20 percent, which is much closer to weapons grade than the 3 to 5 percent needed for nuclear energy. There is a medical use for 20 percent enriched uranium, and the West has offered in the past to give Iran that type of fuel if it stops enriching its own.

Mark Fitzpatrick, with the non-proliferation program at the London-based International Institute for Strategic Studies, says from the international point of view, the most that could be hoped for out of the next few discussions is a set of three agreements.

MARK FITZPATRICK: One is the suspension of 20 percent enrichment. Two, doing something with the stockpile, a hundred kilograms or so, of 20 percent enriched uranium. And three, stopping the work at the underground facility at Fordow.

KENYON: Fordow is where Iran built a nuclear facility deep inside a mountain near the holy city of Qom. That's where the 20 percent enrichment is taking place. Fitzpatrick argues that if Iran stops enriching to 20 percent, it will be doing nothing at Fordow, so why keep it open?

But for Iran, the security of its nuclear program is a sensitive issue. Tehran's fears of a potential military strike have been exacerbated by the assassination of several of its nuclear scientists. Overcoming those fears, analysts say, will take time and the kind of effort neither side has seemed willing to put forth to date.

Analyst George Perkovich at Carnegie says for Iran, avoiding the July 1st EU oil sanctions is crucial. And if the Baghdad meeting and a hoped for next meeting in June don't lead to that, the atmosphere could quickly sour.

PERKOVICH: If those sanctions kick in, why would Iran make a deal now? They won't. I think they'd just say, well, hell, if you're going to punish us in any case, then why should I concede anything? So agreeing to suspend those sanctions will be a very important factor for Iran.

KENYON: Officials say that kind of concession on sanctions is very unlikely to come this week in Baghdad. But if Iran continues to move toward a possible agreement, at some point, the West will have to not only drop future sanctions but ease existing ones. And analysts say for Washington that won't be easy, because Congress has written some of the unilateral Iran sanctions in such a way that they will be extremely difficult to undo.

Peter Kenyon, NPR News, Istanbul.

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