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Over the weekend, there were numerous reports that the United States and Iran have agreed to meet face-to-face after the American election, to discuss Iran's nuclear activities. The story was first reported by the New York Times, on Saturday night. The White House quickly issued a denial. And yet, there have been plenty of signals - mostly from Iran - that such a step could be possible. Here's NPR's Mike Shuster.

MIKE SHUSTER, BYLINE: Iran is hurting. Economic and banking sanctions, plus an effective oil embargo led by the European Union, have brought chaos to Iran's economy. The bottom fell out of its currency, the rial, a couple of weeks ago, provoking street protests. Iranians of all social classes are struggling to cope.Publicly, the rhetoric coming out of Iran has been tough and uncompromising, like these comments last week from the spokesman for Iran's foreign ministry, Ramin Mehmanparast.

RAMIN MEHMANPARAST: (Farsi spoken)

SHUSTER: These sanctions are illegal, irrational and inhumane, he said, because they were imposed on our nation under the pretext of our peaceful nuclear program.

Many of Iran's leaders use the same language, in public. But Alireza Nader, an analyst at the RAND Corp., believes there's been something else going on, below the surface.

ALIREZA NADER: The Iranian government is indicating that it is serious about negotiations.

SHUSTER: The results of the sanctions have come as a shock, Nader believes.

NADER: Despite their rhetoric, they realize that they are facing a national crisis. And we hear this from a lot of Iranian officials today; that Iran is facing the most serious national crisis since the Iran-Iraq war.

SHUSTER: Last week, the screws got tightened. It hardly seems possible that there are any targets left in Iran to sanction. But last week, the EU widened the scope of sanctioned financial transactions with Iran. And now the EU is refusing to buy its natural gas, on top of its embargo of Iranian oil.

The EU foreign policy chief, Catherine Ashton, said Europe is still determined to find a diplomatic solution to the nuclear impasse.

CATHERINE ASHTON: But we've significantly tightened our restrictive measures targeting Iran's nuclear and ballistic programs.

SHUSTER: The New York Times reported that any direct talks would occur only after the U.S. presidential election. Hossein Mousavian, a scholar at Princeton and former nuclear negotiator for Iran, is convinced Tehran is ready to make a deal. He too sees some chance for a breakthrough, but only after November 6th.

HOSSEIN MOUSAVIAN: I cannot imagine any progress before the U.S. election. I hope we would be able to have progress after elections.

SHUSTER: Mousavian says each side must take reciprocal and simultaneous first steps. For Iran, he says, it can no longer brush off Western suspicions about the nuclear program.

MOUSAVIAN: Iran needs to recognize that there is serious concern.

SHUSTER: But, he says, the U.S. and Europe must understand there is no diplomatic solution if they don't recognize Iran's right to enrich uranium for civilian purposes only.

Jon Alterman, an expert on the Middle East at the Center for Strategic and International Studies, believes the issue could be reaching a breaking point.

JON ALTERMAN: There's no question that the Iranian government thinks that this may be a decisive moment, but there's also no question the Iranian government doesn't see a need to fundamentally resolve this issue.

SHUSTER: That could put the Iranian government in a precarious position.

ALTERMAN: When you have protests around the money exchanges, that must make them crazy, because it means that they could well be entering a period of unpredictability, which could fundamentally change the environment - not in months, but in days.

SHUSTER: All the signals right now point to a besieged Iranian leadership that is uncertain it can maintain a defiant stance at the bargaining table for very much longer.

Mike Shuster, NPR News.

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