The highest-level meeting between the US and Iran since the 1979 Iranian Revolution is taking place in Geneva this weekend.
On Saturday US Undersecretary of State William Burns will join talks between Iran and other major powers aimed at persuading Iran to halt its nuclear enrichment programme.
The talks will hear Tehran's response to a proposal presented by six leading powers last month aimed at resolving the nuclear standoff.
The presence of Burns marks a departure from the US administration's traditional tough stance, and as such is a highly significant policy shift, say observers.
In the past the Bush administration has repeatedly ruled out direct talks until Iran suspends its uranium enrichment programme. Iran denies any nuclear weapons plans.
The meeting takes place during the same week that a British newspaper reported that the US would announce in the next month that it is to re-establish a diplomatic presence in Tehran.
US Secretary of State Condoleezza Rice said on Friday that sending Burns was a strong signal to the whole world that the US was committed to diplomacy.
This apparent softening comes at a time of increased tension between the two countries, especially after Iranian missile tests last week that led to US warnings that it would defend its interests and its allies in the region.
The White House and the US State Department deny there has been a U-turn or softening of US policy towards Iran and the nuclear dossier, and insist that it is a change in tactics rather than substance.
But commentators say the presence of the third-most senior US diplomat is a highly significant move.
"It's a milestone both for American-Iranian relations and for negotiations over the nuclear dossier," political analyst Daniel Möckli at the Centre for Security Studies in Zurich told swissinfo.
"It's recognition that dialogue is a key instrument of diplomacy that should be given more weight than in previous years to deal with Iran-US tensions."
"Freeze for freeze"
Burns will join European Union foreign policy chief Javier Solana, the Iranian negotiator Saeed Jalili and officials from China, Russia, France, Germany and Britain in Geneva.
The team, minus US representation, visited Tehran last month to present a package of incentives, including help in establishing a civilian nuclear industry, in return for suspension of the enrichment of uranium, which could be used to build a nuclear warhead.
The team's proposal included a "freeze for freeze" formula to get talks going. The UN Security Council would impose no further sanctions if Iran stopped expanding its uranium enrichment facility.
Saturday's meeting aims to prepare the framework for pre-negotiations, with the actual negotiations still conditional on the suspension of Iranian enrichment activities.
Since the proposal was delivered, Tehran has sent mixed signals, a combination of positive remarks and missile tests, reflecting differences of opinion inside Iran's complex system of government.
Iranian President Mahmoud Ahmadinejad said earlier this week that he was interested in direct talks with the US, and in the opening of a US diplomatic mission in Tehran.
Iran's chief nuclear negotiator also sounded upbeat on Friday.
"If they enter (negotiations) with a constructive approach and avoiding previous mistakes, we can definitely have good and constructive negotiations," said Jalili in answer to journalists' questions about the expected presence of the US diplomat.
Encouraging smoke signals?
But according to Möckli, Iran's position remains confusing.
"Frankly nobody knows what Iran really wants," he said. "The Iranian domestic scene is as complex as the American with lots of different voices and it's hard to see who takes the ultimate decision."
"The offer of the six powers has improved remarkably over the past few months... but I'm still sceptical as I'm not sure any incentives will convince them to forego a nuclear capacity," he said, adding that positive Iranian noises might be a simple time-buying measure.
However Bruno Pellaud, former deputy director of the International Atomic Energy Agency (IAEA), felt there were "encouraging smoke signals".
"Don't expect too much from Saturday's meeting, which will be concluded with the usual generalities," he said.
"The real proof of the pudding will be in the next six weeks whether we enter a soft preliminary negotiating phase or something more substantial; but I believe something positive will happen."
The former IAEA deputy director believes a decision has been taken by realists in the US administration to "try something else". And on the Iran side there is a new situation where they recognise changes in the US and the opportunities with the arrival of a new US president, he added.
"I'm positive as there are good vibrations on both sides," said Pellaud.
swissinfo, Simon Bradley in Geneva
Incentives package for Iran
World powers handed Iran a package of incentives on June 14 to try and persuade it to suspend nuclear work the West fears is aimed at developing bombs.
Iran has repeatedly rejected United Nations demands to halt enriching uranium, which can be used as fuel for power plants or provide material for weapons if refined much more.
The incentives package, agreed by the United States, Russia, China, Britain, France and Germany, says formal negotiations on the offer can start as soon as Iran suspends uranium enrichment. The package is a revised version of an offer spurned by Iran in 2006.
The new offer includes: provision of technological and financial assistance necessary for Iran's peaceful use of nuclear energy; support for Iran in playing an important and constructive role in international affairs; steps towards the normalisation of trade and economic relations; civilian projects in the field of environmental protection, infrastructure, science and technology, and high-tech; cooperation in the area of civil aviation.
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