The prospects for the future could become clearer on Saturday, when Iran's top nuclear negotiator Saeed Jalili is due to meet EU foreign policy chief Javier Solana for talks on a package proposed by world powers.

The stakes have been raised by the news a US envoy is to take part in the talks for the very first time, in a shift in policy described by Washington as a "one-time deal."

The proposal -- handed to Iran by Solana on behalf of world powers last month -- offers Tehran full negotiations on an incentives package if it suspends uranium enrichment activities, which it has refused to do.

The initial reaction to the package from Tehran was mixed.

The day Solana visited bearing the offer, the government spokesman bluntly stated that Iran would never consider any proposal than did not accept Tehran's right to enrichment.

But then the powerful parliament speaker Ali Larijani, a former top nuclear negotiator, said that the proposal would have to be studied "with alertness."

The West's curiosity was truly aroused when Ali Akbar Velayati, the foreign policy advisor to supreme leader Ayatollah Ali Khamenei, gave an unprecedented interview to the hardline Jomhouri Eslami newspaper, a pillar of Iran's clerical establishment.

He was quoted as saying that "those who are agitating against our interests want that we reject the offer. As a consequence, it is in our interests to accept it."

Velayati, who served as foreign minister from 1981 to 1997, also warned officials to "avoid provocative and illogical declarations and slogans" -- in a clear reference to the outspoken President Mahmoud Ahmadinejad.

Days later, Iranian Foreign Minister Manouchehr Mottaki gave an interview to journalists in New York, hailing a "new process" that was underway in the nuclear crisis.

He also refrained from giving any comment on the question of enrichment.

But at the same time, Ahmadinejad has continued to insist in typically combative style that Iran will not shift on uranium enrichment, which world powers fear Iran could use to make a nuclear weapon.

At one point he described the package as a "new game... (which) will result in no achievement for them (world powers) except humiliation."

Iran also intensified the tensions in the nuclear standoff when on July 9 it test fired several missiles, including one it says is capable of reaching Israel, in a show of military strength and defiance.

Ahmadinejad this week again astonished observers by asserting that Velayati, the longest serving foreign minister in the history of the Islamic republic, "has no involvement in nuclear issue decision making."

But Ahmadinejad on Monday then gave a live interview to state television in which he appeared to speak enthusiastically of a "timetable" for pre-negotiations that would be discussed by Jalili and Solana in Geneva.

This appeared to be a reference to a reported proposal by world powers to start pre-negotiations over a six-week period during which Tehran would add no more uranium-enriching centrifuges and in return no further sanctions would be imposed.

Even more significantly, Ahmadinejad said that talks between Iran and its arch enemy the United States were "possible in the near future." The two countries have had no diplomatic relations for almost three decades.

Just a day later, the United States made a major shift in policy by announcing that the State Department's number three official, Undersecretary of State William Burns, would attend the talks in Geneva with Jalili and Solana.

Khamenei, making his first intervention since the package was offered, said Wednesday that Iran's "red lines" were clear, in a clear signal it is not willing to suspend enrichment.

But the undisputed Iranian number one also said Tehran was willing to negotiate, if those red lines were respected.

Iran's official response to the offer also does not answer all the questions and notably makes no specific mention of the crucial questions on enrichment.

According to a text published on the website of French weekly Le Nouvel Observateur, the response speaks of "certain similarities" between the offer by world powers and a proposal put forward by Iran earlier this year.

"These similarities can be the basis for comprehensive and broader negotiations," said the letter, written by Mottaki.

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