LONDON, May 7 - With the standoff over the frozen Iran war threatening a global economic meltdown, Washington and Tehran have scaled back their efforts to agree a comprehensive peace deal and now seek a limited pact putting off the harder issues.
This is what we know about the proposals under discussion and where they leave the big unresolved disputes behind the war:
AT WHAT STAGE ARE THE DISCUSSIONS?
Sources in both camps have said the latest peace efforts are aimed at a temporary memorandum of understanding
to halt the war and allow traffic through the Strait of Hormuz while they discuss a fuller deal.
The proposed framework would unfold in three stages: formally ending the war, resolving the crisis in the Strait of Hormuz and launching a 30-day window for negotiations on a broader agreement.
Gaps remain even on this limited plan, sources have said. Any wider deal would have to address intractable disputes such as Iran's nuclear programme. The last deal over the nuclear programme - struck in 2015 and torn up by Trump in 2018 - took years of negotiations between large teams of technical experts.
WHAT ARE THE MAIN ISSUES?
• ENDING THE WAR - U.S. President Donald Trump says the war is near an end and can be resolved by Iran accepting terms. Iran does not trust him or Israeli Prime Minister Benjamin Netanyahu. Iranian officials point to their decision to attack in February despite a ceasefire that ended a previous U.S.-Israeli air campaign last year. Both conflicts were launched unannounced during efforts to resolve issues diplomatically. Tehran also cites Israeli attacks during ceasefires in Gaza and Lebanon as reasons to believe a truce will not hold and wants some form of external guarantee.
• HORMUZ AND GULF BLOCKADE - Tehran sees its control of Hormuz and Washington views its blockade of Iranian ports as their chief points of leverage. But both sides are hurting. Iran's economy faces catastrophe, and its inability to export oil may mean a storage crunch and output cuts. Its blockade of the Strait of Hormuz, meanwhile, is causing a worldwide energy crisis months before U.S. midterm elections. Iran wants formal recognition of its control over Hormuz, though this would be opposed internationally.
• NUCLEAR - The United States believes Iran wants to build a nuclear bomb. Iran has always denied this, saying its atomic programme is for peaceful purposes only. The focus is on its enrichment of uranium, which generates fuel for nuclear power but can also make material for a warhead. Washington wants Iran to give up its right to enrichment for 20 years and hand over its stockpile of highly enriched uranium. Iran wants its right to enrichment to be recognised. An agreement may eventually be possible including a years-long moratorium on enrichment and the export of its highly enriched uranium, but that still looks far off.
• BALLISTIC MISSILES - One main U.S. demand before the war was for Iran to limit the range of its ballistic missiles so that they could not reach Israel. It says its war has succeeded in degrading Iran's missile stocks, and it is not clear whether it would continue to insist on range limits in a bigger peace deal. Iran has always refused to discuss its ballistic missiles, saying its right to conventional weapons cannot be on the table and that it still has a large arsenal.
• SANCTIONS AND FROZEN ASSETS - Iran's economy has been hurt by sanctions for years, contributing to the nationwide unrest in January. Tehran badly needs them to be lifted and frozen assets to be released. It also wants reparations for war damage, though there seems no chance now of the U.S. agreeing to this, and it is not clear if it would stick to the demand as a condition for a deal.
• Iran has previously said Israel's war against its ally Hezbollah in Lebanon must be included in any peace deal. Israel rejects this, and it is not clear how far Iran would insist on it in future talks.
WHAT DO ISRAEL AND GULF STATES THINK?
Israel is not directly involved in the peace effort. Netanyahu was eager to continue the war and would also be loath to subject Israel's campaign against Hezbollah to a deal between Washington and Tehran.
Gulf states are not united on how to end the conflict. They have been targeted by Iran throughout the war and would oppose a deal that left Iran able to keep hitting them or impose controls on the Strait of Hormuz - their main trade route. They may fear that Washington will not prioritise their needs and concerns in talks.
COULD EUROPEAN STATES, CHINA OR RUSSIA PLAY A ROLE?
European states have their own sanctions on Iran and would want to be involved in any deal aimed at resolving the nuclear dispute. France, Germany and Britain were closely involved in the 2015 deal. European countries have offered to take a role in securing free passage in Hormuz after the war.
China is a major buyer of Gulf oil transiting the Strait of Hormuz. Iran may hope it would agree to be a guarantor in any deal, but it has given no indication it would want such a role.
Iran may also want Russia to play a role in any eventual agreement over its stockpile of highly enriched uranium, though it is not clear if Washington would accept that.
(Reporting by Parisa Hafezi; Writing by Angus McDowall; Editing by Joe Bavier)
