Just days after US Vice President Joe Biden said his country was willing to have direct talks with Iranian officials, Washington imposed more sanctions on Iran.
The economic penalties have left the country with a depreciated currency, rising unemployment, and a shortage in medicine.
Despite the impact of the sanctions on their lives, a recent Gallup poll found that 63 percent of Iranians surveyed want their country's nuclear programme to continue. And nearly half say responsibility for the sanctions lies with the US.
In a statement released this week, Ayatollah Ali Khamenei called on the US to explain "what it means to offer talks while simultaneously continuing pressure and threats".
"It is simply both incoherent and ineffective for the United States to think it is going to be able to get into negotiations while it is continuing to conduct economic warfare, cyber warfare and basically say it wants to see regime change in Tehran. This is not going to work and if we stay on this path, it's ultimately going to lead to another US-initiated war."
- Flynt Leverett, academic and author
The Obama administration has imposed a wide range of sanctions targeting Iranian officials, organisations and industries, including penalties on foreign companies dealing with Iran's oil, shipping, insurance and financial sectors - sharply limiting Iran's ability to trade. US legislation also targets anyone dealing with Iran's central bank.
And new restrictions announced on Wednesday mean that a country buying oil from Iran cannot send payments to Iranian bank accounts. Instead, that money can be deposited in a local bank account, which Iran can use to buy goods only from that country; essentially a form of barter-trading for oil.
The Iranian government says oil exports have suffered a 40 percent decline, while revenues have been reduced by 45 percent. The Iranian rial has lost more than half of its value against the US dollar. And the annual inflation rate was over 27 percent at the end of 2012, according to Iran's central bank.
There are many areas where greater US engagement with Iran may be crucial. Iran has a role to play in any international agreement on the future framework of Afghanistan; the two countries share a long border and have extensive trade ties.
Some say that the Palestinian issue is interlinked with other questions in the Middle East involving Iran. They argue that for securing Israel's safety and creating a Palestinian state, a comprehensive US approach to engaging Iran is necessary.
Ignoring Iran may also come in the way of any regional or international solution to the Syrian conflict.
"What you see playing out, at least on the surface, is the repeat of an old and unfortunately familiar and unproductive script, a bit like a couple that is locked in a bad marriage and the only thing they know how to do is to throw grievances at each other and recite long-held real or imagined grievances at each other ... And we seem to be back in a pattern that neither side is able to break."
- John Limbert, former US Deputy Assistant Secretary of State for Iran
Rahim Safavi, a military adviser to Ali Khamenei, accused the US of trying to weaken Iran through its policies in Syria:
"In regional issues, the Americans do not want Iran to be the first power in the region. This is why they have created the Syrian issue ... But Iran’s political establishment is powerful and of course it is the superior power in the region and the pillar of this power is the great Iranian nation."
Nicholas Burns, a former state department official who helped push through sanctions against Iran during the Bush administration, told the New York Times this week:
“Even the tough Obama sanctions on their own are unlikely to work as Khamenei is dug in and obdurate .... The US must remain patient and commit to direct talks at the highest levels ... ultimately both Obama and Netanyahu also need to make the threat of force more credible to Tehran .... Combined with sanctions, this may be the most effective way to convince Iran to agree to a peaceful, negotiated settlement.”
So, can direct talks be successful amidst sanctions and "all options" remaining on the table?
To discuss this, Inside Story Americas with presenter Shihab Rattansi is joined by guests: Flynt Leverett, a professor of international affairs at Penn State University, and the co- author of the book, Going to Tehran: Why the United States Must Come to Terms with the Islamic Republic of Iran; Ali Reza Eshraghi, a media and communication consultant at the Institute for War and Peace Reporting; and Ambassador John Limbert, the former US Deputy Assistant Secretary of State for Iran.
SANCTIONS AGAINST IRAN
- Iran's leader: Talks pointless while US is "holding a gun"
- Ayatollah Ali Khamenei: US direct talks offer is a deceptive move
- Vice President Joe Biden said last week US is ready for direct talks
- European Union has overseen so-called P5+1 talks with Iran
- US, France, UK, Germany, China and Russia involved in talks with Iran
- P5+1 talks with Iran have made no progress so far
- The West accuses Iran of delaying while it develops nuclear abilities
- Iran says its nuclear programme is only for peaceful purposes
- The value of Iranians’ savings has declined sharply after sanctions
- Unemployment is rising in Iran amid rising prices and currency fall