Tehran has already signaled its goal before Wednesday's talks: Pressing the U.S. and Europe to roll back sanctions that have hit critical oil exports and blacklisted the country from international banking networks.
In Washington, the Senate approved new penalties Monday aimed at thwarting Iran's nuclear ambitions. By voice vote, senators passed a bill that would target Iran's Revolutionary Guard Corps, require companies that trade on a U.S. stock exchange to disclose any Iran-related business to the Securities and Exchange Commission, and expand penalties for energy and uranium-mining joint ventures with Tehran.
A main concern of international negotiators is Iran's production of uranium enriched to 20 percent, which is far higher than needed for regular energy-producing reactors but used in medical research. The U.S. and allies fear the higher-enriched uranium could be quickly boosted to warhead-grade material.
Iran denies it seeks nuclear arms and says its reactors are only for power and medical applications.
U.S. officials have said Washington will not backpedal from its stance that Iran must fully halt uranium enrichment. But speculation is increasing that the priorities have shifted to block the 20 percent enrichment and perhaps allow - at least for the moment - Iran to maintain lower-level nuclear fuel production.
Iranian officials could package such a scenario as a victory for their domestic audience. In Israel, it would likely be greeted with dismay and widen rifts between the Obama administration and Israeli officials, who keep open the threat of military action against Iran's nuclear sites.
Israeli Prime Minister Benjamin Netanyahu warned against concessions, saying world powers should make "clear and unequivocal demands" that Iran stop all its nuclear-enrichment activity.
Besides Iran, participants in the Baghdad talks will be the United States, Britain, China, France, Germany, and Russia.