Iran appears to be locked in a fierce internal debate over whether to hold bilateral nuclear talks with the United States, with key political leaders calling for dialogue with Washington and hard-liners pressing ahead with expansion of the country’s nuclear facilities.

The Obama administration, girding itself for what could be the first major foreign policy test of its second term, has dangled an offer of bilateral talks in hopes of breaking through the nuclear impasse with Iran and easing the threat of a new Middle East war.

But despite positive comments in recent days from President Mahmoud Ahmadinejad and other senior leaders, Iran has shown no hint that it plans to accept the offer, U.S. and European diplomats say.

Instead, intelligence analysts are detecting signs of continued progress at Iran’s uranium-
enrichment plants and no significant softening on the part of the country’s supreme leader, Ayatollah Ali Khamenei, who will ultimately decide Iran’s nuclear course, according to the diplomats.