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Can Iran's Diplomatic Status Change from Meddler to Mediator?

Image: Iraqis living in Iran hold a demonstration against Sunni militants of the al-Qaida-inspired Islamic State of Iraq and the Levant, or ISIL.

Iraqis living in Iran hold a demonstration against Sunni militants of the al-Qaida-inspired Islamic State of Iraq and the Levant, or ISIL, and to support the Grand Ayatollah Ali al-Sistani, Iraq's top Shiite cleric, shown in the posters, as some of them hold posters of the Iranian Supreme Leader Ayatollah Ali Khamenei, in Tehran, Iran, Friday, June 20, 2014. (AP Photo/Ebrahim Noroozi) Ebrahim Noroozi / AP

VIENNA, Austria – As the U.S. and other Western powers meet for talks with Iran over its nuclear program, the issue of Iraq has shown how Tehran’s diplomatic fortunes might be changing.

The consistent rhetoric from Washington and its allies has been that Iran meddles in its neighbors’ affairs by sponsoring overseas terrorism –whether it be in supporting Hezbollah, targeting Israelis abroad or trying to stir up turmoil in the Middle East. But this is not a narrative you hear much of these days.

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The George W Bush administration refused to hold direct talks with Iran over its nuclear program. Now, the Iranians and the Americans are holding bilateral talks.

As the West weighs its response to the seizure of key Iraq cities by Islamist militants, eyes have turned to Iran which wields enormous influence over its conflict-torn neighbor.

The two countries fought a bloody eight-year war and, after the ouster of Saddam Hussein, Iraq’s Shia government takes direct orders from the Iranians. In fact, many members of the current government in Iraq lived in Iran during Saddam's rule, including Nouri al-Maliki.

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Secretary of State John Kerry signaled a shift in attitude earlier this week, recognizing that Iran could play a crucial role in helping to quell Iraq’s violence.

He told NBC News this week that “we are interested in communicating with Iran to make clear that the Iranians know what we're thinking and we know what they're thinking and there's a sharing of information so people aren't making mistakes.”

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Kerry may have ruled out any military cooperation, but that is moot because it is likely that both Tehran and Washington already have top military advisors on the ground inside Iraq. Iraq is strategically much more important to Iran than it is to America.

However, there are significant hurdles to overcome before Iran’s diplomatic reputation can change from meddler to mediator.

Talks in Vienna still do not seem to be making much headway. The main sticking point seems to be the scale of Iran's enrichment program and just how many centrifuges it can keep.

Read: Iran Ready to Defend Iraq Holy Sites From 'Terrorists'

Iran’s foreign minister Mohammad Javad Zarif told reporters Friday that Tehran would not accept “excessive demands” by the West.

With a deal highly unlikely in this round of talks, and the possibility increases of an extension to Iran’s self-imposed July 20 deadline for the elimination of its stockpiles of enriched uranium.

Nonetheless, Britain this week made a leap of faith, announced it will reopening its embassy in Tehran. Foreign Secretary William Hague said that move was an "important step forward" in relations with Iran and that the "circumstances were right" following an improvement in bilateral relations in recent months.

It is not yet clear if the United States and Iran can overcome their deep-seated mutual distrust. Iran's supreme leader has spent decades lambasting the U.S. as evil and oppressive.

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Iranian leaders will show a great deal of caution about any co-operation. They still talk rancorously about how Iran assisted Washington in Afghanistan in 2001, only to be dubbed the axis of evil the following year by President George W Bush.

Iran’s leaders would be concerned that, even if they could pressurize Iraq’s Maliki to reform or step down, the U.S. might turn the tables on them and use the situation to diminish or destroy Iran's hard-won influence in Iraq.