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After months of saber-rattling rhetoric by Iran, Israel and the United States, there seems to be a collective, and welcome, time out.

Since President Barack Obama's March 4 speech to the American Israel Public Affairs Committee (AIPAC), all sides have been stressing non-military means to try to resolve the crisis over Iran's nuclear program.

While asserting that he is determined to prevent Iran from developing nuclear weapons, Obama spent much of his AIPAC address decrying what he called "loose talk" of war. He spoke eloquently of the costs of military conflict for a nation that has fought two wars in the last decade.

His message to visiting Israeli Prime Minister Benjamin Netanyahu was clear: I am not going to start another war and you are not going to drag me into one.

Netanyahu, for his part, appeared to bow to several realities.

A savvy politician, he is recalculating the odds that Obama will be re-elected for another four-year term. The Israeli leader also knows that most of Israel's defence and intelligence establishment - as well as a majority of the Israeli people - oppose a unilateral strike on Iran that could spark massive retaliation without significantly setting back the Iranian nuclear program. Former Mossad chief Meir Dagan has called such a strike "stupid." Obama argues that economic sanctions are having a major impact on the Iranian economy and should be given more time to work.

Evidence bears this out.

U.S. banking sanctions and the threat of a European oil embargo have reduced the value of Iran's currency by half, increased inflation and unemployment and depressed oil production. The International Energy Agency reported last week that Iran is pumping only 3.3 million barrels a day - down from 3.8 million barrels last year - and Iran's oil exports may drop by as much as 50 per cent this summer.

While denying that sanctions are a factor, Iranian leaders have agreed to come back to negotiations with the so-called P5+1 - the five permanent members of the UN Security Council plus Germany. Talks - the first since January 2011 - are expected to take place after the Iranian New Year holiday.

In advance, the Islamic Republic has been conducting a charm offensive. Supreme Leader Ayatollah Ali Khamenei on March 8 reaffirmed a 1995 fatwa that building nuclear weapons would be a "great sin." He also praised Obama for criticising war talk. "Such remarks are good and indicate a step out of delusions," Khamenei said.

On March 15, Mohammad Javad Larijani, a U.S.-educated physicist and adviser to Khamenei, told CNN's Christiane Amanpour that Iran would provide "full transparency" for its nuclear program in return for acceptance of Iran's right to peaceful nuclear energy under the Nuclear Non-Proliferation Treaty.

Larijani also denied that Iran had any intention of attacking Israel, saying that Iran would defend itself against aggression but would not strike another country first.

The Iranians have signalled their interest in dialogue with the United States in other ways.

On March 5, Iran's Supreme Court ordered a retrial for an Iranian American former US Marine who had been sentenced to death as a CIA spy.

On March 13, the U.S. deported back to Iran an Iranian arms dealer arrested in 2007 in a sting operation in the Republic of Georgia.

Taken together, these steps improve the atmosphere for negotiations. However, it remains unclear whether the Obama administration and its partners will put forward proposals that could provide Iran a face-saving way to reduce tensions.

Key elements would include capping Iranian enrichment of uranium at 5 percent U-235, stopping enrichment in a facility near Qom and providing access for the International Atomic Energy Agency to places and scientists associated with alleged nuclear weapons research.

In return, Iran is likely to demand recognition of limited uranium enrichment and the lifting or postponement of some sanctions.

Whether Obama - in the midst of a re-election campaign - is capable of compromise with a country that has been a US adversary for 33 years will test his willingness to put national interest over political expediency.

Iran, in turn, will have to honour its commitments if it hopes to reduce economic pressures and assume its desired position as a respected power in the region and the international community.