US Vice President J D Vance’s mission impossible failed in Islamabad on Sunday, as US and Iran failed to reach an agreement after 21 hours of talks.Vance, before leaving Islamabad, said, “They have chosen not to accept our terms.” This may have come as a damper, but the moment is extraordinary.What is extraordinary about the meeting is this was the first high-level political contact between US and Iran since the 1979 Islamic Revolution. The fact that US Vice President J D Vance came all the way to Pakistan to meet high-level Iranian officials — Iran’s Speaker Mohammad Bagher Ghalibaf, the speaker of Iran’s Parliament, was leading Tehran’s team. This moment of direct contact between the two top officials has a parallel to the phone conversation between US President Barack Obama and Iran’s President Hassan Rouhani which took place on September 27, 2013 during Rouhani’s trip to New York. The 15-minute telephone conversation was the first communication between the two countries since ties were severed in 1979. That set the stage for the two year negotiations that led to the conclusion of the JCPOA in 2015. The significance of the meeting is also because just six weeks ago, US strikes killed the Supreme leader of Iran, Ali Khamenei, and Iran declared avenging his death. At that time, Iran felt betrayed by the Americans, since they were negotiating in good faith with US’ special envoy Steve Witkoff and Trump’s son-in-law Jared Kushner in Geneva till February 27. And then the bombs were dropped on Iran on February 28. The Iranians were extremely upset that the Americans led them down the garden path, and killed their leader. So, they didn’t want to negotiate with Witkoff and Kushner, as they said that these two didn’t have any credibility. The Americans yielded and fielded Vice President Vance — who was the next best authority figure after the US President. Story continues below this adAnd the Iranians agreed to send the top leadership from the regime — next to the new Supreme leader Mojtaba Khamenei who is said to have been injured — to talk to the Americans, after the bloody 39 days of war, in which more than 1,700 Iranians have been killed including schoolkids. Second, the redlines. The talks were taking place in a history of animosity and war, and therefore the sticking points have been well-established. So, the red lines are clear. “We’ve made very clear what our red lines are, what things we’re willing to accommodate them on, and what things we’re not willing to accommodate them on,” Vance said. According to reports in the US and Iranian media, there are three main sticking points — reopening of the Strait of Hormuz; the fate of more than 440 kgs of highly enriched uranium; and Iran’s demand that about $27 billion in frozen revenues held abroad be released. Story continues below this adBut, the fact that it has whittled down from the 10-point maximalist Iranian proposal shows some progress. The first point is of immense value to the global economy, and Iranians — after 39 days of war and almost six weeks of choking the narrow waterway — have realised that their biggest weapons are not drones and missiles and nuclear stockpile, but this waterway through which one-fifth of world’s energy supply passes through. The entire global supply chain for energy has suffered a setback with economic impact across the region and beyond. So, the US has demanded that Iran should immediately reopen the Strait of Hormuz to all international maritime traffic. Story continues below this adTehran realises that this is their biggest leverage and they would not want it to let go. Already, there are reports that Iran has been charging a toll for crossing the Strait — diplomats have been calling it “Ayatoll booth”. The second red-line pertains to Iran’s nuclear programme. Reports suggest that Vance handed the Iranians a take-it-or-leave-it proposal to forever terminate their nuclear program, and they left it. Iranians feel that it is their right to enrich nuclear material and keep their stockpile as part of their sovereignty and keep their nuclear programme ongoing for their power generation — many don’t believe that it is only for civilian use, and they can be enriched pretty quickly to make a weapon. This again has a deja vu with the Obama era negotiations, when US and Tehran agreed on the JCPOA — the agreement was between P-5+1 and Iran — and it took two years to negotiate. It had allowed Iran to retain a small amount of its nuclear stockpile, and gradually lifted the restrictions on its nuclear activities until 2030, when Iran would be permitted to conduct any nuclear activity permissible under the Nuclear Nonproliferation Treaty. Story continues below this adOn February 27, before US and Israel began the attacks on Irans, the Iranians had offered to “suspend” their nuclear operations for a few years, but not to give up their stockpiles of near-bomb-grade uranium or permanently surrender the capability to enrich uranium on their own soil. To the Iranians, that is their right as a signatory of the Nuclear Nonproliferation Treaty, which commits them to never making a nuclear weapon. Now, Vance finds himself at the same point where Witkoff and Kushner had found themselves. Iran has not moved on the nuclear point, since February 28, and the war has hardened their redlines, as they have survived despite bombing of more than 13,000 targets in Iran — from steel plants in Isfahan to missile and military industrial complex in Bushehr. And, that is where the third redline from Iran comes — Iran’s demand that about $27 billion in frozen revenues held abroad be released. Iranian diplomats told The Indian Express that they need money to rebuild and reconstruct their country after the devastating strikes for more than a month, and one of the ways is to release the frozen assets and give them some sanctions relief — and this has been their demand from pre-war days. Story continues below this adIran also sought reparations for damage from six weeks of airstrikes and asked for frozen oil revenues held in Iraq, Luxembourg, Bahrain, Japan, Qatar, Turkey and Germany to be released for reconstruction, the officials said. The Americans have refused those requests, according to the New York Times. Third, the deadlock, but there is a thin silver lining. The Vance-Ghalibaf talks did not lead to immediate results but it left a window open. Vance left the door ajar, as he said, “We leave here with a very simple proposal: a method of understanding that is our final and best offer…We’ll see if the Iranians accept it.” Iranians will get back to Tehran and consult with the hardline IRGC and clergy, and the Supreme leader, before any movement. Story continues below this adBut, the fact that both sides have been able to air their maximalist points and have now agreed to talk to each other, shows the willingness to negotiate. The American establishment will surely defer to the US President, who will take a call on the next steps. Whether he resumes the war and the bombing is difficult to say, but there is something on the table for both sides to chew on and marinate as they have a two-week ceasefire to negotiate. Fourth, the unknown variables. The big X-factor will be how Israel looks at the current status of talks and what they do at the Lebanon front. Story continues below this adIsrael has been pounding on Lebanon — while Israel claims they are hitting on Hezbollah, Lebanon and the international community have condemned the civilian strikes. And Israel PM Benjamin Netanyahu might find this lack of breakthrough in talks as an opening to continue the war against Lebanon and Iran. This will complicate the atmosphere and constrain the space for talks. Pakistan, which has played the role of the mediator and gave a venue for the talks, certainly have raised their profile — but the lack of clarity on Lebanon has put a question mark on their credibility passing the messages, since both Vance and Iranians were talking from different hymn-sheets. Fifth, India has been watching the negotiations very carefully and hoping the talks will lead to reopening of the Strait of Hormuz. The war’s economic impact on the Indian economy has been extremely adverse, as gas shortages in LPG and possible price hikes in petrol are expected in the coming weeks. The shortages have had an impact on India’s domestic consumers, and has been felt quietly on the small and medium enterprises from ceramics, to plastics, to textiles. Also, the disruption in the fertiliser and helium have also complicated India’s agriculture, health and semiconductor spaces. Delhi has been careful in navigating the diplomatic space by talking to Iran continuously in the last six weeks, and has even expressed concern at the strikes on Lebanon by Israel (without naming Israel). And it has got about eight vessels to pass through the Trait, and a ninth one was passing through on Saturday evening. Delhi is also looking at Iran’s benefactors — how China and Russia now respond, after the lack of breakthrough in the talks is also something that will also determine the next steps.