Sanctions, Carrots and Sticks
Ashton has said she hopes the Baghdad talks will form the basis for Tehran to eventually abandon its suspected nuclear weapons programme.
But diverging agendas stand in the way of a breakthrough.
Iran has suggested it will try to leverage its reported rapprochement with the IAEA into a deal in Baghdad to relax sanctions inflicting increasing damage to its economy, including a European Union oil embargo due to take effect in July.
But Western officials ruled out such a weighty concession so soon, even though their call for a "step-by-step" negotiating process is widely seen as a tacit admission that sanctions will have to be eased at some point.
"Sanctions are only going to be lifted if we have significant and genuine progress," one diplomat said.
Ali Larijani, Iran's influential parliament speaker, warned the West on Tuesday not to play "political games" in Baghdad based on "misconceptions" that Iran is after nuclear power to menace its neighbours and dominate the Middle East.
Emanuele Ottolenghi of the Washington think-tank Foundation for the Defense of Democracies said that some concessions from the West would be crucial: "Maybe the US and the EU should agree to suspend measures of minor nature," he said.
"They don't want these negotiations to fail."
Israel, widely assumed to have the Middle East's only atomic arsenal, has made clear its scepticism about the chances for diplomacy to achieve a solution to the dispute.
Asked whether last-resort air strikes on Iran were still conceivable with apparent headway being made on the diplomatic track, Israeli Civil Defence Minister Matan said: "One shouldn't get confused for even a moment. Everything is on the table."
Clara O'Donnell, at Washington's Brookings Institution, said: "The likelihood of an Israeli military strike will remain lower while the talks are ongoing. But they are likely to keep talking about it, to keep up the pressure."
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