The U.S. and Iran are expected to hold indirect “proximity talks” in Vienna next Tuesday to try and break the deadlock over a potential return to the 2015 nuclear deal, Western diplomats tell me.

Why it matters: At the moment, next week’s talks are not expected to include U.S. and Iranian diplomats sitting in the same room, but it's a small step forward when it comes to U.S.-Iran engagement.

Driving the news: Representatives from the signatories who remain in the nuclear deal — France, Germany, the U.K., EU, Russia and China — held a virtual meeting on Friday with Iran to discuss ways to return to the nuclear deal, which would require the U.S. to lift sanctions and Iran to unwind its recent nuclear breaches.

• The parties decided to hold a in-person meeting next week in Vienna at the “experts level."
• The U.S. envoy for Iran, Rob Malley, is not currently expected to take part, Western diplomats tell me.

Behind the scenes: Iranian Deputy Foreign Minister Abbas Araghchi refused to issue a joint statement at the end of Friday's meeting because there was no agreement on U.S. participation in Vienna next week, Western diplomats briefed on the talks tell me.

• According to one diplomat, Araghchi told his counterparts: “'If the Americans are in Vienna at the same time and you want to talk to them, it's O.K. with us but we will not meet them.'"
• Representatives from the E3 (France, Germany and the U.K.) urged Araghchi to agree to direct engagement with the U.S., saying the Biden administration's proposals had been "more than reasonable."
• The French representative was particularly forceful, telling Araghchi that Iran’s position was rejectionist and unhelpful, the Western diplomats say.

What they are saying: Iranian Foreign Minister Javad Zarif tweeted that the aim of next week’s talks will be to “rapidly finalize sanction-lifting & nuclear measures for choreographed removal of all sanctions, followed by Iran ceasing remedial measures. No Iran-U.S meeting. Unnecessary."

• State Department spokesman Ned Price told Axios the U.S. had agreed to take part in the talks and doesn't expect to meet directly with the Iranians, but "remains open" to the idea.
• “These remain early days, and we don’t anticipate an immediate breakthrough as there will be difficult discussions ahead. But we believe this is a healthy step forward," Price said.

Between the lines: According to one Western diplomat, the E3 representatives took a tougher line with Iran on Friday than the Biden administration has thus far. Biden's team has been trying unsuccessfully to kickstart a process that would lead both sides back to the deal.

• "It seems the Americans feel they have to get some progress before the June presidential elections in Iran in order to boost [Iranian President Hassan] Rouhani and Zarif, while the Europeans think there is no rush," the diplomat said.

What’s next: During Tuesday’s talks in Vienna, the American team is expected to sit in one room and the Iranians in another room, with the Europeans shuttling between them.

• According to an EU statement, next week's talks will proceed on two separate tracks: identifying steps the U.S. must take on sanctions on one hand, and steps Iran must take on its nuclear program on the other.
• Price said the meetings would be structured into working groups, assembled by the EU to discuss both of those issues.