Judging by this story, it looks like Iran blinked first.

Iran will suspend uranium enrichment and allow unrestricted inspections of its nuclear program, as sought by the U.N. nuclear watchdog agency, a senior Iranian official said Tuesday after three European foreign ministers came to Tehran to press the international community's case. Iran set no date for the steps.

Iran faces an Oct. 31 deadline, set by the International Atomic Energy Agency, to prove its does not have a nuclear weapons program as the United States alleges. Otherwise, the IAEA will likely turn to the U.N. Security Council, which could impose sanctions.

Iran also pledged to hand over long-sought information to the IAEA that should help it determine whether Tehran has tried to make nuclear weapons, diplomats said Tuesday in Vienna, where the agency is based.

The political implications of this aren't immediately obvious... what should be a victory for the U.S. may actually be a victory for France:

Iran's decision was bound to provide particular satisfaction to France, which led the effort in trying to counter the military option in Iraq.

"For France, it's a way to show that dialogue is more efficient than confrontation," said Philippe Moreau Defarges of the French Institute for International Relations.

After talks with the British, German and French foreign ministers, the secretary of Iran's powerful Supreme National Security Council, Hasan Rowhani, said Iran would sign an additional protocol to the Nuclear Nonproliferation Treaty allowing inspectors to enter any site they deem fit without notice.

Now, there's no timeline on this, so it could be a delaying action by Tehran, but the precedent has been set. Why is an interesting question... it may be the diplomatic pressure, or it may be that Tehran has been relatively unsuccessful, and wants the guaranteed PR benefits of publicly renouncing nukes instead of the uncertain benefits of possession of nuclear weapons. The recent deployment of nuclear-capable subs by Israel may have influenced Tehran as well, as this would indicate a second-strike capacity by Israel that Iran could never hope to match, and Tehran may wish to focus on trying to marshall world public opinion in favour of disarming Israel instead of matching them bomb-for-bomb.

In any case, it's really welcome news. I doubt even the Iranians really want an arms race in the middle East. It's too dangerous and too uncertain a situation to throw nukes into the mix.