While rising U.S.-Iran tensions over Tehran’s uranium enrichment jeopardize nuclear talks, three Iranian sources said on Tuesday that the clerical leadership lacks a clear fallback plan if efforts to resolve a decades-long dispute collapse, Reuters reported.

With negotiations faltering over clashing red lines, Iran may turn to China and Russia as a “Plan B”, the sources said, but with Beijing’s trade war with Washington and Moscow distracted with its war in Ukraine, Tehran’s backup plan appears shaky.

“The plan B is to continue the strategy before the start of talks. Iran will avoid escalating tensions, it is ready to defend itself,” a senior Iranian official said.

“The strategy also includes strengthening ties with allies like Russia and China.”

On Tuesday, Iran’s Supreme Leader Ayatollah Ali Khamenei rejected U.S. demands to halt uranium enrichment as “excessive and outrageous”, warning that the talks are unlikely to yield results.

After four rounds of talks aimed at curbing Iran’s nuclear programme in return for sanctions relief, multiple stumbling blocks remain. Tehran refuses to ship all of its highly enriched uranium stockpile abroad or engage in discussions over its ballistic missile programme, two of the Iranian officials and a European diplomat said.

The lack of trust on both sides and President Donald Trump’s decision to pull out of a 2015 accord with world powers has also raised the importance for Iran of getting guarantees that Washington will not renege on a future accord, read the report.

Compounding Tehran’s challenges, Iran’s clerical establishment is grappling with mounting crises – energy and water shortages, a plummeting currency, military losses among regional allies, and rising fears of an Israeli attack on its nuclear sites – all exacerbated by Trump’s hardline policies.

With Trump’s speedy revival of a “maximum pressure” campaign on Tehran since February, including tightened sanctions and military threats, the sources said, Iran’s leadership “has no better option” than a new deal to avert economic chaos at home that could threaten its rule.

Nationwide protests over social repression and economic hardship in recent years, met with harsh crackdowns, have exposed the Islamic Republic’s vulnerability to public anger and triggered sets of Western human rights sanctions.

“Without lifting sanctions to enable free oil sales and access to funds, Iran’s economy cannot recover,” said the second official, who like others asked not to be identified due to sensitivity of matter.

Iran’s foreign ministry was not immediately available for comment.

Wendy Sherman, former U.S. Undersecretary for Political Affairs who led the U.S. negotiating team that reached the 2015 accord between Tehran and six world powers, said it was impossible to convince Tehran to “dismantle its nuclear programme and give up their enrichment even though that would be ideal”.

“So that means they will come to an impasse, and that we will face the potential for war, which I don’t think, quite frankly, President Trump looks forward to because he has campaigned as a peace president,” she said.

Even if enrichment disputes narrow, lifting sanctions remains fraught. The U.S. favours phasing out nuclear-related sanctions, while Tehran demands immediate removal of all restrictions.

Dozens of Iranian institutions vital to Iran’s economy, including its central bank and national oil company, have been sanctioned since 2018 for “supporting terrorism or weapons proliferation”.

When asked about Iran’s options if talks fail, Sherman said Tehran would likely “continue to circumvent sanctions and sell oil, largely to China, perhaps India and others”.

China, Iran’s primary oil buyer despite sanctions, has helped stave off economic collapse, but Trump’s intensified pressure on Chinese trade entities and tankers threatens these exports.

Analysts warn that China and Russia’s support has limits. China insists on steep discounts for Iranian oil and may push for lower prices as global oil demand weakens.

If talks collapse – a scenario both Tehran and Washington hope to avoid – neither Beijing nor Moscow can shield Iran from unilateral U.S. and EU sanctions, Reuters reported.

France, Britain and Germany, though not part of the U.S.-Iran talks, have warned they would reimpose U.N. sanctions if no deal emerged quickly.

Under the 2015 nuclear pact’s U.N. resolution, the E3 have until October 18 to trigger the so-called “snapback mechanism” before the resolution expires.

According to diplomats and a document seen by Reuters, the E3 countries may do this by August if no substantial deal can be found by then.

Diplomats warn that getting a deal before then would mean, in the best case scenario, an initial political framework like in 2013 whereby both sides offer some immediate concrete concessions giving time for a more detailed negotiation.

“There is no reason to think it will take less time than the 18 months in 2013 especially when the parameters and the geopolitical situation is more complicated now,” a senior European official said.

The leaders of Britain, Canada and France threatened sanctions against Israel on Monday if it does not stop a renewed military offensive in Gaza and lift aid restrictions, piling further pressure on Prime Minister Benjamin Netanyahu.

The Israeli military announced the start of a new operation on Friday, and earlier on Monday Netanyahu said Israel would take control of the whole of Gaza, Reuters reported. 

International experts have already warned of looming famine.

“The Israeli Government’s denial of essential humanitarian assistance to the civilian population is unacceptable and risks breaching International Humanitarian Law,” a joint statement released by the British government said.

“We oppose any attempt to expand settlements in the West Bank … We will not hesitate to take further action, including targeted sanctions.”

In response, Netanyahu said that “the leaders in London, Ottawa and Paris are offering a huge prize for the genocidal attack on Israel on October 7 while inviting more such atrocities”.

He said Israel will defend itself by just means until total victory is achieved, reiterating Israel’s conditions to end the war which include the release of the remaining hostages and the demilitarization of the Gaza strip.

Israel has blocked the entry of medical, food and fuel supplies into Gaza since the start of March to try to pressure Hamas into freeing the hostages the Palestinian militant group took on October 7, 2023, when it attacked Israeli communities.

“We have always supported Israel’s right to defend Israelis against terrorism. But this escalation is wholly disproportionate,” the three Western leaders said in the joint statement. 

They said they would not stand by while Netanyahu’s government pursued “these egregious actions.”

They stated their support for efforts led by the United States, Qatar and Egypt for an immediate ceasefire in Gaza, and said they were committed to recognising a Palestinian state as part of a two-state solution to the conflict.

Hamas welcomed the joint statement describing the stance as “an important step” in the right direction toward restoring the principles of international law.

Israel’s ground and air war has devastated Gaza, displacing nearly all its residents and killing more than 53,000 people, many of them civilians, according to Gaza health authorities.

The war began with the October 7, 2023, Hamas-led attack in which the militants killed about 1,200 people, mostly civilians, and seized 251 hostages, according to Israeli tallies.

Iran’s Supreme Leader Ayatollah Ali Khamenei accused Donald Trump on Saturday of lying when the U.S. president said during his Gulf tour this week that he wanted peace in the region, Reuters reported.

On the contrary, said Khamenei, the United States uses its power to give “10-ton bombs to the Zionist (Israeli) regime to drop on the heads of Gaza’s children”.

Trump told reporters aboard Air Force One after departing the United Arab Emirates on Friday that Iran had to move quickly on a U.S. proposal for its nuclear programme or “something bad’s going to happen”.

His remarks, said Khamenei, “aren’t even worth responding to.” They are an “embarrassment to the speaker and the American people,” Khamenei added.

“Undoubtedly, the source of corruption, war, and conflict in this region is the Zionist regime — a dangerous, deadly cancerous tumour that must be uprooted; it will be uprooted,” he said at an event at a religious centre in Tehran, according to state media.

Earlier on Saturday, Iranian President Masoud Pezeshkian said Trump speaks about peace while simultaneously making threats, read the report.

“Which should we believe?” Pezeshkian said at a naval event in Tehran. “On the one hand, he speaks of peace and on the other, he threatens with the most advanced tools of mass killing.”

Tehran would continue Iran-U.S. nuclear talks but is not afraid of threats. “We are not seeking war,” Pezeshkian said.

While Trump said on Friday that Iran had a U.S. proposal about its nuclear programme, Iranian Foreign Minister Abbas Araqchi in a post on X said Tehran had not received any such proposal. “There is no scenario in which Iran abandons its hard-earned right to (uranium) enrichment for peaceful purposes…” he said.

Araqchi warned on Saturday that Washington’s constant change of stance prolongs nuclear talks, state TV reported.

“It is absolutely unacceptable that America repeatedly defines a new framework for negotiations that prolongs the process,” the broadcast quoted Araqchi as saying.

Pezeshkian said Iran would not “back down from our legitimate rights”.

“Because we refuse to bow to bullying, they say we are source of instability in the region,” he said.

A fourth round of Iran-U.S. talks ended in Oman last Sunday. A new round has not been scheduled yet.