By Sylvia Westall and Tom Miles BEIRUT/GENEVA (Reuters) - The United Nations has adopted a cautious approach to the Syria talks it launched this week, avoiding raising expectations that this latest initiative can end a four-year-old conflict which has so far defied all diplomatic efforts to resolve it. U.N. Syria envoy Staffan de Mistura says he wants to talk to diplomats, activists and political and military leaders to see if there is any new common ground since a roadmap for ending the war was declared in 2012. Diplomats are skeptical his efforts will come to anything, but agree this year alone much has changed, both on the battlefield and in the relationships between allies and opponents of Syrian President Bashar al-Assad. "The balance of power has shifted," said one Western diplomat who tracks Syria. "The government sees that they have lost some battles but not the war. But it could still be the beginning of the end, everything is possible." On the battlefield Sunni Islamist insurgents including al Qaeda wing Nusra Front have made significant gains in recent weeks in the northwestern province of Idlib, edging closer to the government-held heartland of Latakia. In the southwest rebels have captured a crossing with Jordan, suggesting new resolve by Arab backers who want Assad to step down. But diplomats say Assad's inner circle remains strong after government defections earlier in the uprising and main allies Iran and Russia are steadfast. Hardliners including Islamic State have advanced at the expense of more mainstream rebels since the last round of Geneva talks in February 2014. U.S.-led forces have been striking the group in Iraq and in Syria since the summer. De Mistura, whose two predecessors resigned in frustration at the failure to make headway, has already had to drop his first initiative - a proposed freeze to hostilities in the city of Aleppo which he hoped could expand into a wider truce. He is not calling his consultations "peace talks" or "Geneva 3", a name that suggests a third attempt at a U.N.-brokered truce. But some diplomats think that is what his separate, one-on-one discussions are designed to lead into. Participants invited include the Syrian government, a myriad of opposition groups and non-jihadist armed factions, civil society members, non-governmental organizations, representatives of five major world powers, Iran, bordering countries as well as Qatar and Saudi Arabia. The most fertile ground for consensus may be widespread opposition to Islamic State, a common foe which has surged through Iraq and Syria. Western officials say tackling the group is a priority. Thousands of people from across Europe, Africa and the Middle East have traveled to Syria to fight for Islamic State. Governments fear they could carry out attacks on home soil. "I expect a declaration that everybody will fight terrorism and discussions will continue to seek a political compromise. the Western diplomat said, adding that a political solution was unlikely "because the regime does not want it and the opposition is also not able to take it." The conflict has killed 220,000 people and displaced millions since 2011, despite earlier diplomatic efforts by de Mistura's predecessors - Kofi Annan and Lakhdar Brahimi. "It will ultimately be military pressure inside Syria that will determine whether such an initiative has any chance of success," wrote Charles Lister, visiting fellow at the Brookings Doha Center. REALIGNMENT OF POWER Syrian Deputy Foreign Minister Faisal Mekdad has said there was no point in consultations unless they focused on ending "terrorism", and Russia's ambassador in Geneva, Alexey Borodavkin, said he hopes the talks can forge a united front against Islamic State. Borodavkin sees this leading to a political transition although Assad, who was re-elected president last year, has rejected calls for him to step aside. Iran has not signaled whether it will accept the invitation, another diplomatic source said, and its position may not become clear until it concludes talks on its nuclear program - negotiations that are set to last as long as de Mistura's consultations. Nuclear rapprochement could give momentum to the Syria talks but might exacerbate Shi'ite-led Iran's rivalry with Sunni power Saudi Arabia, another Western diplomat who tracks Syria said. "Saudi Arabia is uneasy about the nuclear talks. Some people are even talking about a major shift between the U.S. and Saudi, a realignment. All of this has an effect on Syria." Unlike his predecessors, de Mistura hopes to consult leaders of opposition armed groups, a step seen as important if all sides are to be part of an eventual deal. However, they may only stop fighting and join a peace process if state backers push them to, some diplomats say - and that means big powers need to agree. "It is up to the (external) players," said a diplomat. "The U.S., Russia, Iran, Saudi, Turkey, Qatar. They are the ones that need to agree." With many of the powers involved in Syria also involved in wars or proxy wars in Yemen or Libya, de Mistura says Syria is not a war in isolation, but the most important one to end. "I will focus on Syria because...(it) is the biggest humanitarian tragedy since the Second World War," he said. (Editing by Dominic Evans)
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