As US Vice-President Dick Cheney promised this week that the new Bush team would "serve and guard the country we love", student rent-a-crowds were burning effigies of his leader and his flag in Tehran.

The state-choreographed protest was to mark the 25th anniversary of the 1979 hostage drama at the US embassy in the Iranian capital.

These two countries are on a new collision course - this time over the conviction by Washington and others that Tehran is covertly developing weapons in tandem with a nuclear energy program which the Iranian leadership insists is civilian and purely peaceful.

The bitterness is deep. Senior Iranian officials used the anniversary of the humiliating 444-day detention of 52 American diplomats to mock the newly re-elected Bush and the US as "the great Satan".

In his 2002 State of the Union address, Bush memorably named Iran, along with Iraq and North Korea, as the "axis of evil" as he assessed threats to US national security after September 11, 2001.

European countries have worked feverishly to keep the Iran crisis within a diplomatic framework. But the risk in Tehran's "We've got nothing to lose" posturing and in Bush's pre-election form and post-election rhetoric, is that each will perform as the caricatures they have become - facing off as Tehran Terror v Bullyboy Bush.

The Americans have little faith in the diplomatic process. And given their unilateralism and pre-emptive strikes in response to the September 11 attacks on New York and Washington, the world would be unwise to rule out the possibility of Bush being persuaded by the re-energised neoconservatives to complete a regional trifecta of military strikes - Afghanistan, Iraq and Iran.

In his first term, there were good reasons for Bush keeping a low profile on Iran. He and his team were preoccupied with the bungled aftermath of their invasion of Iraq, Iran's western neighbour. And more recently they have begun to recognise a crisis that has the potential to destroy the fledgling democracy they are building in Afghanistan, Iran's eastern neighbour.

Despite the global celebration of the October 9 presidential election in Afghanistan, Administration officials are concluding that their failure in the three years since invasion to check a burgeoning opium poppy economy means that Afghanistan could become an ungovernable narco-state.

But events in the coming months could shape Iran as the Iraq-like crisis of the second Bush term. There is widespread speculation in Washington and other capitals that, even before Tuesday's US election, the Administration's hardliners were sketching plans for an Iran campaign.

Last week the Los Angeles Times quoted Reuel Marc Gerecht, a former CIA Middle East analyst turned conservative commentator, as saying: "I've heard discussion of between 20 and 40 [suspected Iranian nuclear] sites you'd want to hit to deter the program."

The Administration was "very seriously" studying the possibility of military action against Iran, said Michael Rubin, a former US adviser in Baghdad who is a scholar at the conservative American Enterprise Institute in Washington.

And such is the credence being given to the idea that the US might acquiesce in an Israeli strike on the Iranian plants, that this week the Secretary of State, Colin Powell, was wheeled out to deny it. It would not be a first - in 1981 Israeli jets destroyed a partly constructed nuclear facility in Iraq.

From an Arab and Muslim perspective, it is hardly surprising that Iran would pursue a nuclear program.

The US has always turned a blind eye to Israel's nuclear arsenal and to its stubborn refusal to sign up for non-proliferation or for international supervision of its program.

Like Saddam Hussein before it, Iran is positioning itself as a counter to Israeli force in the region. And that is the crux of it - the hardline argument in Washington and Israel is that, armed with nuclear weapons, Iran would be a risk to the region. It might share its nuclear technology with terrorists or it could threaten strikes on Israel or other US interests.

On Thursday Britain's Foreign Secretary, Jack Straw, ruled out the use of US military force against Iran, telling the BBC: "The prospect is inconceivable - I don't see any circumstances in which military action would be justified against Iran, full stop."

And Karsten Voigt, who co-ordinates relations with the US in the German Foreign Ministry, told reporters: "The Europeans - the British, French and Germans - are seeking a peaceful solution. But the goal is to prevent, together with the Americans, Iran gaining access to nuclear weapons."

British, French and German diplomats were downcast about the prospects for a meeting in Paris yesterday, at which they would again offer an Iranian delegation a range of incentives if Tehran agreed to abandon its plans for enriching uranium.

These talks have been going on for three years, but all Straw would say before the Paris meeting was: "It is difficult negotiating with Iran."

The Vienna-based International Atomic Energy Agency was said to be equally resigned to failure, but some reports suggested the Iranians might attempt to buy time by going part of the way towards a compromise.

Deadlock could leave the Europeans with little room to move, despite their resentment, shared by the agency's board of governors, over Washington's bogus claims about Iraq's weapons of mass destruction as part of the case for war against Saddam Hussein.

If the Paris meeting failed, the Europeans might have to back a US demand that a meeting of the agency on November 25 refer Iran to the UN Security Council, where it could be targeted with economic sanctions.

But Vienna-based diplomats also said that the agency's head, Mohamed ElBaradei, might try to thwart the US. It is thought his report to the meeting may question the extent to which Iran's fuel cycle activities are out of proportion with the rest of its nuclear program, but at the same time state that his staff have found no evidence of the diversion of nuclear material to weapons.

In the meantime, the US is obliged to focus on its attempts to control events in Iraq.

It hopes a planned assault on Falluja might prove the effectiveness of Iraq's new security forces, which are so distrusted by their American trainers and minders that often their weapons are confiscated.

This is the weakness in the US exit plan in Iraq. The theory is that if the Iraqi forces can be trained to impose security, then the US can pull back as all the elements of a democracy fall into place.

But the insurgency still has a grip on parts of the country and exasperated US officers are constantly accusing Iraqi police and military recruits of providing strategic information to the insurgents.

After last month's execution of 49 military trainees, who were unarmed because they were not trusted to keep their weapons during home visits, a senior Iraqi official told Newsweek: "The infiltration is all over, from the top to the bottom, from decision-making to the lower levels."

One of his colleagues added: "Things are getting really bad. The initiative is in [the insurgents'] hands right now. This approach of being lenient and accommodating has really backfired - they see this as weakness."

Despite Washington's hopes and predictions, the insurgency gets stronger and bolder.

The US hopes that an all-out assault on Falluja will change that, but the likelihood is that when the Marines fight their way into the city, most of its defenders will have melted away to fight in other parts of the country.

In which case, the fighting will continue, the elections that the US wants to be held in January will be in doubt and so will be democracy in Iraq.

In the first Bush term, only two people in the presidential loop had the opportunity to challenge his insistence that the Iraq adventure had to be a part of the "war on terror" - Tony Blair and Colin Powell.

History will remember both of them as the flawed individuals who went along for a dangerous ride instead of getting off the bus.

With Powell widely reported to be ready to pack his broken principles and quit as Secretary of State, Blair may be left alone.

This week he came in on cue - making yet another empty call for the US to revive the Israeli-Palestinian peace process. Why would Bush listen to him when he has never done so in the past? Why might the Palestinians believe him, when he has delivered nothing despite all his pious words?

Blair has been Bush-whacked before. He'll be bushwhacked again.

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