Guessing whether Washington's Iran policy is moving nearer or farther from military attack is almost as hard as guessing what is going on in Tehran. A debate is under way in both capitals but the signals are obscure. As Winston Churchill purportedly said about power struggles in the Kremlin: "It's like watching two bloodhounds fighting under a carpet. You can detect a furious battle but you have no idea who's winning."
On the downside, take the US reaction to the latest International Atomic Energy Agency report on Iran, which Gregory Schulte, the chief US delegate, describes as "stonewalling" and a "direct rebuttal" of Iran's argument that it has already satisfactorily answered all nuclear questions. Take also the comments from John McCain, the Republican contender for the White House, accusing his rival Barack Obama of being naive in even offering to talk to Iran.
On the plus side comes the announcement that Javier Solana, the EU's foreign policy chief, is to travel to Tehran shortly with a package of incentives for Iran to suspend its uranium enrichment. The Bush administration will not send one of its officials with Solana's group of Europeans but has endorsed the new offer.
Another broadly positive development was Wednesday's landslide victory for Ali Larijani when the Iranian parliament elected a new speaker. According to experts, Larijani is not a member of the ruling elite's reformist or pragmatic camps. He remains a hardliner. But analysts point to his resignation as chief nuclear negotiator in October, apparently in protest at President Mahmoud Ahmadinejad's abrasive international statements. Larijani's re-emergence in a powerful post is seen as a possible signal of a more sophisticated Iran, even though in his acceptance speech Larijani warned the IAEA that Iran would limit its cooperation if the agency produced another "deplorable" report.
Epithets aside, the IAEA report was the usual mixture of good and bad points. Contrary to most western news accounts, it was not unusually harsh. It did not express IAEA frustration or accuse Iran of a willful lack of cooperation. In fact, it said all activities at Iran's fuel-enrichment plants remained under IAEA containment and surveillance. It then outlined a series of areas where Iran needed to provide answers. Many relate to the "alleged studies", a shorthand phrase for material given by US intelligence agencies to the IAEA, which the IAEA is not allowed to pass on to Iran except in broad outline. While claiming the material is forged, the Iranians have begun to provide answers on some points. Although news accounts described Iran's behaviour as "a matter of serious concern", the IAEA used these words for the allegations, not Iran's response to them.
To some, this may all sound like dancing on a pinhead. But Scott McClellan, Bush's former press secretary, has just accused his former boss of manipulating the truth and mounting a dishonest propaganda campaign against Iraq before the invasion. We ignore similar efforts against Iran at our peril.
That said, the Iranians are probably waiting, like everyone else, to see whether Obama wins the White House and makes good on his promise to open a comprehensive dialogue with Iran. Direct talks between Washington and Tehran offer a far greater hope of detente than anything Solana is bringing. What Iran wants above all is an end to US hostility, and reliable guarantees that Iran's security concerns in the region are recognised. This is not likely to come in the dying months of Bush's presidency or from McCain, as they try to stoke Sunni-versus-Shia hostility throughout the Gulf.
Neither man is willing to admit that Iran has legitimate interests in Iraq. Iran was attacked by Iraq in the 1980s and has no wish to see the current regime signing up to an agreement for the US to have bases there. Hence Tehran's assiduous wooing of the government in Baghdad. Tehran also has close links to Moqtada al-Sadr and his Mahdi army, but avoids having to choose between these two allies. It was largely thanks to Iran's good offices that a ceasefire quickly ended the recent fighting in Basra between the Iraqi army and the Mahdi army.
Indeed, the irony of today's Baghdad is that Iran has an embassy there while none of Bush's Arab allies, neither Egypt, Jordan, or Saudi Arabia, do. This was underlined in Sweden yesterday at a conference of international donors, which was attended by the Iranian foreign minister but boycotted by most of his Arab counterparts. Condoleezza Rice pleaded in vain for them to come.
Washington is caught in a bind. On the one hand, for the purpose of showing its occupation has "worked", it does all it can to boost the status and authority of Iraq's government, even though Prime Minister Nuri al-Maliki and his sectarian party remain firmly against sharing power with Sunnis. Worse still, in its zeal to exclude Sadr, the US is forcing al-Maliki more closely into the arms of the Kurdish parties and the other main Shia party, the Islamic Supreme Council of Iraq. They support the idea of a loose federalism that could lead to the breakup of Iraq -- an outcome which many in Tehran would welcome.
On the other hand, in order to minimise anti-occupation resistance from Iraq's Sunni nationalists, Washington is financing new Sunni militias and encouraging anti-Shia and anti-Iranian prejudice among them. On the international stage it pursues the same strategy by trying to create an anti-Iranian alliance of Sunni-led Arab states. If Iran can be portrayed as a regional threat, it will be easier -- so the thinking goes -- for the US to pose as the indispensable policeman in the Gulf.
A new US approach is urgently needed. Peace and stability can only be reached in Iraq with Iran's cooperation, and this will not happen until the US president announces a timetable for leaving Iraq. As for stability in the region, this will not be decided by a few adjectives in an IAEA report, nor by UN security council sanctions. Whatever one's view of Iranian intentions, even the most sceptical analyst does not believe Iran could acquire a nuclear weapon and the means to deliver it for several years.
The more immediate danger is that the Gulf becomes a theatre for artificial Sunni-versus-Shia tensions, deliberately stoked by outsiders. There is no axis of evil. There is no arc of crisis. There is just a series of states which need sovereignty and mutual respect, and the chance to trade and work together.
Jonathan Steele's book, Defeat: Why They Lost Iraq, was published earlier this year
© Guardian News and Media Limited 2008