Towards Confrontation With Iran.

Complicating the situation is the role of the Shi'ite theocracy of Iran among both Shi'ite and Sunni groups in Iraq, as well as among Neo-Salafi Kurds active in the north. Whether or not this is related to Iran's stand-off with the West over Tehran's nuclear ambitions has been the question of debate in the international community. Tehran's theocracy is also suspicious of American plans for regime change in Iran, while the US suspects an Iranian-Syrian alliance of being behind attacks against Israel by Hizbollah of Lebanon and Hamas in the Gaza Strip.

Israel seems has Washington's blind eye to its waging of two wars simultaneously against Hamas in Gaza and Hizbollah in Lebanon. Hizbollah had complicated the issue by kidnapping two Israeli soldiers and killing eight other Israeli troops on July 12 - with Hamas having already kidnapped an Israeli soldier before. Almost immediately on July 12 Israel launched a wide-scale military offensive in Lebanon. By July 15, Lebanon had become isolated as Israel had enforced a total blockade of the country by land, sea and air. Israel also appeared ready for a possible attack against Syria.

The chance of any quick breakthrough on the nuclear issue evaporated on July 12 when Iranian negotiator Ali Larijani said in Brussels that Iran was not ready yet to respond to a European-American offer of incentives in exchange for halting its uranium enrichment programme. The Bush administration had been expecting an ambiguous Iranian response, and it agreed earlier with its allies that anything short of a clear "yes" would be taken as a "no". But for administration officials who had argued for the diplomatic opening to Iran, Tehran's non-response was still a disappointment.

US officials saw nothing positive in Larijani's July 12 meeting with Javier Solana, the EU foreign policy chief. On July 13, the foreign ministers from the five permanent members of the UN Security Council (UNSC) and Germany decided to refer the Iranian case back to the UNSC.

US experts had been warning in recent weeks that a divided and suspicious theocracy in Tehran did not yet appear ready to make significant concessions. But Washington's strategy for now is one of diplomatic pressure. The first step will be to push the Iranian issue to the UNSC. US officials say Russia and China had promised they would back at least some limited UN measures against Iran if Tehran balked at negotiations, and President Bush wants a strong statement criticising Iran at the July 15-17 G-8 summit in St. Petersburg.

With Israel now seeking to "break Hizbollah" in Lebanon and so the same to Hamas in Gaza, US officials expect a period of jockeying over the next few months - a long summer of pressure and counter-pressure between Washington and Tehran, in which the parties test and probe each other's resolve. The Bush administration wants to avoid rhetorical bombast and US-Iranian confrontation, preferring a steady international pressure campaign which makes clear to the Iranians that they must make a choice.

For months, the Iranian theocrats have been almost dismissive of US warnings - apparently convinced the US is so bogged down in Iraq that it lacks real leverage against Tehran. But the theocrats have been warned by Western experts that spurning a super-power is never a good idea.

The Shi'ite theocracy remains deeply suspicious of US policy - believing that it is the Americans who are adopting a strategy to delay, while maintaining their policy of regime change. A British expert says the best outcome from Washington's recent agreement to have a dialogue with Tehran is that it has produced some real debate within Iran, with both the moderate and radical theocrats mulling the proper response. That ferment will intensify in the autumn, when the Iranians will hold elections for their Assembly of Experts, a body dominated by the conservative camp.

"We have no choice but to return to the UN Security Council", said French Foreign Minister Philippe Douste-Blazy, summing up the conclusions of a meeting in Paris of the five permanent UNSC members plus Germany on July 13. He said: "Iran has failed to take the steps needed to allow negotiations to begin".

While Iran insists its purposes are peaceful, the US and EU fear it is moving closer to developing nuclear weapons. A new UNSC resolution would make it mandatory on Iran to halt enrichment. Previously Iran has been urged to suspend enrichment by the International Atomic Energy Agency (IAEA), the UN's nuclear monitor, but this was not legally binding - unlike a resolution. If Tehran failed to halt enrichment by a certain period, probably one to two months, it could face more UNSC resolutions which would begin to impose sanctions.

The FT on July 14 quoted a European diplomat as saying: "The Iranians do not want to find themselves in a position where they are excluded from normal relations with the rest of the world", adding that possible sanctions ranged from "specific measures against Iran's nuclear and ballistic missile programmes to [in the longer term] wider measures".

Russia and China have previously voiced misgivings about imposing sanctions and diplomats acknowledged that any future resolutions would have to be negotiated between the UNSC members one by one. The EU and the US still say the offer to Iran remains open, even though Larijani has failed to give even a partial response to the international offer.

Speaking in Iran, President Mahmoud Ahmadi-Nejad said Tehran would not retreat "one iota" on its nuclear rights. This was a reference to uranium enrichment, a process which can generate both nuclear fuel and weapons-grade material. Ahmadi-Nejad earlier had said that Iran it will only provide a response to the international proposal after Aug. 22.

Like Larijani, Ahmadi-Nejad has questioned the sincerity of the European countries' desire for negotiations. During his meeting with Solana, Larijani asked for guarantees that the Western powers were not pursuing regime change but instead wanted a long-term relationship with Tehran.

Larijani said he would not be in a position to respond until three committees studying the international proposal in Iran had reported back. The FT quoted a British official as saying: "The Iranians did not indicate any flexibility, in particular on the suspension [of uranium enrichment] issue. Everybody who attended the meeting was disappointed".

On the even of the July 15-17 G-8 summit, Western states stepped up efforts to win Russian and Chinese backing for a tougher stance over Iran's nuclear issue. The US said it was offering Moscow a deal on civil nuclear co-operation - as long as Russia provided more help in convincing Tehran to scale down its nuclear programme. The deal could allow Russia to make billions of dollars from storing nuclear waste from US-supplied reactors around the world.

A White House spokesman was on July 10 quoted as saying: "For agreement on peaceful co-operation to go forward, we will need Russia's active co-operation in blocking Iran's attempts to obtain nuclear weapons".

Western officials acknowledge that North Korea's recent missile tests distracted international attention from Iran, while the international reaction underlined Moscow's and China's reluctance to use UNSC sanctions to deter proliferation. Indications that Iran's nuclear programme may be faltering technically have also reduced the sense of urgency surrounding the case.

The US and the EU, which fear that Tehran is coming closer to developing nuclear weapons, have focused on using the July 15-17 G8 summit in St Petersburg as the main source of pressure on Iran. Russia has wanted the summit to focus on energy security instead, while Iran, which insists its programme is purely peaceful, has said it will not reply until after Aug. 22.

The FT on July 10 quoted Mark Fitzpatrick, nuclear expert at London's International Institute for Strategic Studies (IISS) as saying: "They want to get past an action-forcing deadline and the idea that the Americans have more leverage. So long as the Iranians haven't rejected [the international proposal for Iran to halt enrichment work], Russia and China will say there is no reason to go to the [UN] Security Council".

Fitzpatrick added that Iran's technical progress had also recently slowed, with a 164-centrifuge cascade - used to enrich uranium - not working well and plans for a second and third cascades delayed.

The FT quoted a Western diplomat as saying: "The Iranians sometimes miscalculate the international mood. The Russians don't want a big row at St Petersburg". Some analysts speculate that Iran could eventually agree to take a temporary break with enrichment and allow talks with the permanent five UNSC members and Germany to begin. It could then use the talks to argue that it should be allowed to maintain a small-scale UN-monitored enrichment programme.

Reuters on July 9 reported a Western diplomat as saying Iran had banned a senior UN nuclear inspector who had criticised the Tehran government from visiting the country. Reuters said the diplomat was confirming a report in the German newspaper Welt am Sonntag, in which International Atomic Energy Agency (IAEA) Iran section head, Chris Charlier of Belgium, was reported as saying that he had not been allowed into Iran for several months.

Charlier was quoted as saying: "I haven't been allowed to travel to Iran since April. Since April, I have had no more contact with the Iranian nuclear file". But Reuters quoted a senior diplomat at the Vienna-based IAEA as saying Charlier was still the chief of the agency's Iran section.

The IAEA had been inspecting Iran's nuclear programme since 2003. Although it had found no hard evidence that Iran was working on atomic weapons, it had uncovered many previously concealed activities linked to uranium enrichment.

Charlier was quoted as saying he believed Iran was probably still hiding things from the IAEA, adding: "It is very probable that Tehran is doing things in the nuclear field that to this day we have no clue about".

It was not clear why Charlier was banned from Iran. In 2005 he complained about the lack of freedom UN inspectors faced in Iran, noting: "Whatever we say, whatever we do, they're always behind us with a video camera, with a microphone trying to record all our movement and all things that we're saying".