On Iran, the wind goes out of the balloon

The wind seems have gone out of the Bush administration's Iran balloon with the U.S intelligence community's latest report saying that Tehran ended its nuclear programme in 2003.

In October, US President George W. Bush raised the spectres of "World War III" or a "nuclear holocaust" if Iran obtained an atomic arsenal. But the National Intelligence Estimate (NIE) report assesses "with moderate confidence that Tehran had not restarted its nuclear weapons program as of mid-2007". It goes on to say with moderate-to-high confidence "that Iran does not currently have a nuclear weapon." Perhaps most damagingly, it states: "Tehran's decision to halt its nuclear weapons program suggests it is less determined to develop nuclear weapons than we have been judging since 2005."

In truth, air began seeping out of the balloon a few weeks ago when IAEA's Executive Director, Mohamed ElBaradei, issued his report on Iran's nuclear programme. The report has something in for everyone. For Iran, there was an acknowledgment that Tehran had supplied transparent data on its past nuclear activities. In tone, however, the report was closer to U.S thinking. It berated Iran for being reactive, not proactive and acknowledged that there may be a number of illegal nuclear sites hitherto undisclosed by Iran. The IAEA also found in a report that Tehran was still enriching uranium in defiance of the UN Security Council - as the NIE now confirms.

Yet Dr. ElBaradei undeniably slackened the pace towards a third set of UN sanctions. Once his report was published, the Chinese, pleading an unlikely "diary conflict", missed a key meeting of the Permanent Members of the UN Security Council scheduled to draft a common position. In private, Chinese officials said they do not forswear future sanctions, but do not believe that sufficient evidence has yet been found. Russia, with a newly-validated President at the helm, is likely to remain difficult to bring along.

Then came talks between the European Union and Iran. For a moment, it looked as if the report by the EU's foreign policy "czar" Javier Solana - who was said to be "disappointed" after having met his Iranian counterpart - might inflate the balloon again. But now this appears unlikely, even though Javier Solana's spokeswoman made clear that the NIE report would not "change our dialogue-pressure approach."

The U.S is working hard to counter-act the impact of the NIE report. At a White House briefing, an administration official said: "There's going to be a tendency of a lot of people to say: ‘The problem's less bad than we thought, let's relax,'". But, he went on to say: "Our view is that would be a mistake."

Despite this, the most likely outcome is that Germany, Italy and Austria will resist EU sanctions before the UN acts; at the same time the UN route seems more and more unlikely. Conclusion: 2008 will begin as 2007 ends, with a stalemate on Iran's nuclear programme.

Does this mean that the twin concerns - of a military strike and/or of a nuclear-armed Iran - are behind us? Not so fast: Both the NIE and IAEA have made clear that Iran has not been truthful and have continued to enrich uranium. As the NIE report states: "For example, Iran's civilian uranium enrichment program is continuing."

The question for Iran has always been an issue of trust. Can Iran be trusted not to leverage its research - however basic - into a weaponized programme? The NIE report explicitly recognize the possibility of the civilian program being diverted for military uses: "Iranian entities are continuing to develop a range of technical capabilities that could be applied to producing nuclear weapons, if a decision is made to do so." Such a decision could probably be made relatively quickly and the international community would probably not find out for a while.

The second point is what the U.S will do. The blogosphere is full of speculation about why the NIE report, which was apparently prepared weeks if not months ago, was released. For one, it allows the administration to argue some sort of success for the White House's policies against Iran, as National Security Adviser Stephen Hadley has sought to do. More likely, the intelligence community - especially the reforming Director of National Intelligence Mike McConnell - wanted to call the issue as they saw it in part to restore trust in their work. On this reading, the White House has been dealing with the consequences. Either way, the political pressure will remain for a third round of sanctions.

The basic conclusion remains the same: the air has gone out of the balloon and there is little international consensus on trying to inflate it again. For now. However, the twin dangers - of military strikes and a nuclear-armed Iran - remain.

Rather than breathe a sigh of relief, the EU would do well to continue thinking of ways to encourage Iran's positive behaviour - perhaps through re-examining  the E3+3 package of incentives - and to prepare for tougher sanctions if new evidence emerges that Iran has decided to develop nuclear weapons.