Why should the world be concerned with Iran's defiance of the International Atomic Energy Agency (IAEA)?

The reason the world should be concerned is because the development of nuclear weapons by Teheran could transform the entire Middle East. Although the Arab world has known for 20 years that Israel has nuclear weapons, the Arab perception that the Israelis would use them only as a last resort has reduced the pressure on their leaders to respond. Unfortunately, if Iran goes nuclear, it is likely to trigger a wave of others in the region doing the same.

The Saudis, who may have already benefitted from Pakistan's smuggling network of nuclear materials and technology, might decide they need the bomb as a deterrent against Iran. Egypt, not wishing to lose its prominence in the Arab world, will almost certainly press harder to acquire nuclear capability, Syria which also appears to have benefitted from the Pakistani network, will not want to be left behind. Even Algeria, which already has a research reactor, will have a strong incentive to go nuclear.

The prospect of a nuclear Middle East is frightening. The risk of an accidental war cannot be dismissed. Israel's Defence Minister Shaul Mofaz has already declared that a nuclear Iran is 'intolerable'. Could the international community prevent an Iranian bomb? It will not be easy. Iran has learned the lesson of Israel's strike on Iraq's Osirak nuclear reactor (1981). It has multiple and hardened facilities for producing fissile material.

The Iranians believe that the US is tied down militarily in Iraq. It also considers itself in a position of strength against the EU. The UK, France, and Germany all threatened penalties to force the Iranians to halt their enrichment programmes, but they imposed none of them when Iran broke its promise in October 2003. When the IAEA called for Teheran to suspend enrichment, the Iranians declared they would convert 40 tons of uranium into uranium hexafloride, enabling them to produce a compound for enriching nuclear fuel for weapons.

After 18 years of deceiving the IAEA, it is difficult to believe that Teheran will fulfill its obligations now unless it is convinced of the possibility of sanctions or worse. Isolation, however, cannot be mandated. It is time the US tried an approach based on engagement. This would require Washington to talk directly with Teheran, in coordination with the EU to finalise an agreement. The US would have to state directly the severe consequences that Iran would face if it violated this agreement. This would include sanctions, or an increased US naval presence in the Persian Gulf, or a US nuclear guarantee for any country threatened by Iran.

Sanctions might be impossible to implement in a world where oil is running at US$50 a barrel. The Iranians know this. In 2004, they completed two oil and gas deals with China for US$100 billion. If the US is unable to prevent Teheran from going nuclear through diplomacy and sanctions, it may have to resort to the unpleasant option of military strikes. But before this, the US is likely to employ various 'sticks' to prevent Iran from going nuclear.

Can even this limited goal be achieved? Maybe. Will it be good enough? That is unclear. But given the terrible alternatives, it is at least worth considering.