Iran's deranged president Mahmoud Ahmadinejad is spoiling for a fight with the United States and its closest Western allies, but the fallout from this fight if it goes to all-out war will be disastrous for not just the warring parties but the world. But in the interim, as tensions escalate, watch the world's oil price skyrocket back to at least US$70 a barrel, if not more. That's not all. Washington's finger on the firing trigger is itching, madly as madly as the mad mullahs' in Iran. But what will Bush's next military adventurism in Iran having labelled it a rogue state, alongside Iraq and North Korea, in 2001 achieve, and by what means? And what about the fallout?

It's easier to deal with the fallout first, because we've been there already. The world has been witnessing the carnage wrought by America's militarist adventurism in Iraq. World crude prices soared, and the world's gross domestic product forecasts kept trimming even if international organisations like the World Bank and the International Monetary Fund kept talking up huggy global economic prospects. But that's these global institutions' job to add more spin to its White House masters'.

Every day the White House's Iraq policy and strategy look gutted. There's growing evidence Washington, London and Canberra just aren't winning the war in Iraq, and they're also losing the war against global terrorism. That's irrespective of whether Osama bin Laden is alive or dead, because dozens of other radical, militant Osamas seeking martyrdom have stepped up to fill his sandals and carry on their anti-West jihad. It's happening in southern Thailand. The West's blunders and hypocrisy in the Middle East are legendary. Yet, staggeringly, every move is based on even more gross lies, deception and the West's ongoing ignorance of the crux of the problems behind Islamic terrorism. Don't expect any less from the most secretive US presidency since possibly Richard Nixon's.

Worse, there are no effective or genuine policies or strategies, nor indeed the political will, to solve these growing anti-West problems in the Muslim world. The West's only solution is the usual gung-ho, John Wayne, Texan one: shoot first, ask questions later. Check Washington's murder of innocent men, women and children in a remote village in western Pakistan near the Afghan border as the US desperately hunts for Osama and his number two, Ayman al-Zawahiri.

The only killing reported, although unconfirmed despite Pakistan's President General Pervez Musharraf's "200 percent certain" ebullience, was a top Al-Qaeda commander named Hamza Rabia, either Syrian or Egyptian, in early Decembber last year in a northern Waziristan village of Asoray or Haisori, also not far from the Afghan border. But then Musharraf is the US's puppet; he'll say anything Washington wants as long as he keeps his dictatorial power in Pakistan and receives financial goodies from his White House masters.

Lies, hype, hubris

Regardless, should Iran be allowed to restore its research and develop nuclear capability? President Ahmadinejad says he has the god-given right to scientifically develop Iran, and that his nuclear reactors are strictly for generating electricity for Iranians. Ahmadinejad says Tehran hasn't violated the Nuclear Non-Proliferation Treaty (NPT), which he says allows signatories to produce nuclear fuel. That's true. There are no restrictions for nuclear research activities under the NPT protocol. More, Iran has not accepted any obligation not to carry out research. So, Ahmadinejad says: "How is it possible to prevent the scientific development of a nation?".

This puts the West, especially the US, in the Middle-East conundrum tray that's quickly morphing into a basket-case of one failure after another, tricking themselves into believing their own lies, hype and hubris. The NPT was designed and rammed down its signatories' throats by Washington and London, but both had left convenient loopholes for themselves and Israel. The same kind of loopholes which Saddam Hussein the monster created by the West's own selfish strategic oil interests had tried to exploit and whose shenanigans the US, Britain, Europe and Australia had closed their eyes far too many times than they have the moral backbone to admit.

Then again, in a country run by hateful mad mullahs, should the rest of the world, especially the West, sit by idly and let Iran and its batty president - who on more than one occasion has vowed to obliterate Israel - develop a nuclear capability to wreak mass destruction on his hated enemies? Ahmadinejad seems hell-bent on turning Iran even more fundamentalist, even more intolerant. And throughout the Middle East, but especially in Iraq, he has been backing Shi'ite religious ideologues and armed militants against Sunnis, Kurds and Christians.

If Iran's president is playing a game of chicken or cat-and-mouse, it's a dangerous one. It's a game that borders on the Cold War doctrine of Mutually Assured Destruction (MAD) if Iran were to develop nuclear weapons. And it could have that capability by 2009. The nuclear standoff between Pakistan and India in their nuclear weapons race is at best edgy, and with fighting having resumed in war-torn Kashmir, it's hard to second-guess whose finger will push the nuclear missile button first. But it's not hard to guess the bloody awful consequences of a nuclear attack. With Ahmadinejad playing his ideological one-upmanship games, he is only raising the stakes of war between Washington and its allies and itself. And that'll bring even more terrorist attacks.

Yet two years of European diplomacy with Iran has proved useless useless because it has failed, and failed dismally. Israel, with its mighty firepower for a small nation, has made it clear: if the Iranian threat remains transparent, it'll bring military power to bear on Iran unilaterally or otherwise. Most likely Jerusalem will take out Iran's nuclear power and research facilities first, in the same way it had Iraq's, before any escalation compelling Israel to call on 'collective self-defence'. Justified or not, the fallout from such skirmishes will be horrendous at a time when the Muslim world is growing ever more suspicious of the West.

Nuclear warheads

The West's threat of imposing sanctions against Iran just won't work. And President Ahmadinejad's defiance of the West's ultimatums could easily lead him to a point of no return. Last August, he ordered Iranian scientists to commence uranium enrichment programmes. Last month, he ordered them to break United Nations seals at the secret Natanz nuclear facility and resumed enrichment programmes. He has openly defied the UN in that checks by the 35-member International Atomic Energy Agency (IAEA) will be strenuously repelled. Clear and present danger or not, it makes greater mockery of the seriously inept and weak leadership of UN Secretary-General Kofi Annan. Which leaves the US and its allies to go it alone against Iran.

No doubt President Ahmadinejad wants to turn Iran into a nuclear weapons state, and that should worry Iran's neighbours immensely. They'll of course side with the US, quietly, like most of the pro-West Gulf states have been doing since the first Gulf War against Iraq in 1990-91. But there's another danger lurking behind Iran's wild and naked nuclear ambition: its feverish need to export an archaic form of Islamic revolution. Ahmadinejad takes seriously to heart his mentor, Ayatolah Ruhollah Khomeini's diktat one often repeated by the Supreme Leader Ali Khamenei and the last president, Ali Akbar Rafsanjani: "The governments of the world should know ...," Ayatollah Khomenei had said, "... that Islam cannot be defeated. Islam is victorious in all the countries of the world, and Islam and the teachings of the Koran will prevail all over the world".

And Iran's 'informal accord' with Al-Qaeda including allowing its operatives transit through Iran from Afghanistan to Iraq and elsewhere, plus having carved an intimate relationship with murderers like Ayman al-Zawahiri and the Jordanian radical Abu Musab al-Zarqawi, who operates in Iraq says that Iran has developed the kind of clout the West now wishes it had not. Years of isolationism since Khomeini has made every successive Iranian regime not just more radical but it wants to be seen in the Muslim world as the true champion of Islam.

This is more than just a Mexican standoff. If the West is thinking up its military options, so are Iran's ayatollahs, including the cultivation of an even bigger army of suicide bombers willing to carry deadly miniature nuclear warheads to target cities in the West and elsewhere. Someone is going to have to back down before it's too late. But who?

MANJIT BHATIA, an academician and writer, is also research director of AsiaRisk, a political, economic and risk analysis consultancy in Australia. He specialises in international economics and politics, with a focus on the Asia-Pacific.