Within the next week or so the Board of Governors of the International Atomic Energy Agency will have to decide whether or not to refer the Islamic Republic of Iran to the United Nations' Security Council for alleged violations of the Nuclear Non-proliferation Treaty (NPT). We must thus expect a great deal of smoke-and-mirror diplomacy on all sides as no one knows how to negotiate this dangerous bend on the road.
Despite its uncompromising posture the Iranian side has already made a number of concessions that would have been regarded as impossible a few weeks ago. The IAEA is now allowed to interview all the Iranian nonmilitary personnel it has had on its lists for the past four years. The agency has also received answers to a set of detailed questions that it had posed to Iran last January. Tehran sources also suggest that the Islamic Republic is prepared to continue its suspension of all activities at Natanz, a plant built to produce military grades uranium.
The problem, however, is that the Islamic Republic, suffering from a huge deficit of trust, is in no position to convince its critics, notably the United States and the European Union, that it has put an end to a policy of deception and subterfuge that has continued for almost two decades. Even Russia, now engaged in a desperate effort to help the Islamic Republic avoid sanctions, admits that it cannot fully trust any promises coming from Tehran.
No one knows for sure whether or not the Tehran leadership has decided to produce nuclear weapons. But the way it behaves leaves little doubt that this must be the case.
President Mahmoud Ahmadinejad says that Iran wants to develop a full nuclear fuel cycle so as not to become dependent on imports of enriched uranium needed for producing electricity.
"If we do not produce our own (enriched) uranium," he says, "those who produce it will be able to dictate any price or even hold us to ransom."
That argument, however, is hard to sell. Do the OPEC countries use their oil production to dictate whatever price they like or hold any other nation to ransom?
Under a compromise proposed by Russia, the Islamic Republic would get all the enriched uranium it needs to produce electricity. Even Iran's own experts admit that what Russia offers is a good deal if only because the fuel from Moscow would cost less than one-third of what it would to produce in Iran.
Now let us sum up the situation.
• Iran doesn't have any nuclear power station yet and thus has no urgent need of nuclear fuel.
• Iran's only nuclear power station is being built in the Bushehr Peninsula by Russia which is contracted to provide all the fuel it needs for its entire life-span of 30 to 35 years.
• The fuel that Russia offers will be 23 percent cheaper than the similar product made in Iran itself.
• The uranium processing plant at Isfahan and the uranium enrichment plant at Natanz have a larger production capacity than Iran would need for Bushehr and can only be justified in military strategic terms.
• It is a mystery why Iran has built a heavy water plant at Arak when it does not have nor plans to have any nuclear power station using plutonium.
All this shows that suspicions regarding Iran's intentions are not entirely unjustified. But is referral to the Security Council the answer?
Iran, of course, always has the option of withdrawing from the NPT and, as Ahmadinejad likes to say, decide its own nuclear policies without any outside interference.
Such a move, however, is certain to be seen by everyone, including Tehran's last few friends, as an admission of duplicity.
Iran now finds itself in the situation Iraq was during the last years of Saddam Hussein's rule. Iran cannot prove that it has no secret nuclear program while its critics cannot prove that it has. The IAEA is as helpless in the case of Iran as it was in Iraq three years ago.
There are only two ways to find out the truth.
The first is to march into Iran and find out on the spot. That means invasion, regime change and an Iraq-style undertaking only on a much larger scale. It is clear that even the most gang-ho advocates of regime change do not have the stomach for such an adventure.
The second way is to wait until Iran detonates its first bomb and brings the good news to the whole world.
In the meantime any talk of tough resolutions and even sanctions could prove counterproductive. Iran has lived under a set of sanctions since 1979 and is geared for sustaining even tougher ones.
Ahmadinejad may actually welcome a UN resolution followed by sanctions that may hurt the average Iranians but would not shake the regime. He would be able to sell his macho image further by claiming that, unlike his predecessor Muhammad Khatami who tried to please the West, he is standing up to the "arrogant powers".
Narrowing the focus on the nuclear issue has other benefits for the Islamic Republic. It diverts attention from its repressive policies at home and its disruptive moves throughout the region, especially in Afghanistan and Iraq. It will send the wrong message to democratic forces inside Iran by showing that the only issue that interests the major democracies is the Islamic Republic's nuclear program.
The UN sanctions may be welcomed by both the Bush administration and the European Union as a fig leaf to cover their manifest inability to develop a coherent policy on Iran. Condoleezza Rice would be able to apply to Iran Madeleine Albright's formula about Saddam Hussein: "We have him in a box!"
The real issue that Albright wanted to avoid was whether or not it was possible to remold the Middle East with Saddam Hussein in power in Baghdad. And the issue that Rice now faces is whether or not the new democratic Middle East envisaged by President George W Bush can be built against the will of Iran, the region's largest and most ambitious nation.
The question is what to do with Iran and not what to do with Iran's real or imaginary nuclear program. And that is precisely the question that both the US and the EU are keen to avoid. My guess is that we are heading for another diplomatic fudge to allow all those concerned to dance around the real issue for as long as possible. The question is how long such a dance can go on.