MEPGS: "US believes Iran is in no mood to bargain.."

US officials are exceedingly pleased with the outcome of the July 19 meeting with Iranian representatives in Geneva. This is not because Teheran was, in any way, forthcoming about addressing concerns regarding their nuclear program. On the contrary. The paper they presented was considered so unresponsive ("ridiculous", was the word usedby one senior State Department official) that it highlighted their intransigence. US officials consider this to be a good thing, because it served to increase international concern, specifically Russian and Chinese.

....with oil prices at record levels and through their surrogates, such as Hezbollah in Lebanon, projecting greater political power, some US analysts believe Iran is in no mood to bargain. Says one senior State Department official, "Iran is getting more dangerous. I fear that their confidence level is leading them to think they can do things they really cannot."

....analysts believe there is an important internal debate going on in Iran. "They are not like the North Koreans. They care about and want to do business with the people who are getting more anxious about them." To buttress this argument, this official notes that both in 2003 and 2006, the political leadership put the brakes on Iran's nuclear program. In the first instance, as disclosed in the latest National Intelligence Estimate, their "weaponization" efforts were halted. In 2006, they suspended their enrichment program, as they entered into a dialogue with the Europeans.

Now, say some US officials, the Iranians have to weigh the increasingly threatening words and actions of Israel. "Ideally the Iranians would like to have an ambiguous nuclear deterrent, like Israel. Not declared or operative, but assumed to be easily and quickly assembled." [One analyst calls it the "Japan option", which assumes that the Japanese, who have foresworn nuclear weapons, could, if necessary, assemble a number of them "over along weekend."]

US officials also take seriously Israeli willingness to use force against Iran. ...noting that "exuding calm and serenity, rather than overstating" their concerns might have been a more powerful message to send to Teheran, no one doubts the seriousness of Israeli concerns. Although the Israeli air force has famously destroyed Arab nuclear sites before; many analysts doubt that Israel could be nearly as successful against the larger, better protected and more widespread Iranian program. To begin with, the logistics are daunting. It is widely assumed that Turkey allowed Israeli warplanes the use of its airspace to get to the Syrian nuclear facility. The Turks may not be as acquiescent when it comes to its more powerful neighbor Iran. A more direct route would be over Iraq. But that would require, not just acquiescence, but active assistance by the US. Still, some hard line Administration officials argue that the US should do exactly that. ["There is no doubt, for reasons of national pride, all Iranians want to have the bomb," notes one State Department official. "Heck, even the exiles want Iran to join the nuclear club."] Coupled with the military threat from Israel (and perhaps the US), there is the widespread opposition of most of the international community to Iran going nuclear.

To drive home the second part of the message, the US, after the Geneva meeting, is redoubling its efforts to pressure Iran economically and financially. Operating effectively (and almost independently) is the Treasury Department's Stuart Levey,... "He has put the fear of God, or at least of US capital markets into a lot of companies and institutions thinking of doing business with Iran." At the same time, State Department officials are working with counterparts in Dubai to stop shipments of materials that could aid Iran's nuclear program. Bahrain has also become a target because of its banks' involvement in financing this trade.

Iran has been asked to respond by August 2, to the proposals presented at Geneva. If, as expected, the response is not satisfactory, US officials plan to introduce another UN Security Council resolution in the fall. ...say US officials. "We used to worry that we did not have a `Plan B', said one key US official this week. I think Iran's performance in Geneva gave us one."

The US investment in getting Iran, in the words of one State Department official "to step back", has never been greater. "Unlike in the old days, we face Iran on three sides: Iraq, Afghanistan and in the Gulf." [Somewhat surprisingly, career US officials believe a Democratic victory in November increases the odds for success. Their reasoning: As one State Department veteran says, "Our best chance for turning Iran around is through international pressure. And the international community would be more likely to follow the lead of a President Obama."

The enhanced status and therefore independence of the al-Maliki government is causing Teheran (as well as Washington) to recalculate its relations with Baghdad. "The Iranians used to have the luxury of turning the temperature up and down with their Iraqi surrogates," says one key State Department official. "Now that Iraq has more of a government, the Iranians have to be more careful. After all, they want a friendly government next door."