Is Iran a step too far for the Americans?

"Only wimps stop at Baghdad," the neo-conservatives boasted in their hour of greatest glory as American forces swept Saddam Hussein from power in a dazzling campaign in Iraq.

Why be content with Baghdad, they argued. Why not carry the torch of freedom and democracy across the border to Iran, that other founder member of President George W. Bush's "axis of evil".

Two years after invading Iraq, is the United States setting its sights on a new war with Iran?

The issue scarcely featured in the election campaign, but ever since Bush defeated Senator John Kerry last November, it has been clear that Iran will be a crucial challenge of his second term. Even as policymakers struggle to find an exit strategy from Iraq, they are obsessed by Iran.

The issue is likely to dominate Bush's fence-mending visit to Brussels next month. Even more than Iraq, Iran has the potential to divide both the Bush Administration and the Atlantic alliance.

As even slightly chastened neo-cons now admit, Iran is quantitatively and qualitatively in a different league to Iraq.

For one thing, unlike Iraq, it represents a genuine WMD threat. Saddam's chemical and biological weapons programme proved a figment of the Western intelligence services' imagination.

By contrast, UN nuclear watchdog the IAEA has been in Iran all along, and what they have encountered - obstructions and lies about a sophisticated "civilian" nuclear programme - has been extremely worrying. Almost no one doubts that Iran wants the bomb. Most experts believe it is roughly three years away from getting it.

Secondly, unlike Saddam's Iraq, the Iranian regime has proven ties with various Middle East terrorist groups, if not with al Qaeda itself, is explicitly committed to the destruction of Israel and has far more credible ambitions than Saddam ever had of becoming the dominant power in the Gulf.

Thirdly, as a potential foe, Iran is on a different scale to Iraq.

It is nearly three times as populous and its potential for mischief-making is unrivalled. Unlike Iraq, it could block the Straits of Hormuz, passage for 40 per cent of the world's traded oil. Iran is a Shia country, with close ties to and influence over Iraq's Shia majority.

For all these reasons, the US has held back. At present Washington is engaged in a "good cop, bad cop" routine with the help of the Europeans.

Britain, France and Germany are leading a EU effort to strike a grand bargain with Iran, offering economic, technological and diplomatic assistance in return for "objective guarantees" that Tehran has no military nuclear ambitions.

With studied reluctance, Washington has thus far gone along, maintaining its harsh rhetoric and strict trade sanctions, but allowing others to lead the way.

"We've sanctioned ourselves out of influence with Iran," Bush admitted at his pre-Christmas press conference. "In other words, we don't have much leverage with the Iranians."

But the bad cop is sending another message to Tehran: If negotiations fail, force is very much an option. A nuclear-armed Iran is "unacceptable", Bush has said - and he means it.

Incoming Secretary of State Condoleezza Rice sounded a similar note at her confirmation hearings yesterday: "We must remain united in insisting that Iran [and North Korea] abandon their nuclear weapons ambitions."

Meanwhile, the familiar precursors of "regime change" are visible. The Pentagon is working with an Iranian exile group based in Iraq.

In the US, exiles are forming organisations of their own, most notably the ADI, or Alliance for Democracy in Iran, which wants the Iranian people to restore the monarchy under the former Shah's son, Reva Pahlavi (a resident of Washington).

For Ahmad Chalabi, the Pentagon's pre-war poster boy for Iraqi "democracy", read Kamal Azari, president of the ADI. On Capitol Hill, conservative Republicans want an Iran Freedom and Support Act, shading the 1998 Iraq Liberation Act.

Then came this week's New Yorker article by Seymour Hersh, the investigative reporter who broke the Abu Ghraib Prison scandal. Hersh claimed that US commandos are already inside Iran, dispatched by a Pentagon unabashed by the growing difficulties in Iraq. The Pentagon dismissed the story, but stopped well short of a full denial.

Just as before the Iraq war, the neo-conservatives loudly demand action against Iran now. In their view, the EU initiative will fail - just as they were convinced the UN inspection would fail in Iraq.

At that point, however, the scenarios diverge.

The diplomatic uproar over an attack on Iran would eclipse the Iraq controversy. If the US went into Iran, it would do so virtually alone, with not even the semblance of the "Coalition of the Willing" that unseated Saddam. Even Britain would be missing. Instead Israel - the one country that could never go to war with Iraq - might be America's only ally, inflicting yet more damage, were that possible, to the standing of the US in the Islamic world.

The military attack itself would pose daunting problems. True, US forces are now based in Afghanistan and Iraq. But its military is overstretched and the 150,000 troops in Iraq are tied down by the insurgency. If attacked, Iran would pull every lever to cause trouble in Iraq, and redouble its terrorist support.

There is a second option, of smaller strikes from the air or commando raids on suspected nuclear sites and/or key military installations. These might be carried out with the help of Israel, which has warned that it cannot tolerate a nuclear-armed Iran. The implication is that Tel Aviv is ready to go ahead on its own, with (or perhaps even without) Washington's blessing.

But even this is riddled with difficulties. Iran's nuclear sites are scattered and well-protected. This would be no repeat of 1981, when Israeli jets destroyed Saddam's reactor at Ozirak, setting back his nuclear ambitions by a decade.

And would the humiliation of any attack really make the Iranian population rise up, as the neo-cons believe, to overthrow the mullahs?

The lessons of Iraq, including the debacle over non-existent WMD and the rush to embrace Chalabi, display the limits of US understanding of that country. Why should Iran be any different? If the post-war occupation and the absence of an "exit strategy" have been disasters in Iraq, they will surely be double-disasters in Iran.

Last autumn, at the height of the election campaign, Atlantic Monthly magazine warned that the next President "must through bluff and patience, change the actions of a government whose motives he does not understand well, and over which his influence is limited".

Sam Gardiner, who for two decades has conducted such exercises at the National War College and who played the role of National Security Adviser, summed up its judgments in two blunt sentences. Mr President, "you have no military solution for the issues of Iran. You have to make diplomacy work".

The indications are that Bush may have grasped this reality. Certainly his pre-inauguration deeds, as well as his words, tilt towards a strategy of negotiation.

It may be true that the most prominent foreign policymakers to depart the Administration - Colin Powell and his deputy, Richard Armitage - have been moderates, while the civilian architects of the Iraq mess, such as Deputy Defence Secretary Paul Wolfowitz, have kept their jobs.

But Condoleezza Rice is no neo-con and her deputy, Robert Zoellick - while a vigorous defender of US interests - comes from the old pragmatic and multilateralist Republican foreign policy mainstream.

For the moment at least, John Bolton, the hawkish former Under-Secretary of State whom many feared might be promoted to the No 2 job at State, is nowhere to be seen.

Moreover, the proclaimed policy of rebuilding alliances would be a sham - and Bush would know it to be - if he had already made up his mind to attack Iran.

But somehow America must deal with Iran.

This Administration's heart may say attack, but its head, it seems, says negotiate.

Maybe a grand bargain can be struck. But, in the end, Washington may have no choice but to live with its nightmare: an Islamic theocracy with the bomb.

- INDEPENDENT