The gloves are off but the US and Iran are just swinging

The US government's latest squabble with Iran demonstrates that the US is reluctant to use real diplomacy but quick to rattle its sword.

US President Barack Obama doesn't want, or intend, to go to war with Iran. But that doesn't necessarily mean he won't do so. Neither Mr Obama nor his Iranian counterparts imagine that their game of brinkmanship could lead to a conflagration that neither seeks, but both sides could make political choices that amount to opting for war rather than compromise.

Iran spent last week test-firing surface-to-surface missiles in war games near the Strait of Hormuz, apparently seeking to signal its ability to close off the sea lane through which some 40 per cent of global oil supplies travel. A couple of Iranian officials even threatened to do just that if Iran is blocked from selling its own oil on global markets - although other, more senior officials quickly walked back that threat.

Nevertheless, the US Navy vowed to prevent militarily any closure of the Strait, creating a media firestorm in the news-starved holiday season Western media.

President Obama, of course, was spending his Christmas break in Hawaii, but he took time off from golf and snorkelling to sign into law a dramatic escalation of US sanctions against Iran - and any company from any country doing business with Iran's central bank. The new measures threaten to exclude any bank or firm that trades with Iran from doing business in the US, which remains the hub of global finance. That legislation could be used to effectively stop Iran selling oil on world markets.

The plummeting of Iran's currency since Monday suggests that the measures are having an impact, although few analysts expect them to change the stance of Iran's leadership. On the contrary, Ayatollah Ali Khamenei will hope to rally nationalist sentiment by blaming economic hardships on Western pressure over a nuclear programme that remains popular.

Mr Obama likes to tell himself that economic strangulation is an alternative to war. In signing new sanctions legislations, he believes he is giving Iran a "last chance" to back down peacefully before the US exercises a "military option" to stop Iran from acquiring the means to build nuclear weapons. But the "red lines" are hardly being made clear, and they may not be the same for Washington as they are for Israel, which is constantly threatening to strike.

More importantly, as the former CIA chief analyst Paul Pillar argues: "The United States has made it almost impossible for Iran to say yes to whatever it is the United States is supposedly demanding of Iran."

The dispute has moved beyond the terms of Iran's conflict with the IAEA and the relevant UN Security Council resolutions, since the sanctions being imposed now are not authorised by the UN resolutions - and the threat of military action that underlies them has no legal authority from the Security Council.

When the showdown began under President George W Bush, the determination was to prevent Iran from acquiring the means to build nuclear weapons, particularly the technology to enrich uranium.

Iran crossed that "red line" two years before Mr Bush left the White House. Since then, Western powers have not defined the parameters of an acceptable or plausible outcome to the showdown. It remains extremely unlikely that Iran, whose insistence on its "nuclear rights" under the Nuclear Non-Proliferation Treaty enjoys widespread popular support at home, would accept less than the full nuclear fuel cycle - including uranium enrichment - to which it is entitled as an NPT signatory once it has satisfied the concerns raised by the IAEA.

As Mr Pillar notes: "Any feasible change in Iranian policies that could be the basis of a new understanding with the United States and the West would ... very likely include the (continued) enrichment of uranium by Iran." That would mean Iran would keep the means to develop a nuclear weapon but would agree to stronger safeguards against it turning that capability into a weapons program.

That's a goal that can still be achieved: Western intelligence agencies agree that Iran has not, in fact, made a strategic decision to actually build nuclear weapons, even as it uses the rubric of a nuclear energy programme to acquire the infrastructure necessary to do so. This despite the fact that the IAEA has accused Iran of conducting research work and experiments that appear to be aimed at mastering the technology of building nuclear warheads.

The misleading conventional wisdom in Washington is that diplomacy was tried with Iran, and failed. But a group of US foreign policy greybeards, represented by former Ambassadors Thomas Pickering and William Luers, warned last week that serious diplomacy with Iran hasn't really been tried.

"Military action is becoming the seemingly fail-safe solution for the United States to deal with real and imagined security problems," the ambassadors wrote in the Washington Post. "The uncertain and intellectually demanding ways of diplomacy are seen as unmanly and tedious - likely to involve compromise and even appeasement. President Obama made efforts to engage Iranian leaders in his first year in office but, when rebuffed, turned in a different direction."

Today, when the Obama Administration talks about "diplomacy" on Iran, it means the effort to persuade other governments to support sanctions.

"Without [a] patient search for different ways to deal with Tehran," Mr Pickering and Mr Luers warn, "Washington will be stuck with a policy that will not change Iran's practices or its regime and could lead to a catastrophic war."

Two weeks ago, the Associate Press reported that US Ambassador Susan Rice had told the Security Council that Iran sanctions were not an end in themselves, but a means to "buy time to pursue diplomatic solutions" to the nuclear standoff. Unfortunately, the only constituency from which the US needs to "buy time" are those baying for war and manufacturing a sense of crisis that could end in tragedy.

Tony Karon is an analyst based in New York. Follow on Twitter @TonyKaron