Washington's new strategy in Iraq is being accompanied by an escalation of its rhetoric against the theocratic regime in Tehran over the latter's role in Iraq. The Bush administration feels reinforced in the effort by the United Nations Security Council sanctions imposed in December 2006 over Iran's nuclear programme, and news of mounting criticism within Iran of Mahmoud Ahmadinejad's leadership style and failures of economic policy.

But Washington should take care: its twenty-seven years of diplomatic enmity with the Islamic Republic of Iran has yielded little in its reading of Iran's internal politics. Yet only by understanding how Iran's leaders currently see their triple predicament - the nuclear issue, Iraq and regional tension, and the economy - can a way be found to resolve the current dangerous standoff. In particular, it is important to recognize that while Iran can make concessions to break the nuclear stalemate, it will not over its assertive regional policy.

Sanam Vakil is a middle-east specialist teaching at the Johns Hopkins School of Advanced International Studies in Bologna, Italy. Her book Through the Looking Glass: An Analysis of U.S.-Iranian Relations will be published in 2007.

The signals within

Iran's nuclear, economic and regional pressures are having an impact on the political calculations of Iran's elite. The UN Security Council Resolution 1737 broke the long diplomatic stalemate by imposing financial sanctions in Iran, and travel restrictions on the architects of its nuclear portfolio; it further set Iran a deadline of 21 February to consider suspending "all enrichment-related and reprocessing activities, including research and development, to be verified by the International Atomic Energy Agency (IAEA)." A symbolic gesture of suspension (whose verification would need to follow) will protect the regime from intensified economic pressure, and deflect the military threat now hanging over it.

Meanwhile, as Iran evaluates its nuclear options, its domestic economic difficulties - the culmination of the theocracy's ineffective policies over an entire generation - are a deep concern. An energy-dependent, subsidised, bureaucratised system is incapable of providing for an increasingly young population (70% of the population is under the age of 30); double-digit inflation and unemployment affect the daily lives of millions. Many in the elite are acutely conscious that they are presiding over a failed economic model.

The election of President Ahmadinejad in June 2005 gave him a mandate for economic reform after the abortive civil-society reforms of his predecessor, Mohammad Khatami. Ahmadinejad's populist platform caters to the mostazafin (dispossessed), intended to be the principal beneficiaries of the Islamic revolution. They are still waiting.

As discontent rises from the grassroots - reflected in the comprehensive defeat of Ahmadinejad's supporters in the December 2oo6 municipal and Assembly of Experts elections - it is growing too among the elite and in the media. The breakthrough came in mid-2006 when the supreme leader, Ayatollah Ali Khamenei, highlighted the issue of rising inflation. Today, the disapproval is widespread: from the majlis (parliament) to reformist and even conservative newspapers. A majority of legislators (150 out of 290) have signed a letter condemning Ahmadinejad's inflationary economic policies, and - even worse for him - impeached four of his ministers for ineptitude and passed a motion summoning the president for questioning.

A significant outcome of December's election was the success of the former president Hashemi Rafsanjani in alliance with the reformist camp. His return to the centre of the political scene is augurs further difficulty for Ahmadinejad, who defeated Rafsanjani in the 2005 presidential election. Rafsanjani, a political chameleon (considered a pragmatist in the west) has charged Ahmadinejad with moving away from the privatisation policy supported by the supreme leader and enshrined in the Iranian constitution.

At the same time, voices of dissent are rejecting the president's confrontational approach over the nuclear issue. The conservative newspapers Kayhan and Jomhuri-ye-Islami are scornful of a president who referred to resolution 1737 as a "piece of torn paper", and even suggest that he has compromised Iran's national security.

The cards and the table

In such criticism, the outline of a possible way forward can be glimpsed - beginning with the nuclear issue. Iran's more intelligent leaders are aware that intransigence over its nuclear programme would only invite an unstoppable, vicious cycle - the wrath of the international community, the imposition of more stringent sanctions, a return to international isolation, greater economic crisis, and internal political unrest. To avoid this outcome, Tehran needs a consensus - and such a consensus is in the making.

Its heart is a temporary suspension of uranium enrichment (a move strongly encouraged by Mohamed ElBaradei, head of the IAEA). Crucially, this nuclear gambit will protect Iran in the regional arena as well.

Among openDemocracy's recent articles on Iranian politics in a period of crisis:

Nazenin Ansari, "An ayatollah under siege… in Tehran"
(4 October 2006)

Hooshang Amirahmadi, "Iran and the international community: roots of perpetual crisis" (24 November 2006)

Nasrin Alavi, "Iran: cracks in the façade" (11 December 2006)

Nasrin Alavi, "Iran's election backlash"
(19 December 2006)

Dariush Zahedi & Omid Memarian, "Ahmadinejad, Iran and America"
(15 January 2007)

Ali Afshari & H Graham Underwood, " Iran's post-election balance Ahmadinejad, Iran and America"
(22 January 2007)

Kamin Mohammadi, "Voices from Tehran"
(31 January 2007)

The reason that Iran will move on the nuclear issue is that it must protect is that it must protect its strategic interests in the region as one guarantee of its long-term viability. Washington is attempting to intimidate Iran - by increasing its troop numbers in Iraq, hardening its language, deploying a second US aircraft carrier to the Persian Gulf, positioning additional Patriot missiles in Iraq, and pledging to "interrupt the flow of support (for extremists in Iraq) from Iran." The final card in the Bush administration's locker is military operations against Iran. Iran can only respond by attempting to avert the accumulating threats.

The key to its response is balance: aware of the devastating effects of the eight-year war with Iraq in the 1980s, and of the growing United States regional presence, Tehran must maintain its neighbourly influence while avoiding American adventurism turning into war. A nuclear concession - the temporary suspension of uranium enrichment - provides the best return for the regime.

True, in itself it would not guarantee either security against or regime survival (the ultimate ambition of the clerical elite); but it would give Iran other much-needed benefits. It would restore Tehran to the favour of the international community; placate the middle east; buffer the Islamic Republic against further sanctions; open the way to new negotiations with the international community; deflect the immediate threat of war; and not compromise Iran's permanent nuclear ambitions.

By adhering to the terms of Resolution 1737 through a temporary suspension, Tehran can defend its domestic, economic, national security, and international interests. For the Bush administration, this would be a bad outcome, compromising its goals of containing and weakening - if not actually destroying - the Islamic Republic. But for Tehran, the move will trump Washington's hand in this never-ending game of power politics.

By 21 February, Iran must gamble. Tehran has limited options, and it has bluffed too many times. Yet rolling its dice with the international community is in the best interest of a troubled regime. When it does, Tehran will be back at the table, where the games can begin yet again.