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Washington DC - An IAEA report released this week confirms that Iran now has 1,300 centrifuges operating—a significant increase in just the past few months. The finding prompted IAEA Secretary General Mohammad El Baradei to controversially conclude that despite persistent technical problems, Iran now “pretty much knows how to enrich.”

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For an administration seeking to reverse Iran's gains in uranium enrichment, this conclusion was particularly galling as it directly undermines efforts to deny Iran this capability. If Iran can already enrich uranium independently, not only does the 2006 Western offer of nuclear fuel in exchange for suspension lose relevance, but the price for any future diplomatic resolution is automatically increased.

This is partially why El Baradei has also recently concluded-much to the chagrin of the State Department, who has filed complaints against him-that Western efforts to prevent Iran from acquiring enrichment capability have failed and a new approach of dialogue is needed.

Talking Under Pressure

The U.S. and Iran are preparing for crucial direct talks in Baghdad regarding Iraq on May 28. As they do so, both parties are pursuing harder stances on a number of issue to establish leverage. Rhetoric from both sides on the nuclear issue has become more confrontational as well. In recent days provocative activity by both sides has escalated dramatically.

The Bush administration has stepped up pressure on Iran via diplomatic, economic, covert, and military means since last fall. In the past week, Vice President Cheney delivered a tough speech aboard a U.S. Navy vessel in the Persian Gulf aimed directly at Iran. U.S. forces have also conducted unannounced, large-scale military maneuvers just off the Iranian coastline. These actions aim to blunt Tehran's support for Iraqi militias while sending a strong signal regarding its nuclear program and regional ambitions. However, they have also occurred within a changed political environment in Washington. Renewed U.S. pressure is now widely seen as a way to change Iranian behavior and not the regime itself.

Even though this shift has been widely credited to resurgence among foreign policy "realists" in the Bush administration, advocates of this view-unlike the neoconservatives they have supplanted-consider applying gradations of pressure as a useful policy tool.

Notably, in the current geopolitical environment, this approach is likely to lead to even greater points of conflict with Iran in the near term.

The Boomerang Effect

A key determinant of Iran's behavior on the nuclear question is the ability of radical politicians such as President Ahmadinejad to morph the issue into one of Iranian sovereignty and independence. This mirrors the traditional success of radicals in translating external threats into political bludgeons against domestic opposition or rivals.

The Iranian response has been typical of the regime when faced with an adversary bent on imposing its will. Rather than becoming more malleable Tehran has in fact become more bellicose. In addition, internal dissent has been surpressed to reduce points of vulnerability or to settle internal political scores among competing factions. Unsurprisingly, in the aftermath of the notorious 2002 Axis of Evil designation, the radical Islamist factions have benefited the most in Iran at the expense of reformist or pragmatic elements.

The key mediator in the internal political rivalries that pervade Iranian politics is the collective leadership of the regime-most prominently the camps of Supreme Leader Ali Khamenei and former President Hashemi Rafsanjani. Indications exist that the leadership is concerned about the behavior or Iran's radical President and has taken steps to limit his power. Real questions exist about the ability of Ahmadinejad to run and win the next presidential election.

In the meantime, the regime in Tehran is in fact quite paranoid about the possibility of U.S.-sponsored "regime change." The most radical elements of the Iranian regime, such as the political allies and acolytes of President Ahmadinejad, thrive on the perception that they are bullied and under siege. U.S. pressure tactics provide evidence of malicious intent, reinforce their extremist interpretations of Shi'a theology, and strengthen their appeal to Iranian nationalism-a powerful internal mobilizer.

Following the Congressional allocation of $75 million for regime change, recent reports regarding covert activities against Iran and growing American support for a range of Iranian opposition and separatist groups feeds this paranoia. More pressure by Washington plays directly into the hands of Iranian factions that wish to derail any potential improvement in relations.

These political elements in Iran are prone to taking unpredictable actions to change facts on the ground in their favor. This is reflected by their role in the 1980-81 hostage crisis, the taking of the Western hostages in Lebanon in the 1980s, the recent seizure of 15 British naval personnel, and the detention of several prominent Iranian-Americans in recent weeks as agents of U.S.-sponsored regime change policies. Through such actions, they seek to reverse their internal political slide since 2005, stoke the prospects for U.S.-Iranian conflict, and appeal to the broader Iranian and regional population as defenders of Iran's national independence and religious identity.

What Now?

The nuclear standoff and steadily increasing U.S.-Iranian tensions provide the radicals with ideal opportunities to demonstrate their disregard for U.S. will or that of the international community they consider beholden to U.S. pressure. El Baradei's conclusion that Iran's program has proceeded beyond the point at which enrichment suspension would be useful from a non-proliferation perspective has undoubtedly strengthened Iran's hand.

This leaves the U.S. pondering the prospect of convincing an Iranian leadership still inclined to dismiss its demands to reach a negotiated solution soon. Given the boomerang effect, one of the few paths to advancing a diplomatic solution is the upcoming May 28 talks. Movement toward a common understanding of events in Iraq could represent a crucial turning point.

Dr. Bahram Rajaee is a senior policy consultant for NIAC and an expert on Middle East affairs.