No one knows exactly how Iran will react to the latest European proposals for reining in its nuclear ambitions and no one should underestimate the importance of its response. Britain, France and Germany - the EU3 - did the sensible thing yesterday when they set out their stall in Vienna. Their tempting idea is that the Islamic Republic will be helped to generate nuclear power if it agrees to stop enriching uranium, which can be used to make nuclear weapons. The United States is unhappy with this strategy of inducements. But with the American presidential election imminent and the Europeans desperately conscious of the shadow of Iraq, it is right to explore every diplomatic avenue. If there is no progress, the International Atomic Energy Agency, the UN's nuclear watchdog, will pass the dossier to the security council next month to consider "further steps", including the possible imposition of economic sanctions. It is hard to imagine that there will be a united international response at that point.
Iran maintains that its nuclear programme, a symbol of modernity and national pride, is for power generation and not for military purposes. It insists too that it is open to talks, but will never give up uranium enrichment - a process which can be used to produce fuel for nuclear reactors or material for atomic bombs. This is a murky area - though the US and Britain must be aware that their record on intelligence about Iraq's weapons of mass destruction will not inspire confidence that they are well informed about Iran. The studiously neutral IAEA has uncovered previously hidden activities that could well be related to a clandestine Iranian weapons programme. Crucially, though, it has found no "smoking gun".
President George Bush famously included Iran in his "axis of evil" in the state of the union address in 2002, citing its support for the Lebanese Hizbullah and Palestinian Islamic Jihad groups, as well as its nuclear ambitions and a fundamentalist regime which began life by overthrowing the Shah and humiliating America back in 1979. But the view from Tehran looks fairly ominous these days: two of Iran's neighbours - Russia and Pakistan - are nuclear powers. Israel has a formidable if undeclared nuclear arsenal and has hinted heavily that it might launch a pre-emptive strike on Iran's nuclear facilities, as it did against Saddam Hussein's French-built reactor in 1981. American forces are next door in Iraq and Afghanistan - hardly a recipe for studied calm among the hawks around President Ali Khamenei. You do not need a Farsi edition of Clausewitz to work out that a nuclear weapon might be a useful protection against efforts at regime change in Tehran - a thought surely reflected in Wednesday's launch of a new long-range ballistic missile.
Looking back a year or so ago, Iran looked like the case that could prove that European policies of engagement and persuasion would succeed where American sabre-rattling failed. The EU's strategic doctrine placed heavy emphasis on "effective multilateralism" (without referring to Mr Bush's disastrous unilateralism). The mission was important enough to unite London, Paris and Berlin, divided over Iraq, to try their luck with Iran. But barring some last minute surprise from Tehran, they seem to have failed. Understandably enough, the world is deeply preoccupied with Iraq, but the crisis brewing next door could be extremely serious. Nothing much will happen this side of November 2, though after that - especially with a re-elected President Bush - all bets will be off. The nuclear non-proliferation treaty has already been rocked by India and Pakistan acquiring nuclear weapons. Another breach could kill it off. That means that keeping the Iranian genie inside its bottle is a matter of global importance.