By giving Israel veto rights and threatening more sanctions, the U.S. is squandering the best chance we have for a negotiated solution to the Iranian nuclear issue.

Ordinarily, it would have been easy to dismiss the latest resolution of the International Atomic Energy Agency censuring Iran as a text, drafted by idiots, full of sound and fury, signifying nothing.

But context is everything. Whether by design or default, the unhelpful resolution comes at a time when the Iranians are still in the process of working out the terms of a landmark agreement on a nuclear fuel swap. If implemented, this would represent the first genuine breakthrough in the nuclear arena since the present standoff between Iran and the West began in 2005. Under the terms of the original proposal made last month by the five permanent members of the U.N. Security Council and Germany (known collectively as the P5+1), Iran is to send to Russia most of its stocks of 3.5 per cent low enriched uranium (LEU) produced under safeguards at Natanz. There, the LEU would be enriched to 20 per cent and sent on to France for fabrication into fuel rods for eventual use at the Tehran Research Reactor (TRR).

The TRR was set up in 1967 with U.S. support and is used by the Iranians for the production of medical isotopes for cancer diagnostics. With the TRR’s fuel set to run out next year, Iran had asked the IAEA for help in procuring new supplies, failing which it would be obliged to up the level of its own enrichment activities so as to fuel the TRR domestically. The IAEA, in consultation with the United States, came up with the 3.5-for-20 per cent fuel swap idea. The proposal was, and remains, win-win as far as the U.S. and Iran are concerned. Washington, which worries about the possibility of Iran using its LEU stocks to bust out of the Nuclear Non-Proliferation Treaty, buys time. And the Iranians, who do not as yet have any domestic use for their LEU stocks, get fuel for the TRR and also reassure the international community about the peaceful nature of their nuclear programme. Most importantly, the TRR fuel deal represents a political victory for Iran because it shows the U.S. and its allies are willing to engage in dialogue and deal-making despite Tehran not suspending enrichment — something Washington has been insisting on since 2005.

Despite these benefits, the proposal ran into trouble in Tehran for two reasons. First, ever since the controversial re-election of Mahmoud Ahmadinejad earlier this year, the Islamic Republic has been buffeted by deep political schisms that have reduced the president’s room for manoeuvre internationally and also, perhaps, his appetite for compromise. Second, Iran’s establishment is distrustful of France and, to a lesser extent, Russia, and fears the deal may not be honoured once its LEU is exported. The fact that IAEA director general Mohammed ElBaradei, who has generally played straight with Iran, retires December 1 is a further source of unease in Tehran. His successor, Yukio Amano, is an unknown quantity. Would he, for example, insist on upholding the Western side of the bargain if France declares, sometime next year, that it will not supply fuel for the TRR after all? No gambling man would be willing to wager a large sum on Mr. Amano defying the West.

In order to cover for all contingencies, Iran modified the original proposal. In an interview to The Hindu earlier this month, Foreign Minister Manochechr Mottaki said the swap should take place on Iranian territory. This condition would not alter the essential structure of the deal. At a certain date, when French fabrication of the TRR fuel starts, the IAEA could take into its custody an equivalent amount of Iranian LEU and hold it, in escrow, inside Iran. When the TRR fuel is ready, the Iranian LEU can be loaded onto a plane, which would take off once the French fuel lands inside Iran. At the end of the day, the outcome for the U.S. from a simultaneous swap would be the same as from a sequential swap: Iranian LEU stocks would have been depleted.

For reasons best known to itself, however, Washington declared the original proposal could not be modified. Rather than using Mr. Mottaki’s comments on a swap inside Iranian territory as a means of swiftly closing the TRR deal, President Barack Obama expressed disappointment in Iran’s response and said the Security Council would soon have to consider fresh sanctions. It is in this context that last week’s IAEA resolution must be seen. According to the Washington Post, the U.S. won Chinese backing for it by sending Dennis Ross, arguably the most pro-Israeli official in the White House, to Beijing with the message that the Zionist state was likely to attack Iran if the IAEA and UNSC did not act against Tehran.

President Obama’s refusal to find creative ways of reaching a settlement is of a piece with the approach of his predecessor. In early 2005, the Bush administration leaned on the European troika of Britain, France and Germany to ensure the package they proposed to Iran included the insulting condition that Tehran should abandon enrichment altogether. And now, once again, by turning the P5+1 into a U1+5 — a body driven by U.S. interests and considerations — Washington is sabotaging the prospects of a diplomatic solution.

The proximate trigger for the latest IAEA resolution is Iran’s recent disclosure that it is constructing a second enrichment facility. This facility, at Fordo near Qom, is fortified and designed to withstand the kind of military attack that Washington and Tel Aviv have been threatening. Legally, Iran insists it was obliged to inform the IAEA about Fordo only six months prior to the introduction of nuclear material. It says it started construction in late 2007, after it had declared it would no longer abide by new rules of early disclosure it had provisionally accepted. The U.S. initially claimed the work on Fordo began in 2002 or 2003, but satellite imagery from late 2006 shows no construction work there. As Gareth Porter has argued, the Iranian timeline is consistent with the findings of the U.S. National Intelligence Estimate of 2007, which said “covert” enrichment work had probably ended in 2003, and with the U.S. military build-up which took place around Iran two years back.

Last month, I asked Dr. ElBaradei if he thought it reasonable for Tehran to be secretive given the threats Israel and the U.S. have made of a military attack on their nuclear facilities. He avoided a direct answer but said: “That’s why I say using the language of force is not helpful. It leads to confrontation, to the other country taking counteraction. It is better to forget the language of coercion and focus on trying to engage in dialogue”.

Sadly, the U.S. has now further undermined the prospects for dialogue. Iran has responded to the latest IAEA vote by threatening to further downgrade the level of its cooperation with the Agency. It knows the purpose behind the IAEA vote is to prepare the ground for more sanctions. Russia and China went along because they have a veto in the UNSC and were willing to kick the can down. India, which voted against Iran, naively stated that the latest resolution “cannot be the basis of a renewed punitive approach or new sanctions”. But Brazil, which abstained, demonstrated a clearer understanding of international politics. “The resolution clear the way for sanctions... and sanctions don’t lead to anything,” its ambassador to the IAEA said.

Ever since Iran was referred to the UNSC, Tehran has withdrawn its voluntary adherence to the Additional Protocol and to the modified Subsidiary Arrangements to its Safeguards Agreement requiring early disclosure of nuclear-related construction. Despite losing these windows of access, the IAEA has managed to close the file on all the outstanding issues which led the Board of Governors to find Iran in violation of its safeguards obligations in September 2005. The outstanding issues which remain pertain to alleged studies Iran is supposed to have conducted on nuclear weaponisation. But although Western intelligence agencies have shared some documents pertaining to these alleged studies with the IAEA, they have not allowed these to be shown to the Iranians. Iran cites this refusal as proof that the documents are forgeries and says that the purpose of sanctions is to ensure it abandons its enrichment programme.

Since existing sanctions — and the impending threat of more punitive measures — have had little impact on Iran, the U1+5 need to seriously rethink their approach. One way out of the current impasse is for the UNSC to suspend sanctions for a finite period, to begin with, during which time the Iranians once again voluntarily abide by the AP and step up cooperation with the IAEA over the alleged weaponisation studies. This mechanism would allow the agency to conclude that there are no undeclared nuclear activities in Iran, following which U.N. sanctions could be lifted. While the world would welcome such an outcome, Israel wouldn’t, since it is not prepared to accept a safeguarded Iranian enrichment programme under any circumstances. Mr. Obama’s failure to press ahead with his campaign promise of engaging Iran is of a piece with his failure to play the honest broker on the Israel-Palestine issue and can only lead to confrontation and conflict. Sooner rather than later, the world, and America, will come to regret this abject failure of leadership.