The evidence put out over the weekend by American military officials in Baghdad - that Iran is supplying Shia extremists groups in Iraq with deadly weapons - has ratcheted up tensions. But as the US continues the biggest naval build-up in the Gulf since the Iraq war, have all the diplomatic options been fully explored?
"Creative diplomacy and leadership" was called for last week by the Atomic Energy Agency chief, Mohamed ElBaradei. He emphasised the dangers of an uncontrolled chain reaction if confrontation with Iran made the Middle East more militant and angry. He called for a three-month time-out period that allowed for a comprehensive settlement covering not just covering nuclear issues but security and trade, which have polarised issues between Iran and the United States for 25 years.
The current crisis could present new opportunities as the political landscape in Iran is changing. There are increasing signs that President Ahmadinejad may have suffered a near fatal blow. In an unprecedented criticism of his bellicose foreign policy rhetoric, and his poor record on promised reforms at home, 150 members of the Iranian Majlis (parliament) signed a letter blaming him for raging inflation, soaring food prices, high unemployment and failure to deliver a budget on time.
Pragmatists in Iran claim that Ahmadinejad's provocative rhetoric in which he declared "Iran would not suspend uranium enrichment even for one day" runs the risk of torpedoing any chance of better relations with the West. His declining position coincides with a crushing defeat in December's local elections, when his allies won only a fifth of the seats for the Tehran City Council. The results suggest a move away from dogmatic conservatism and a growth of support for his presidential rival, Mohammed Baqer Qalibaf, the mayor of Tehran, who is known for more pragmatic policies.
Even if this does not happen, the changing mood inside the country and the external pressures from the UN Security Council may have encouraged those in charge of foreign policy to challenge Ahmadinejad. Under Iran's complex constitutional set-up, President Ahmadinejad is responsible only for domestic policy, not for Iran's external relations. Foreign policy is made by the Supreme Leader Ayatollah Ali Khamenei under the guidance of the National Security Council.
A military strike from outside, either from the US or from Israel, would derail these developments and would be welcomed by the regime hard-liners. During a recent visit to Tehran, I spoke to hardliners and moderates. Many felt that the consequences of outside intervention would lead the Revolutionary Guard to declare a state of emergency, marginalising moderate influence for the next decade. This would escalate Iran's thrust to become a nuclear-weapon state. A surge of nationalistic fever could secure Ahmadinejad's position.
A little-known fact is that in 2003 the Iranian government, under the then-president Mohammad Khatami, discussed a secret "Grand Bargain" with Swiss interlocutors at the time of the fall of Saddam Hussein. In return for US security guarantees of non-interference in the regime, the end of sanctions and the opening of the possibility of joining the World Trade Organisation, Iran offered support for a two-state solution for Israel and Palestine in which it said it would accept the 2002 "Beirut Declaration", in which the Arab League endorsed this objective. It also offered to give up supporting terrorist groups.
What then is the scope, four years later, to revitalise such an initiative, and could the changing mood in Tehran offer new opportunities?
There is much suspicion and mistrust about the intentions of the Iranian and US governments. Tehran insists that the US policy is aimed at regime change, and the US charges Iran with attempting to sabotage its attempts to stabilise the Middle East. Mutual security agendas need to be addressed.
Can the gradual drum beat towards war against Iran be averted? Is it possible to mitigate Iran's nuclear threat by offering a deal that addresses the security concerns of all the parties engaged in this conflict? ElBaradei's call for "a three-month time-out period" could address much deeper questions and anxieties about Iran's place in the region, the future of the regime and relationships with the West and Israel. Could the changing mood in Tehran open up more possibilities to pursue this agenda?
Gabrielle Rifkind is a specialist in conflict resolution. She co-authored 'Making Terrorism History'