Leading article: Alarming escalation over Iran

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The dispute over Iran's nuclear programme has been around for so long that it seems part of the background music of international diplomacy. But over the past few weeks, Tehran and the West have moved perilously close to an endgame that could set the Middle East ablaze and have disastrous consequences for the already feeble world economy.

The latest chapter in the controversy was opened by November's report from the International Atomic Energy Agency. It concluded that, contrary to Iran's denials, the programme has a military purpose and it included expert assessments that the country could have a nuclear weapon within a year or two.

In response, the US and its allies have drastically tightened financial sanctions, while Europe is moving towards an oil embargo. Iran has retaliated by warning US warships to stay out of the Persian Gulf and by threatening to close the Straits of Hormuz, through which a quarter of the world's oil shipments pass daily.

Meanwhile, Israel, the third protagonist in this escalating crisis, continues to insist that if no one else acts quickly to remove what it deems an existential threat, then it will.

Both sides have domestic reasons to act tough. In March, Iran holds parliamentary elections that are expected to be a showdown between hardliners and ultra-hardliners, while in America the White House race is well under way. Every Republican challenger (except Ron Paul) sounds ready to bomb Iran tomorrow, and will pounce on any sign of "weakness" in President Obama. And the essay in the latest edition of Foreign Affairs – house magazine of the US diplomatic and national security establishment – advocating a preventive strike against Iran's nuclear sites is hardly comforting.

To be sure, a good deal of posturing is involved and the Obama administration is correct in arguing that the ever more shrill rhetoric from Tehran – not to mention the recent collapse of the Iranian currency – merely proves that the latest sanctions are really biting. But the situation is explosive and a small miscalculation by either side could prove fatal. Great wars in the past have been started by much less.

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