By Kaveh L Afrasiabi

It is possible that by giving the go-ahead for the production of 20% enriched uranium, Iranian President Mahmud Ahmadinejad has sufficiently jolted the other side to rethink its approach on the nuclear fuel-swap deal.

On the surface, Iran’s decision has raised alarm bells in the West and has provoked a strong response from United States President Barack Obama, who has warned that his administration is “developing a significant regime of sanctions” to impose on Iran.

Even Moscow has expressed its displeasure, in the form of a statement by a Foreign Ministry official, which said, “We are disappointed with the Iranian step, which did not allow diplomats to agree on mutually acceptable ways for the fulfillment of the IAEA [International Atomic Energy Agency] proposal of higher-enriched uranium fuel production for the Tehran research reactoroutside Iran.”

Under a proposal put forward by the IAEA last year, Iran would hand over its low-enriched uranium (LEU) to be further processed in another country before being returned for use at the Tehranreactor. On February 2, after much flip-flopping, Iran said it was now ready to send its LEU abroad. Then, on February 7, Iranannounced it would itself begin enriching uranium to 20%, while saying it was still open to discussing the original proposal.

This has heightened concerns that Iran aims to build nuclearweapons, something it has consistently denied.

However, not all hope is lost for the IAEA-proposed deal, and there are emerging signs of growing activity on both sides to come to some sort of mutually satisfactory agreement.

On Iran’s part, various officials from the Atomic EnergyOrganization (AEO) to the Foreign Ministry have repeatedly stated that Iran is still open to the swap deal. Ali Akbar Salehi, the head of the AEO, told the Tehran daily Iran that the government was willing to suspend production of 20% uranium if there were an exchange “without preconditions” of Iran’s 3.5% LEU in return fornuclear fuel rods. According to Salehi, Iran’s LEU could be “sealed and put under the custody” of the IAEA until it received the fuel it needed for the medical research reactor.

The news from Washington on the other hand indicates that the US is now working on a new proposal aimed at salvaging thenuclear deal that was unveiled last October in Geneva. This focuses on procuring medical isotopes for Iran from the international market. An administration official told the Washington Post, “Rather than operate a reactor, this would be a more cost-effective and efficient approach.”

Not everyone agrees with that assessment, however, and some US nuclear experts have openly admitted that Iran’s home production of key ingredients (eg technetium 99) would be less costly and more efficient. (See Dangerous steps in Iran’s nuclear dance Asia Times Online, February 9, 2010).

That aside, the problem with the US’s new approach is that it apparently seeks to make the reactor redundant by the promise of delivering the reactor’s net products. That will not wash with the Iranians, who have had an earful of unfulfilled promises over the past 30 years.

Instead, what may work to everyone’s advantage is a “mixed approach”, whereby the fuel swap under set timelines and delivery of medical isotopes to Iran would be the central elements of an agreement according to which Iran would refrain from engaging in enrichment activities deemed “highly dangerous” by the West.

“It’s Iran’s version of nuclear brinksmanship,” said a Tehran foreign policy expert. “The message from Tehran is clear: take our counter-proposal seriously or face the consequence of Iran taking a giant step closer to the ‘nuclear-capable’ threshold … There is cause for a pause on the part of Washington and London in their unreasonable rejection of Iran’s proposal.”

If a deal is worked out and a modified version of the IAEA proposalaccepted, it would represent a unique victory for Iran’s nucleardiplomacy, combining “soft” and “hard” power to elicit a favorable response from the “Iran Six” nations, ie the US, France, Britain, Russia, China and Germany. These countries have engaged innuclear negotiations with Iran over the past several years.

Also, if there were a breakthrough, it would frustrate some of the hardline voices in Iran that argue in favor of Iran “deepening itsnuclear capability”. To silence such voices and to agree to limitIran’s enrichment activities to low levels (below 5%), Iran’s top decision-makers would have to show that they had struck the right bargain without selling themselves short.

As Iran celebrates the anniversary of the 1979 Islamic Revolution on Thursday, with people expected to take to the streets in their thousands across the country – although some will be protesting against the current government – there are rays of hope that the dark clouds of a more intensified nuclear crisis may be disappearing.

Kaveh L Afrasiabi, PhD, is the author of After Khomeini: New Directions in Iran’s Foreign Policy (Westview Press) . For his Wikipedia entry, click here. His latest book, Reading In Iran Foreign Policy After September 11 (BookSurge Publishing , October 23, 2008) is now available