IRAN'S THEOCRATIC leaders are not an attractive group of men. Their behavior and their public statements provide much ammunition for those who are convinced their regime should be toppled. Iran is a dangerous country.

But Iran does not pose an existential threat to the United States analogous to imperial Japan, Nazi Germany or the Soviet Union. It is not a rising superpower that threatens to dominate the globe-a regional troublemaker, yes. But "confronting Iran" should not become the guiding focus of U.S. foreign policy.

Rhetoric about Iran's malign propensities has received much attention. A worst-case analysis, most vigorously argued by Norman Podhoretz, an advisor to former-presidential-candidate Rudolph Guiliani, would suggest that once Iran gets hold of nuclear weapons, its messianic president, Mahmoud Ahmadinejad, may be inclined to use them, especially against Israel. Ahmadinejad and his coterie believe in scenarios that call for a bloody battle between true believers and infidels as the precursor for the return of the Hidden Imam and the establishment of a world government. This is why Iran, unlike other nuclear powers-including the Soviet Union and China during the cold war-may not be susceptible to the logic of deterrence. For this reason they must be stopped from getting the bomb. In the absence of any diplomatic solution this simply calls for a military strike against the Iranian nuclear facilities.¹

While such apocalyptic visions are frightening, to infer, as Podhoretz does, that Ahmadinejad is another Adolf Hitler does not take into account the reality of Iran's strengths and weaknesses. Iran is an important regional power that wants to be taken seriously and have an influence on Middle East geopolitics. Yes, it has energy reserves, a talented, educated population, and a unique geographical position that strides both the Persian Gulf and the Caspian Sea-and it may even soon have the capacity to build nuclear weapons. But its ability to act as a regional hegemon is constrained by political, economic and military limitations. For all the rhetoric about Iran as a new Mideast colossus, the reality is that Iranians are not a martial people.

Iran is an authoritarian theocracy on the political level, but within its own parameters it has a lively and active political culture. The balance of political power in Tehran is adjudicated by the conservative supreme leader, Ali Khameini. He has been successful in reducing the power and influence of the reformists who thrived during the first years of President Mohammad Khatami's terms in office from 1997-2005. Khameini played a complicit role in the surprise election of Ahmadinejad in 2005, but since that time he has kept the new president in check by allowing the pragmatic conservatives, including former-President Akbar Hashemi Rafsanjani, to wield influence in the National Security Council and other high-level institutions. In 2007, Rafsanjani was elected chairman of the Assembly of Experts, a body that legally has the authority to supervise, choose or dismiss the supreme leader.

As expected, the outcome of Iran's parliamentary elections on March 14 assured that the conservatives retained their overall majority in the parliament. But let us be clear, the hard-line Council of Guardians disqualified many of the reformists' candidates, making it impossible for them to compete in a number of districts. Ahmadinejad can boast that the votes point to popular approval of his nuclear policies. However, the conservatives as a group are disunited and a significant number of pragmatic conservatives will be in the new parliament, including the former-nuclear-negotiator Ali Larijani and the mayor of Tehran, Mohammad Bagher Ghalibaf. They are likely to challenge the president on a number of issues, especially those relating to the poor performance of the Iranian economy, which is in the doldrums and is not attracting the level of foreign investment it needs to modernize its infrastructure and upgrade its oil and natural-gas industries. Thanks to high oil prices, Iran has a cushion of financial reserves, but oil production is down from the high of 6 million barrels per day in 1974 to 3.8 million barrels per day in 2006. Unemployment and inflation remain high. Ahmadinejad has fulfilled very few of the promises for economic relief he made during his election campaign in 2005. Frequent shortages of staple items, such as fuel and food, have led to rationing and subsequent price increases.

One clear indicator of Iran's comparative economic weakness is to contrast it with the growth and investment in massive infrastructure projects that are flourishing across the Gulf in the Arab countries. The emergence of super-rich city-states, flush with unprecedented oil wealth while still militarily weak and dependent upon Asian labor and American military power for prosperity and survival, is an extraordinary development. These city-states are attracting much foreign investment and having a veritable one-upmanship contest; each trying to create more high-rise buildings, resort facilities, duty-free shopping malls and luxury airlines equipped with the most-advanced planes on the market. Dubai is the poster child for this phenomenon, but it has competition in Abu Dhabi, Doha, Manama and Kuwait City. With the exception of Kuwait, the lifestyle for visitors and expatriates in the other Gulf cities is determinedly secular and open. Sheikh Mohammed bin Rashid al-Maktoum, the ruler of Dubai, wants to make Dubai an international hub, a financial and tourist center comparable to Hong Kong and Singapore. He plans to make Emirates Airlines the biggest in the world and Dubai the busiest airline hub, surpassing London, New York and Singapore. The airline is currently the world's fastest growing, receiving a delivery of one new Boeing or Airbus plane each month for the next five years. Dubai also plans to build a $33 billion Dubai World Central Airport with six runways-making it the world's largest airport.

Despite their wealth, the small Gulf states know they are vulnerable. Any number of events could bring the whole dreamworld down in ruins in a very short period of time. Everyone in the region remembers what happened to Kuwait in the early days of August 1990 when one of the most prosperous countries in the world was overrun, occupied and trashed by Saddam Hussein's invading army. For this reason the Gulf states are determined to continue close military cooperation with the United States as their protector of last resort. They will provide necessary access and base rights, no matter how nervous they are about U.S. policy in the region, a fact the Iranians well understand.

In terms of defense spending, the Gulf Cooperation Council countries are investing far-more money than the mullahs in their military establishments and are upgrading with the most-modern weapons the United States, Europe and Russia can provide. Although the ability of their armed forces to fight in combat can be doubted, as long as they are allied with the United States, their assets are valuable. For example, given the importance of airpower in modern warfare, especially in the Middle East, consider the inventories of Saudi Arabia, Kuwait and the United Arab Emirates as compared to that of Iran. According to the latest estimate by the International Institute for Strategic Studies, the three Arab countries have 512 modern combat aircraft in service, including U.S. F-?15 Eagles, F-16 Fighting Falcons and F-18 Hornets, and European Tornados and Mirages. Saudi Arabia has placed an order for 72 Eurofighter Typhoons. In contrast, Iran's total for combat aircraft is 319, which includes large numbers of obsolescent U.S. aircraft, such as the first-generation F-14 Tomcat and Vietnam-vintage F-4 Phantoms and F-5 Tigers. Since 1980 the United States has had an embargo on all military supplies to Iran, so they face spare-parts difficulties in attempting to maintain their American-built fleet. Iran is upgrading with new Russian aircraft including Su-24s and MiG-29s, but this modernization is far from complete.

If we add to the power equation U.S. air assets both in the Gulf and Iraq as well as its strategic-bomber fleets that can reach Iran from the continental United States, it is difficult to see how Iran could anytime soon seriously challenge the combined power of the United States and its Arab allies in any major military confrontation in the Gulf. No matter what happens in Iraq, the United States military, especially the U.S. fleet, is not going to leave the Gulf anytime soon. It will be decades before any other external power can replace it as custodian of the vital sea-lanes of the Persian Gulf and the Indian Ocean. The Asian powers, especially China, India, Japan and South Korea, have growing stakes in the economic prosperity of the Gulf and the secure supply of oil and natural gas. They do not want the United States to leave or draw down its naval assets. As the recently retired head of CENTCOM, Admiral William "Fox" Fallon, concluded in an interview with Esquire when asked about war with Iran, "Get serious. These guys are ants. When the time comes, you crush them."²

Iran's ability to project power to its east is even less impressive. Pakistan and India have deployed nuclear forces in their inventories and are not subject to Iranian hegemony. For many years Iranian security analysts worried about the close ties between Pakistan and the Taliban and spoke of the nightmare of a "Talibanized Pakistan." They may still have reason to be concerned about that scenario. Iran does play an important role in Afghanistan given its geographic and historical relationship with its neighbor. Iran was helpful in establishing the Karzai provisional government in 2001 when its diplomats worked with their U.S. counterparts at the Bonn Conference in December following the defeat of the Taliban by American-led forces. Today it has considerable influence especially in Herat, which was once part of the Persian Empire. But any further encroachment of Iranian influence to the east would be challenged by Pakistan and India.

Finally, despite the conventional wisdom that Iran has emerged as the greatest beneficiary of the U.S. invasion and occupation of Iraq, its position in Iraq is not as strong as assumed. No matter who wins the U.S. elections, American forces will be in Iraq for many years. Iran's leaders do not want Iraq to collapse, for then they would be drawn even deeper into a quagmire. But neither do they want Iraq to become once more a powerful, rich Arab country with close ties to the United States. They are worried that the United States will stay in Iraq with the blessing of most Iraqis and the Sunni Arab world. They are also aware of Iraq's economic potential if it can sort out its oil laws and establish an effective federal system of government. Under these circumstances oil production could soar. The fact that small foreign oil companies, notably from Korea, India and Norway, have a significant presence in Kurdistan is indicative of what could happen to all of Iraq if an agreed oil law is passed by the Iraqi parliament. Iranians are aware that the emergence of a strong Shia-led central government in Baghdad does not necessarily work in their favor. Iraqi Shia will want to benefit from economic growth in the south and will resist efforts by Iran if it plays too heavy a hand. President Ahmadinejad's state visit to Iraq in February 2008, while portrayed by some as a triumph, had downsides. He never got to visit the holy cities of Najaf and Karbala and did not get a photo opportunity with the Grand Ayatollah Sistani, a cleric who commands enormous respect throughout the Shia world.

THIS IS not to dismiss the very real threat Iran can bring to the region. What Iran can do is engage in asymmetric warfare and create mayhem for the United States, the Arab countries and Israel with its support for insurgents and terror organizations such as Hezbollah and Hamas. If pushed to the limits of its tolerance, Iran could engage in a strategy of attacking Gulf oil infrastructure and blocking access to the Strait of Hormuz, at least for enough time to disrupt world oil markets. But such actions would be suicidal and put at risk Iran's own oil and gas exports and the facilities that produce them. Having the capacity to cause damage may give Iran a strong hand to play in regional geopolitics, but this does not mean it can be a regional hegemon. The more heavy-handed Iranian interference in the Arab world and against Israel, the more it will likely face countervailing challenges from the neighborhood, the United States and maybe at some point NATO forces. The fact that France has agreed to establish a small military base in the UAE, announced during President Sarkozy's visit to the region, is indicative that the United States is not the only external power concerned about Iranian behavior and the need to present the mullahs with a robust military presence in the region.

There remains the serious problem of what to do about Iran's nuclear program. It is clear that Ahmadinejad has a mandate to pursue uranium enrichment and the other vital components of a nuclear infrastructure, including heavy-water production. So long as Iran's leaders continue to insist that the program is for peaceful purposes and that they have no intention of deploying nuclear weapons, the conservative leadership will continue to receive widespread public support on this issue. This means that Iran will continue to develop all the prerequisites for a nuclear force while insisting that it is not violating any commitments. The problem is that all the major foreign intelligence services, including Russia's, believe the Iranians are lying, but each foreign government has a different attitude as to how to deal with the matter. Russia and China currently feel less threatened by the prospects of an Iranian bomb than either the United States or Israel, with the Europeans and the Arab countries somewhere in between.

Iran's leaders will be hesitant to make any compromises on the nuclear program so long as President Bush remains in office. The expectation is that the next American president will have to find a workable formula for talking to the Iranians. This could involve offering the regime more "carrots" if they are prepared to suspend the uranium-enrichment program or place it under international safeguards, but also threatening more "sticks." Short of force, the most effective new "sticks" would be a decision by the European Union to apply the same level of sanctions against Iran that the United States currently has in force. If the EU took this difficult step it would have a psychological and practical impact on Iran's efforts to modernize its economy and would send a stark reminder to Iran that it remains a pariah. In an effort to break out of strategic isolation, Iran's leaders are embarked on a global effort to expand their friendship with foreign countries, but establishing cozy relations with Venezuela's Hugo Chávez and Zimbabwe's Robert Mugabe, to name but two, points to weakness not strength. Similarly, the notion that Iran has become the anchor for a sinister "Shia Crescent" stretching from Tehran through Baghdad, Damascus and Beirut belies the realities of Middle East politics and the highly complicated nature of Sunni-Shia relations in the Arab world.

Nevertheless, it is necessary to address how the balance of military power would change if Iran continues to develop its nuclear program. Much will depend upon the nature of a future Iranian nuclear-weapons capability. If it remains covert and Iran does not brag about it-even though everyone may assume Iran could assemble a bomb in a matter of months-the consequences will be serious but manageable. If, on the other hand, Iran withdraws from the NPT and goes full throttle toward a deployable nuclear force, perhaps analogous to Pakistan's, the repercussions would be more severe. Under these circumstances, Saudi Arabia, Egypt and possibly Turkey could reassess their nonproliferation commitments. In the case of the Saudis it could lead to a Pakistani nuclear presence on the Arabian Peninsula, a development that could hardly make Iran feel stronger or more secure.

THE NEXT U.S. administration is likely to face the prospect of living with the mullahs while continuing to challenge them over their most dangerous habits-support for Hezbollah and Hamas, interference in Iraq and Afghanistan, demonization of Israel, and the continued development of a uranium-enrichment and heavy-water program. This will require a nuanced policy that will best be addressed in close cooperation with Europe and with better cooperation from Russia and China. For these reasons it is wise to lower the rhetoric over the Iranian threat while at the same time keeping open the options of negotiating with them if they wish to, or confronting them if they escalate their support of terrorism or break out with a nuclear weapon.

This is not an exciting policy prescription. Many will reject it as too tame, too laid-back. But it reflects the reality that we cannot get rid of the mullahs and that attempts by the United States to directly interfere in Iranian domestic affairs have been counterproductive. Absent some new egregious behavior by Iran, such as a massive attack on U.S. troops in Iraq, the use of force to set back Iran's nuclear program carries huge risks and is unlikely to be considered anytime soon. On the diplomatic front the Bush administration deserves credit for its cooperation with Europe and the UN Security Council in getting sanctions imposed on Iran for its nuclear program. The efforts of the U.S. Treasury to hamper Iran's access to financial markets have had some success. One should not underestimate the capacity of the United States and its allies to make life difficult for the Iranian financial sector as it seeks to develop its woefully underfunded energy infrastructure. The fact that Russia and China have supported three rounds of UN sanctions suggests that the cautious approach, while falling short of stopping Iran's program, sends a message to Iran that it remains under global scrutiny. Such policies should be continued by the next administration with the realization that Iran's potential to be a regional hegemon is limited.

The United States must sustain its presence in the Gulf irrespective of the immediate commitments in Iraq and Afghanistan. As the key Asian powers, especially China, India, Japan and Korea, become more involved in the region, a time will come when the United States will have to decide how long it will remain the policeman and how much responsibility other powers could take on. Undoubtedly the most dramatic event that could change the equation would be the emergence of an Iranian government prepared to work with the United States and its allies to establish a collective-security arrangement in the Gulf. But that day is not on the horizon. In the meantime, the wisest policy is to nurture closer security ties with the Arab Gulf countries and make sure that the inevitable drawdown of U.S. forces in Iraq is done prudently.

Geoffrey Kemp is the director of Regional Strategic Programs at The Nixon Center. He was the special assistant to the president for the Middle East during the first Reagan administration.

¹See Norman Podhoretz, "Stopping Iran: Why the Case for Military Action Still Stands," Commentary, February 2008.

²Thomas P. M. Barnett, "The Man Between War and Peace," Esquire, March 11, 2008.