Anne Penketh: Iran nuclear report presents Obama with tough dilemma

After the Arab Spring, the Iran nuclear file is back on President Barack Obama's desk with a potentially explosive report that found "credible" evidence that Iran had conducted nuclear weapons research in violation of its international commitments.

An International Atomic Energy Agency report contained the most comprehensive detail to date on Iran's nuclear programme, about which the agency said it had "serious concerns regarding possible military dimensions". However it did not produce a "smoking gun" and was unable to assert categorically that such research continues today.

Iran, a signatory of the Nuclear Non-Proliferation Treaty, has always denied that it is working on a nuclear weapon and insists that its nuclear programme is devoted to the production of electricity.

The IAEA report, reflecting the efforts of Western intelligence corroborated by IAEA inspectors, described work that it said could only have been related to developing weapons. It mentioned activities relevant to the development of a nuclear bomb trigger, the testing of high explosives and the design of a nuclear warhead.

However, much of the information in the report related to research pursued by Iran before 2003 when a US National Intelligence Estimate concluded that Iran had stopped work on a nuclear weapons programme. The view of the intelligence community remains that there is no hard evidence that the Iranian leadership has decided to build a nuclear weapon.

The reaction in Washington to the IAEA document was muted, in a country consumed by domestic politics in an election season.

The question now for policymakers is how to get Iran back into compliance with its NPT commitments, something which Tehran has refused to do despite harsh UN sanctions that have affected its financial, energy, transport and insurance sectors.

Last weekend, it seemed that Israel's response would be outright war. The initial leaks of the IAEA report coincided with the Israeli Cabinet discussing prospects for unilateral pre-emptive strikes against Iran's nuclear facilities. But the reports from Israel were widely seen as part of a plan to ratchet up the diplomatic pressure on Iran, and even hawks in America are wary of a rush to war with unpredictable consequences.

The Obama Administration, already seeking a tough international reaction after revealing an Iranian-hatched plot to assassinate the Saudi ambassador to the US, has been sending out signals that it hopes for agreement on a new round of sanctions. There is a general awareness that going after the Iranian central bank - an option being discussed by some congressional leaders - could backfire by causing a spike in oil prices and pushing the global economy deeper intorecession.

Russia, a UN Security Council permanent member which attempted to dissuade IAEA director-general Yukiya Amano from publishing his report, has criticised the timing of its release on the grounds that it would undermine the chances of a diplomatic solution.

There are also uncomfortable echoes of the run-up to the Iraq war, when the Bush Administration used faulty intelligence to back its case for the invasion of Iraq. As a result, the burden of proof will be even higher in the case of Iran. The Iranian Foreign Minister last weekend compared the latest IAEA report to the false Niger uranium claims raised by Britain and the US in the run-up to the Iraq war, and Iranian officials have called the IAEA assertions a "fabrication".

Obama Administration officials are still hoping that Iran prefers negotiations to isolation. Washington intends to keep the engagement track with Iran going, despite the difficulties.

But Obama will have to tread carefully. He must bear one thing in mind, which is that Iran brought down another American president. His name was Jimmy Carter, the last one-term Democratic president.