Iran is fast becoming the number one item on the Bush administration's foreign policy agenda, overshadowing even the problem of how and when to extricate American troops from Iraq. With two wars on its hands, American ground forces are already overstretched, but the United States still has powerful naval and air strike forces within easy striking distance of Iran. And President Bush continues to ratchet up his rhetoric, warning in his latest press conference that if Iran continues to defy much of the world and succeeds in producing a nuclear weapon, that would raise the risk of a “World War III.”

American media coverage of these international developments has been thin, and provides so little context that the public has difficulty judging the gravity of the situation. So here's a little context to help put things in perspective.

1. Most experts believe Iran wants to develop the capacity to produce nuclear weapons, and is collecting the know-how and means to make a bomb right up to, in the words of an International Atomic Energy Agency official, “the last screwdriver.”

2. Few observers believe Iran would attack Israel, even if it had the bomb. Its leaders are not suicidal, but they do know the power that nuclear capacity confers on a nation, to be used either as a bargaining chip or as a deterrent against threats from other countries. They see how well a few bombs have served North Korea.

3. Right after the American conquest of Iraq in 2003, Iranian leaders feared they would be the next victims of “regime change.” The Swiss Ambassador to Iran, who represents American interests there, informed the State Department that Iran was ready to settle all disputes with the United States. According to an authoritative new book, Iran: Le Choix des Armes?, by Francois Heisbourg, a well-informed French expert, Iranian diplomats offered to stop giving material support to Hezbollah militants in Lebanon, to pressure militant groups in the Palestinian territories to stop terrorist attacks on Israel, to take action against members of “Al Qaeda in Iran” and to cooperate fully with the International Atomic Energy Agency on weapons of mass destruction. In return, the Iranians asked the U.S. to abolish sanctions against their country, to stop supporting Iranian dissidents, and to give Iran access to Western technology. The Bush administration never responded to the offer because it was convinced the Iranian regime was about to collapse. And since the election of Iran's hard-line President, Mahmoud Ahmadinejad, the offer has been a dead letter.

Ayatollah Ali Khamenei

4. President Ahmadinejad's political fortunes are falling. Not only have Teheran University students heckled him, but the real leader of Iran, Supreme Guide Ayatollah Ali Khamenei, has publicly supported the students' criticisms. In a rare comment on Iran's internal dissensions, he said, “I support the government, but that does not mean I approve of everything it does.” A number of influential “pragmatists” in Iran's power elite are fed up with Ahmadinejad's provocative pronouncements on Israel and Iran's nuclear program. They fear he is giving Washington neocons a pretext to attack Iran. Other high-ranking Iranian “pragmatists” share the Supreme Guide's concerns about Ahmadinejad.

5. There is another important player in the high stakes game over Iran's nuclear program. Russia is trying to use Iran as a bargaining chip in an effort to win concessions from the United States on other matters. President Putin's recent visit to Iran, his reluctance to tighten the sanctions squeeze on Iran, and his public warning against any attempt to attack Iran, are all part of the game. Russia is Iran's neighbor and most certainly does not want it to acquire the bomb. According to hints in the Iranian state-run media, Putin has been withholding delivery of uranium fuel for a Russian-built reactor in Bushehr until Iran agrees to freeze its uranium enrichment program. In return for Russian help in getting Iran to comply, he hopes the United States will cooperate with Russia in a number of other areas, including negotiations over several East-West arms agreements that have become outmoded since the end of the Cold War.

All of this is as complex as three-dimensional chess, but there is one obvious lesson. No diplomatic approach to Iran is necessarily doomed to failure. There are possible deals to be made, even though they would be neither simple nor easy to verify. But diplomacy is always preferable, and war is always the last choice.