Analysis: Iran's nuclear showdown with West still short of war

EDITORS' NOTE: Reuters and other foreign media are subject to Iranian restrictions on their ability to film or take pictures in Tehran.A woman walks past an anti U.S. mural at the former U.S. embassy in Tehran November 19, 2011. The former U.S. embassy was the site of the 1979-1981 hostage crisis in which a group of militant Iranian students held 52 U.S. diplomats hostage for 444 days. The building is currently being used by the Iranian Revolutionary Guards.

LONDON (Reuters) - Iran's nuclear standoff with the West has led to much harsher words and new economic sanctions, but Tehran has yet to cross the red lines that would prompt Israel or the United States to contemplate military action.

A report by the U.N. watchdog International Atomic Energy Agency this month suggested that Iran has pursued the capability to develop nuclear weapons.

That has provided new impetus for Western efforts to isolate Iran on the diplomatic stage and formed the basis for a wave of sanctions restricting banks from doing business there.

Some media coverage has suggested a new Middle East war could be coming, if the leadership of Israel decides that it cannot tolerate a nuclear bomb in the hands of a state committed to its destruction.

Over the long-term, most experts hedge their bets rather than make firm predictions about such a volatile region.

But for now at least, experts say there was nothing in the IAEA report that makes military action more likely. If anything, it points to the limits of the effectiveness of a military campaign, which would have to be weighed against the risk of starting a potentially catastrophic regional war.

The report was mainly based on information already known to Western intelligence agencies. It did not reveal the sort of new evidence of immediate danger that would lead Israel or the United States to take a decision now about whether they can live with an Iranian atomic bomb or must take urgent military action to prevent it.

Instead, Western states are likely to stick to diplomacy and economic measures, while keeping a vigilant eye out for as-yet-untaken steps - such as expelling international monitors or diverting nuclear material from known sites - that might show Iran was embarking on an all-out bid to build a bomb.

"The route that continues to be taken and favored by the international community when dealing with Iran is very much one of applying pressure and a desire to return to the negotiating table," said Marie Bos, Middle East analyst for Control Risks Group, a consultancy firm.

"We still feel at this stage that the scenario of a military strike remains an unlikely one."

YOU CAN'T BOMB KNOWLEDGE

The IAEA report, like earlier U.S. intelligence estimates, suggested Iran had been pursuing the science needed to make an atomic bomb at least until 2003.

But that interest mostly took the form of research, rather than building actual bomb-making infrastructure.

Experts refer to that knowledge as a "nuclear intangible," and you can't destroy it by air strikes, said Andrea Berger of Britain's Royal United Services Institute: "Because it would be a nuclear intangible, it's something that can't be rectified with a military strike."

The West's main concern of late about actual activity on the ground in Iran has been its enrichment of uranium to 20 percent purity, a level which Western states say is more than it needs for peaceful nuclear power.

But 20 percent pure uranium is still not pure enough to make a bomb. The enrichment is taking place at sites that are known and monitored, and the IAEA says it has not seen material being diverted.

It would take another event - a decision by Iran to expel inspectors, the emergence of evidence of other undeclared nuclear sites or the diversion of material from existing sites - to raise the enrichment from a worry to an immediate threat.

"We know what's going on in (the monitored sites) now, and what's going on in them now is not indicative of an Iran that's racing toward a nuclear weapon," said Berger.

"There might be something that would compel a change in thinking on the military option, but right now it doesn't have much utility. So other options might be better."

OTHER OPTIONS

For the long term, Western countries have still not exhausted the economic weapons in their arsenal.

Blocking international access to Iran's central bank could theoretically bring a halt to its huge oil trade, but that could cause a global supply shortage with far-reaching consequences.

"There's still a possibility of formally sanctioning the Iranian central bank. We can expect that it would significantly hamper Iran's ability to trade internationally, including on the oil and gas market, and it could have an impact on oil and gas prices," said Bos of Control Risks.

The toughest economic measures would require support from the U.N. Security Council, which would mean persuading veto-wielders Russia and China that the threat of an Iranian nuclear weapon is serious enough for the world to pay a serious price.

Israel or the United States also have other options to disrupt the Iranian nuclear program besides air strikes, such as sabotage and cyber warfare.

The Stuxnet computer virus that hit Iranian nuclear equipment last year may have been a deliberate cyber attack.

A massive explosion hit a military base near Tehran this month, killing 17 troops including the head of the Revolutionary Guards missile program. Iran says it was caused by an accident, but it inevitably raised suspicion of sabotage.

For the future, Israel and the United States are unlikely ever to take the option of military strikes off the table as a way of applying pressure.

For it to be a credible threat, Tehran has to believe they are serious. But the effects of an attack would be dire.

"The idea that the state of Israel is able to mount any kind of attack with its air force and its missiles against Iran's nuclear program and have any chance of pulling it off and destroying the whole thing, is very unlikely," said Tim Ripley, a British defense analyst.

"And once they do that they would start a very big war which would drag in almost every Middle East country and the United States," he said, adding that for now, Washington has been holding its Israeli allies back.

"Up until now, President Bush and President Obama have said don't do it. That's been documented," he said. "This is the multi-billion dollar question: are the Israelis misguided and impulsive enough not to ask the Americans for permission?"

(Editing by Jon Boyle)