Iran challenge looms large for next U.S. president

By Alistair Lyon, Special Correspondent - Analysis

BEIRUT (Reuters) - The next U.S. president will have no easy policy options on Iran -- attacking, accommodating or boxing it in are all fraught with risks and difficulties.

Even these choices for Barack Obama or John McCain could be pre-empted if Israel exploits the last few months of President George W. Bush's term to smash Iran's nuclear facilities.

Israeli Prime Minister Ehud Olmert, in his toughest warning yet to Tehran, said in Washington on Tuesday the Iranian nuclear program must be stopped by "all possible means".

Olmert urged the international community "to clarify to Iran, through drastic measures, that the repercussions of their continued pursuit of nuclear weapons will be devastating."

Israel, widely believed to have hundreds of nuclear warheads, views Iran as its deadliest threat. Tehran says its nuclear ambitions are confined to generating electricity.

Even if Israel holds back, whoever wins the White House in November will face realities which dim prospects that Iranian power can be rolled back by the tactics already tried by the West: threats, sanctions, isolation and economic carrots.

Iran's regional clout and nuclear ambitions have defied containment, especially since Bush removed two of its sworn foes -- the Taliban in Afghanistan and Saddam Hussein in Iraq.

Extending its reach, Tehran has gained undeniable influence in the Arab-Israeli conflict via its long-standing alliance with secular Syria, Shi'ite Hezbollah guerrillas in Lebanon and its newer links with the Palestinian Sunni Islamist Hamas movement.

Iranian President Mahmoud Ahmadinejad, flush with windfall oil revenue, has so far overridden domestic critics of his populist economic policies, combative nuclear stance and rhetoric against the United States and the existence of Israel.

FINAL ARBITER

Supreme Leader Ayatollah Ali Khamenei, the final arbiter on Iranian policy, has not reined in the radical president, who faces what could be a tough re-election battle next year.

Khamenei said on Tuesday Iran would defy Western pressure in pursuit of its "peaceful" nuclear goals, a policy followed even before Ahmadinejad replaced his reformist predecessor in 2005.

Continued insistence on enriching uranium also puts Iran at risk of U.S. military action, whether the Democrat Obama or his Republican rival is in the White House, said Paul Salem, head of the Carnegie Endowment's Middle East Centre in Beirut.

"The United States will attack Iran sooner or later if this goes on," he said. "It can do it and I don't think the Iranian response, whatever it is, will deter the U.S. in the end."

Tough talk from McCain suggests he would be at least as ready as Bush to apply U.S. military might if economic warfare through extra sanctions fails to shift Iran's nuclear policy.