SCENARIOS: Options open to Obama on Iran in policy review

By Sue Pleming

WASHINGTON (Reuters) - The Obama administration is weighing options on how to open a dialogue with Iran, part of what the State Department says is a full review of its strategy toward Tehran.

Analysts do not expect sudden shifts but President Barack Obama has made clear he is prepared to open a new chapter with Tehran, which has been confronting the West over its nuclear program and other issues.

Here are some possible options and outcomes in a review drawing input from the State Department, Treasury Department, National Security Council and Pentagon as well as close Western, Arab and other allies.

OPENING UP AN INTEREST SECTION IN TEHRAN?

An early option is to open a low-level diplomatic presence in Iran such as the U.S. interests section in Cuba, another country with which Washington does not have formal ties.

The Bush administration had decided in principle to go ahead but ultimately left it to the incoming team. With Iranian presidential elections due in June, Washington may delay to avoid boosting Iranian President Mahmoud Ahmadinejad, said one European diplomat.

ADDRESSING THE IRANIAN PEOPLE IN LETTER?

Having Obama address Iranians personally in a speech or open letter may be under consideration. However, senior U.S. officials deny reports that a letter is already in the works and say discussions are still at an early stage. The previous administration also sought ways to reach out to Iranians directly, increasing sporting and cultural exchanges. This is expected to continue.

MAKE USE OF THE BILATERAL CHANNEL ON RANGE OF ISSUES?

Instead of focusing solely on the nuclear issue where international negotiations are deadlocked, Obama may try to broaden bilateral discussions to a range of topics without preconditions. These could include U.S.-Iranian relations, Afghanistan, Iraq, the Israeli-Palestinian conflict as well as the nuclear issue. The Bush administration held several rounds of talks at ambassadorial level on the violence in Iraq.

On the nuclear issue, the United States and other major powers have said talks can only begin if Iran suspends its enrichment and reprocessing activities. Officials and analysts say there is a broad discussion over whether this precondition could be "finessed" to draw in the Iranians. However, any move would have to be agreed by the six countries dealing with Iran -- the five permanent members of the U.N. Security Council plus Germany. Political directors from those six will meet in Germany next week.

MORE SANCTIONS?

U.S. Secretary of State Hillary Clinton made clear in her Senate confirmation hearing this month the Obama administration intended to impose more sanctions on Iran if it did not change its behavior. Options include targeting Iran's financial sector and technology that could be used to upgrade Iran's refining methods, a senior European diplomat said. Despite being a major oil producer, Iran has to import refined oil products and wants to lessen its dependency on these imports. Banning certain equipment exports or technology could stymie these efforts.

REVIEW COULD TAKE TIME

The review is expected to take months as different U.S. government departments try to build consensus. Major action or outreach could be held off until after the June elections in Iran to avoid boosting Ahmadinejad over more moderate leaders.

(Editing by Alan Elsner)