Is a Beleaguered Iran Ripe for Nuclear Negotiation?

(Dec.1) -- Iran enters next week's negotiations with the United States and other world powers boasting a long record of outfoxing opponents of its nuclear ambitions.

But this time Tehran comes to the table under nearly unprecedented international and domestic pressure to relinquish enrichment of uranium and other activities the West and the United Nations suspect are aimed at producing nuclear weapons. That leads some participants to hope for some kind of breakthrough.

Secretary of State Hillary Rodham Clinton said today that she's "encouraged" by Iran's agreement to meet with diplomats from the U.S., Europe, Russia and China next week in Geneva, despite tough words from Iranian President Mahmoud Ahmadinejad about the prospect of Iran's willingness to compromise.

And the Treasury and State departments today offered evidence to Congress of how effectively Iran has been punished by a year of tough diplomacy, new U.N. sanctions and a host of new U.S., European, Japanese and other unilateral economic strictures.

William Burns, the undersecretary of state who led the U.S. delegation to talks with Iran last year and will do the same at negotiations on Monday and Tuesday in Geneva, told the House Foreign Affairs Committee that Washington faces "a moment of great consequence in the long and complicated history of international concerns about Iran and its nuclear ambitions."

"A great deal is at stake, for all of us. A nuclear-armed Iran would severely threaten the security and stability of a part of the world crucial to our interests and to the health of the global economy," Burns told the committee. "These risks are only reinforced by the wider actions of the Iranian leadership, particularly its longstanding support for violent terrorist groups like Hezbollah and Hamas; its opposition to Middle East peace; its repugnant rhetoric about Israel, the Holocaust, 9/11 and so much else; and its brutal repression of its own citizens."

Burns, in talks set up by the European Union and including the five permanent U.N. Security Council members -- Russia, China, France, Britain and the U.S. -- as well as Germany, will have to first test the sincerity of Iran's participation and then negotiate "tangible steps" Iran can take to address concerns about its nuclear program, he said.

In similar talks just over a year ago, Iran initially agreed to halt its enrichment of uranium -- a key process in the creation of atomic weaponry. The deal included French and Russian promises to supply Iran with enriched fuel for a Tehran research reactor. But the country's supreme leader, Ayatollah Ali Khamenei, later rejected it, a move that helped the Obama administration build international support for the U.N. sanctions put in place in June.

Since then, advances in Iran's enrichment activities and a now much larger stockpile of uranium enriched -- or purified -- closer to weapons grade make the same deal a nonstarter for the West this time. They would appear to give Iran a stronger negotiating hand.

Yet Iran is also a much weaker country than it was a year ago, economically and in other ways.

The U.N., U.S. and other unilateral sanctions have isolated important Iranian commercial sectors from the international banking system, while its ability to buy a host of industrial materials related to arms and energy projects is now extremely limited.

"Iran has dramatically reduced access to financial services from reputable banks and is finding it increasingly difficult to conduct major transactions in dollars or euros," Stuart Levey, treasury undersecretary for terrorism and financial intelligence, told the committee.

"With great regularity, major companies are announcing that they have curtailed or completely pulled out of business dealings with Iran, and, as has been widely reported, Iran's leadership appears to have underestimated the severity and effects of the global financial measures, giving rise to internal Iranian criticism and finger pointing.

"By sharpening the choice for Iran's leaders between integration with the international community and, alternatively, increasing isolation, we are creating the leverage needed for effective diplomacy," Levey added.

He noted an ever-growing roster of global banks, oil companies and engineering giants have pulled out of deals with Iran, fearing their reputations could be tainted and their more lucrative U.S. contracts jeopardized.

Restricted access to foreign capital, technology and the likes of jet fuel and other refined petroleum products -- oil-exporting Iran refines little of its own gasoline -- has widened fault lines within the Iranian government. For instance, Ahmadinejad has faced a veritable revolt in parliament as his administration struggles with ways to phase out unaffordable but popular subsidies that keep gas at about 37 cents a gallon.

The economic pain in Iran is widespread, with unemployment officially at 12 percent and possibly much higher, and with three of four unemployed Iranians under age 30.

Iran's nuclear program is also experiencing problems, in part because the government has a much tougher time securing needed materials from abroad.

But the most recent report on Iran from the International Atomic Energy Agency, a U.N. watchdog, said there has been a mysterious halt to enrichment activities at Iran's important Natanz reactor. The Institute for Science and International Security, a Washington-based think tank with a strong track record following Iranian nuclear activity, speculated that may be the work of the Stuxnet Internet virus, which analysts believe to be the work of a foreign government.

The Iranian nuclear program is literally under fire, with two of its most senior scientists attacked by bombers Monday. And in accusing the U.S. and Israel of staging the attacks, Ahmadinejad also confirmed that the Stuxnet virus had caused some damage.

The U.S. denied any role in the attacks, and Israel has a policy of never responding to such accusations.

Iran may now have an additional reason to feel surrounded.

The trove of State Department cables released by WikiLeaks this past week showed that Saudi Arabia, Bahrain and many other Iranian neighbors in the Middle East fear the prospect of a nuclear-armed Iran -- to the point that they'd want a military solution if that were the only way to stop it.