As Iran approaches the nuclear threshold, the only way out is to co-opt it

As Iranian president Mahmoud Ahmadinejad showed off what purported to be fourth generation nuclear centrifuges at Natanz - which can enrich uranium to 20% - the world should react by staying calm. If the Iranian claim is correct, then it has exploited a paradox in the international non-proliferation order, which allows enrichment to 20% for civilian purposes. But the technology used to enrich uranium to this level can easily be tweaked to go higher, up to weapons-grade uranium.

The UN Security Council has asked Iran to stop enrichment, but Ahmadinejad's latest announcement shows Tehran is in no mood to listen. Since not just the West but also Gulf Arab states are dead set against Iran's acquisition of nuclear weapons, this will ratchet up tensions in the Gulf. But New Delhi ought to be telling everyone involved - Tehran, Tel Aviv, Washington - that a war will prove calamitous for all parties. A much better option is to co-opt Iran into the global security and economic order, for which all sides need to be diplomatically flexible.

A war could arise from two sources. Iran has threatened to close the Strait of Hormuz, through which much of the world's oil supplies flow. If it tries to enforce this by military means, it runs the risk of its navy being blown out of the water. Alternatively, Israel has been threatening to mount an attack on Iran's nuclear sites. It may be tempted by this being election year in the US, which will constrain President Obama from stopping the Israelis. But it would be a serious mistake on the part of Tel Aviv to act on such a calculation. Since Iran has not actually broken any law, it would be an illegitimate war and most of world opinion would be against it. Even in practical terms, Iran has many asymmetrical means to retaliate against Israel and the US. Above all, a war would rally most of Iran's population around its unpopular government. Given that Iran has already acquired significant nuclear capability, nothing would then stop it from getting the bomb.

It would help if the West were inclined to throw some significant carrots Iran's way - such as cast-iron security guarantees and full WTO membership. After all, time is on the West's side. Iran has a young population and a large middle class. A policy of engagement is bound to yield better results in weaning Iran off its belligerence.