However, there can be little doubt that the new intelligence report – with its central claim that Iran halted its work on nuclear weapons in the third quarter of 2003 – has up-ended years of US policy toward the Islamic Republic.

Already, much has been made of the report’s deficiencies: its failure to address Iran’s civilian uranium enrichment (a key precursor to nuclear weapons development), its lack of coverage of Iranian foreign weapons of mass destruction (WMD) procurement efforts and the potential for deception from foreign sources. Far less well understood are the practical consequences of the report on US strategy toward Iran and on US posture in the Middle East more broadly.

Undoubtedly the biggest casualty of the NIE has been the credibility of a US military option vis-à-vis Iran. “The finding that Iran halted its nuclear weapons programme in 2003 ended any possibility that Bush could win support for an attack on Iran’s nuclear facilities,” US political commentator Morton Kondracke noted.

Kondracke’s assessment rings true; the new NIE has put the lie to Bush’s longstanding assertion that “all options remain on the table” in dealing with Iran’s nuclear ambitions. The use of force, carried out in contravention of the combined recommendation of the US’ 16 intelligence agencies, is now simply a political bridge too far, particularly in an election year. And without it, the Bush administration’s policy toward Iran has become all carrots and no sticks: something that Iran’s ayatollahs understand very well.

Not surprisingly, US efforts to cobble together an international consensus on the need to pressure Iran have suffered a serious body blow. Even before the release of the new NIE, Washington was having a tough time convincing Russia and China of the need for more serious measures against Iran. In its aftermath, that task has become nigh impossible. After all, why should Moscow and Beijing get behind the Bush administration’s assessment of the Iranian threat when its own intelligence community is not?

The practical consequences have not been long in coming. Before the NIE’s publication, Beijing had begun to signal its willingness to go along with more serious sanctions against Iran, but in the wake of its release the People’s Republic of China (PRC) has decided to get back to business as usual, with state-owned Sinopec signing a multimillion dollar deal to develop Iran’s massive Yadavaran oil field.

Nor is China alone. Encouraged by the new NIE, a number of other countries have scurried to strengthen their economic links with the Islamic Republic. Russia, for one, has signed a new memorandum of understanding on economic, trade and defence-industrial cooperation with Iran’s ayatollahs.

India is also following suit. “Expansion of ties with Iran is a priority for India’s foreign policy and India seeks to further develop relations with the Islamic Republic of Iran,” Indian Foreign Secretary Shivshankar Menon said during an official state visit to Iran in mid-December 2007.

Where does all this leave the US? Some have seized the opportunity to argue for some sort of rapprochement with Tehran.

Officials in Washington know full well, however, that a ‘grand bargain’ with Iran’s ayatollahs is no more advisable now than it was before. A recent survey by a leading US polling firm found that just 18 percent of Americans believe the NIE’s assertion that Iran’s nuclear weapons programme is on hold. Anecdotal evidence suggests that the number of people living in Iran’s immediate neighbourhood who believe the same is lower still.

Domestically, therefore, a diplomatic deal with Iran would be seen as tantamount to US acquiescence to an atomic Islamic Republic. Such a state of affairs, in turn, would spur far greater proliferation, as countries in the region seek the same types of capabilities in order to counterbalance or neutralise Iran’s nuclear advantage. The end result would be a new and dangerous Middle East arms race and a further marginalisation of the US’ influence there.

Tehran’s nuclear timeline also remains unchanged. The international consensus – one confirmed by Iranian officials – is that Iran now has 3,000 uranium enrichment centrifuges operational at its nuclear facility in Natanz. This marks a major developmental milestone; with this many centrifuges spinning continuously for a year, the Iranian regime could generate enough highly enriched uranium for one nuclear weapon.

Once it does, the rest is rudimentary. In 1945, it took the US just 60 days to weaponise the uranium enriched as part of the Manhattan Project and detonate it over Hiroshima. Today, with far greater international experience in this field, Iran could do so even more quickly. An Iranian nuclear weapon capability, therefore, may materialise much sooner than the NIE’s general prediction of “sometime during the 2010-15 timeframe”.

All of which means that the Bush administration’s strategy toward Iran must also remain status quo. US efforts to ratchet up economic pressure on Iran have gained ground in recent weeks, thanks to support from two key European allies: France and the UK. These efforts are likely to dominate the approach of the White House in the months ahead. The battle, however, will undoubtedly be an uphill one, hamstrung by battered US credibility and an emboldened nuclear effort in Iran. For that, Washington – and Tehran – have the NIE to thank.

Ilan Berman is Vice President for Policy at the Washington-based American Foreign Policy Council and is most recently the editor of ‘Taking on Tehran: Strategies for Confronting the Islamic Republic (2007)’