Europe's Double-Take Over Iran Report

Iran and US Flags with nuclear - atom
Elizabeth Palmer is a London-based correspondent for CBS News. She wrote this reporter's notebook for

European diplomats were as surprised as anyone by the National Intelligence Estimate's conclusion that Iran had stopped working on its nuclear program in 2003.

Privately, though, they are wondering whether it reflects genuine fresh intelligence about Iran's nuclear plans - or merely the sharp differences between the White House on one side, and the Pentagon and intelligence services on the other.

It dovetails suspiciously neatly, they point out, with Admiral William Fallon's statement three weeks ago that a U.S. strike against Iran "is not in the offing."

Either way, the latest NIE report doesn't change Europe's strategy when it comes to Iran's nuclear ambitions. America's not-so-veiled threat to attack Iran was always seen as an unsettling - but unlikely - possibility.

Also a counter-productive one. Military strikes, went the Euro-logic, would just rally Iranians behind the regime - even those who would not normally support it.

Britain, France and Germany have always believed that diplomatic negotiations coupled with economic sanctions could in the end convince Iran to stop enriching uranium. And that's what counts.

Iran may, as the NIE suggests, have given up on the engineering and ballistic aspects of a military nuclear weapons program. But it is still defiantly and unabashedly enriching uranium. In fact, last week Mohammed el Baradei, the head of the International Atomic Energy Agency, reported that Iran had admitted working on a new gas centrifuge to enrich uranium even faster and more efficiently.

Enriched uranium is a crucial ingredient of a nuclear weapon. If the NIE estimates are correct, the Iranians will have made enough of it in less than a decade to make a weapon if they choose to. They may not choose to, but neither American nor European leaders want to give them the option.

Even as the White House was saber-rattling and muttering about military strikes, the U.S. State and Treasury Departments were putting a serious squeeze on Iran's finances.

On top of two rounds of United Nations economic sanctions, which went into effect in the past year, the two departments announced sweeping unilateral measures a few weeks ago to restrict money moving in and out of three of Iran's most influential banks. See details in this paper by Matthew Levitt of the Washington Institute for Near East Policy.

Behind the scenes, U.S. Treasury officials have also been leaning hard -- and effectively -- on foreign financial institutions and companies to restrict the flow of capital and trade.

There is no doubt the Iranian regime is worried. Inflation is creeping up toward 20%. Many middle class Iranians -- like doctors and teachers -- have to moonlight at a second job to make ends meet. Iran's aging oil fields are in serious need of upgrades. There is growing consensus among Iranian voters that President Ahmadinejad has made a mess of the economy.

All this - said one senior British diplomat - presents us with a better opportunity for changing Iran's mind than military strikes ever did.

By Elizabeth Palmer

  • Elizabeth Palmer

    Elizabeth Palmer has been a CBS News correspondent since August 2000. She has been based in London since late 2003, after having been based in Moscow (2000-03). Palmer reports primarily for the "CBS Evening News."