Such, at least, was the consensus among experts who gathered at Washington's Brookings Institution Wednesday. The reality, however, is that America's Iran policy faces not so much a crossroads as a spaghetti junction.

There is no simple choice between compromise and confrontation. As long as the oil price remains high -- and it shows every sign of doing so -- economic carrots will have little effect. On the other hand, while Iraq remains in disarray, the big stick of invasion and enforced regime change remains unviable.

Given the straitened circumstances, United States policy makers might be forgiven for their lack of invention. After all, this is a game in which Iran holds all the cards: Economic solidity; stable government; at least temporary security from American invasion; Russian and Chinese friends on the United Nations Security Council and potent foreign policy levers in the form of the Iraqi Shiites, Palestinian terror groups and the Lebanese Hezbollah. But while there is no clear policy line to appeal to the "you're either with us or against us" mentality of the Bush administration, there is plenty the United States can do to improve its position.

The first task must be to establish a more coherent relationship with the European Union. Considering the recent trans-Atlantic tiffs over Iraq and arms sales to China, relations over Iran have been remarkably cordial. Policy co-ordination has also shown some success -- the practical freezing of the Iranian nuclear program between 2003 and the summer of 2005. The current arrangement has now reached the natural limit of its effectiveness, however.

"Previously, we have had a division of labor, where Europe provided the carrots and America the sticks," says Philip Gordon, a senior fellow at Brookings. "The United States must be willing to provide some carrots and Europe must be willing to provide some sticks."

The long relied-upon good cop-bad cop routine leaves the Europeans able to offer only limited security to Iran as long as America remains hostile. Likewise, European incentives are devalued by a lack of American support.

Secondly, the United States must arrive at a clear objective for its Iran policy. At the moment, there exists a strategic fudge, which aims simultaneously at Iranian co-operation over nuclear development and, in the long term, regime change. These aims are, more often than not, contradictory. A regime that fears invasion will be inclined to race to build a bomb, not to negotiate.

But abandoning regime change as an objective need not mean taking the military option off the table. Rather, it means convincing the Iranians and the international community as a whole that the military option derives only from the Iranian nuclear threat and not from an American desire to remold Iran in its own image.

Such an assurance would not only render negotiations more productive; it would facilitate the imposition of greater penalties for Iranian non-compliance: Sanctions cannot be applied against Iran without international co-operation. Were the United States to make clear that its Iran policy was focused entirely on nuclear security and not greater involvement in the regime politics of the Middle East, the big hitters on the Security Council would become immediately more open to supporting sanctions.

Sanctions, if applied, must be cautious and selective. "What sticks should we use?" says Charles Grant, who heads the Centre for European reform, a London-based think tank "Most people in Europe believe that economic sanctions don't work."

Grant advocates carefully targeted sanctions, such as restricting foreign travel for Iranian officials. Blanket measures affecting the entire population could reinforce Iranian nationalism and lead to greater intransigence, he says, citing Burma, Cuba and Iraq. Grant believes the United States and Europe can draw on their more productive use of limited sanctions against Serbia and South Africa to pressure the Iranian regime.

A third element of United States policy must be to search for some degree of common ground with the Iranians. This might not be as hard as it seems. "I'm not sure that the nuclear issue offers the best point of entry for U.S.-Iranian relations," says James Dobbins, Director of the Rand Corporation's International Security and Defense Policy Center.

"The bright point in U.S.-Iranian relations is the stabilization of Iraq, where we have a common interest. We might then be able to move on to other issues," he said, adding that Iranian officials were surprisingly helpful in rebuilding Afghanistan.

Lastly, the United States must work more closely with Russia and China if any strategy of coercion is to be effective. "If you couldn't get sanctions on North Korea, which doesn't have a friend in the world and produces nothing of value, how are you going to get sanctions against Iran?" says Dobbins.

Sanctions against Iran are achievable. But they will become feasible only through engagement with Russia and China over a range of issues, notably United States policy on energy, security and democratization in Central Asia. This is by no means impossible. While it would be rash to predict a new era of America multilateralism, there is "a trend towards greater co-operation with allies and negotiation," says Volker Perthes, director of the German Institute for International and Security Affairs

Ultimately, Iranians will decide for themselves whether to pursue nuclear weapons. If they become determined to build a bomb, military action might be the only choice. But a more coherent American policy could influence the decision, and would certainly postpone it.

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