The US obsession with Iran is enormously puzzling to Europeans much as was the obsession with toppling Saddam Hussein. This idee fixe of policy wonks and executives is now in danger of becoming a national ‘enthusiasm’ – it extends beyond the Administration deep into the wider political process right down to state level. Something about the alleged Iranian threat and 'Islamo-Fascism' has caught the American imagination as the ‘enemy’ that is often needed to make a nation feel whole. Bluntly, in the rest of the world, an enemy like Iran can sometimes seem no more dangerous than a friend like America.

The crude interpretation is that the Israeli lobby is manipulating the agenda but this misunderstands the internal dynamic of American politics. Any Zionist lobby is preaching to the converted for reasons that we do not need to go into here. Iran is currently playing the much more useful role of re-directing domestic political attention from Iraq. Democrats are divided over Iraq, less so over Iran. 

Clinton and Obama may squabble over this or that Senate amendment but Obama, the allegedly more left candidate, and the almost demented ‘fourth world war’ language of Lieberman represent rhetorical rather than real differences of stance. All leading American democratic elements support aggressive diplomacy towards Iran but none (except the semi-detached Lieberman whose strike language is still conditional) have yet come out for an actual strike now (certainly not the Administration). Obama merely fears that ‘right wing’ Democrats' keenness to support aggressive rhetoric from within Congress creates carte blanche for a Bush-Cheney assault. All these elements leave open the possibility of a strike but set the trigger on a different point in the scale from inaction to action.

Much of the rhetoric surrounding US promotion of its missile shield plan (a left-over from the Reagan era's strategic mentality) is also centred on the threat from Iran, although the President now has the good grace to admit that any Iranian WMD threat is eight years away rather than imminent. The Russians are adamant that Iran poses no such threat and, while diplomatically understanding of a Pacific shield against North Korea, clearly sees a European shield as directed at itself.

The US is now promoting a third UN Resolution against Iran but it is being forced increasingly towards a programme of unilateral action based on its allies' willingness to act independently of the United Nations. US Treasury is also core to the process of undermining Iranian access to Western credit. Bank Saderat and Bank Sepah are effectively being excluded from the international financial community (although we see no signs of panic in their circles from our contacts in London) and operations now seem to be planned against Bank Melli and the Central Bank.

Alongside State and Treasury, the ever-present and more than slightly creepy Justice Department is also in play but with a broader brief to force European banks into line by threatening them over alleged sanctions violations not only in relation to Iran but also Libya, Cuba and Sudan. The Justice Department’s political operations arguably represent a grave threat to European sovereignty in a US-dominated Western capitalist system, far graver than the Treasury’s attempt to develop an agreed regulatory structure favourable to ‘Wall Street’. This at least has the virtue of being a shared project with conservative 'reformers' in Europe like Angela Merkel.

The Justice Department has become a prime agent for US extra-territoriality. On a number of issues (not excluding extradition), its pursuance is that of war by other means. A flaccid European political system is allowing itself to be pushed from pillar to post by an organization with all the discipline and ideological fervour of the Comintern in its heyday. In 2005, ABN Amro, for example, was ‘nailed’ for £39m by the Treasury’s OFAC [Office of Foreign Assets Control] because its US office had processed Bank Melli-originated wire transfers. This Treasury move enabled Justice the space to go after other banks and so it has.

Congress has now rolled in with a slow-moving bill (unlikely to become law) to impose sanctions on foreign energy groups that invest in Iran. At least three states have passed divestment legislation and the involvement of state legislatures and pension funds in 'ethical' foreign policy decision-making has considerable support from NGOs, romantic idealists, liberal activists and neo-conservatives.

All this means that American political warfare operations in international relations are directly using non-US Western dependency on the US economy as leverage to force European corporations to help implement an increasingly populist American foreign policy. The weakness of European elites and the continued scale and importance of the US economy (certainly over the next thirty years) suggests that the US will tend to win in such situations - but do not underestimate the quietly accumulating resentment.

The general public in Europe has certainly not yet noticed what is happening – although the extradition process in the UK that granted the US its exceptional rights might well have raised consciousness in due course if the Government had not stepped in and reasserted some degree of sovereign authority. The business community is beginning to relax but the Gary Mackinnon case still has the potential to outrage.

Any debate on these new developments outside the US is restricted to the political class. Half of this class seems to prefer the US regulatory approach in any case and the dynamics of using American power for ethical ends remain attractive when set against the direct long term bread-and-butter interests of their own populations. Amongst the business class, it is largely bankers and energy corporations who are unnerved, the former because they are dependent on Governments for their regulatory structure and are already weighing up a wide range of new political and credit risks.

But US Treasury and Justice are moving into dangerous territory. Non-US Western business will start making choices about the degree to which it wants to be engaged in the US. It may bifurcate into two competing systems seeking to manage foreign policy in their interests.

Such a development may come to limit the chances of a Euro-American common regulatory framework for capitalism (the vision of Angela Merkel) and build a state capitalist base within Europe itself. Already Germany is shifting a little to the Left in these terms and corporatist nervousness about the global economy's effects may be playing a role in this. The current US Administration has never been very good on the long game.

A worrying aspect of all this is that a political momentum inside the US may emerge for war in the context of electoral politics (though you would think Americans would be ‘once bitten, twice shy’ after Iraq). The political class may start to lose control of their own agenda much as the Government of Erdogan is trying to manage the political outrage over Kurdish 'atrocities' in order to come to a diplomatic resolution of the PKK presence in Iraq. 

This perception of the probable momentum to war is being actively encouraged by US Treasury negotiators and their extensive network of agents. If the Europeans and moderate Arabs have a weak point, it is a terror of war in the ‘old world’ leading to devastation, famine, disease and refugees. The ‘punt’ (such as it is) is for the US to use the same techniques on Europe that it uses in business negotiation – charm, legalism and bullying in equal proportions - in order to shift the Europeans into a hard line on Iranian sanctions as alleged substitute for military action. 

The US probably sincerely believes that it can win this battle (on nuclear proliferation) without recourse to military action but, to do this, it has to appear as if the superpower would actually engage in ‘shock and awe’ at most or (more likely) a surgical strike that humiliates Ahmedinejad, is seen as a ‘defeat’ and enables regime change from within.

This is true brinkmanship because it relies on a layer of assumptions – first, that the West will unite on what appears to be a single issue, then that the united West can contain Iran (which is doubtful), then that Iranian populism is so fragile that an attack will not create a ‘Pearl Harbour’ effect on the Shia and, finally, that Iran’s capability in terms of regional insurgency has been very much exaggerated. Moreover, it suggests that a temporary Western unity on sanctions can be sustained after the event if a strike becomes ‘necessary’.

In this mix of assumptions, American analyses are probably right that European elites can be brow-beaten into support for the US or at least be forced to sit on the sidelines and 'tut-tut' at Iranian intransigence. They are probably also right that Iranian power is limited and can be contained through alliances and localised (if budget-breaking) force of arms.

Where they may be miscalculating is on the ability of Iran to structure an alternative economic and diplomatic network capable of resisting Western demands and the commitment of the Iranian/Persian people to behave as the Americans themselves would behave under an unwarranted attack. After all, the Japanese calculation on Pearl Harbour was wrong but rational, based on desperation and false information.

While regional conservative Sunni interests will continue to support the US under its strategic umbrella, an unwarranted attack on Iran would quickly raise the stakes on street protest against elites in both the Muslim world and in Europe, dividing cultures and forcing those elites into conservative national populism. This usually lasts only a short time in democracies as we have seen in Poland but the long-term effect would be the effective dissolution of the Atlantic Alliance in Europe and even more instability in the Muslim community.

American analysts may be right that they can grind down Iran into compliance but, having got Iraq wrong, the chances are that they are getting Iran (and possibly Pakistan) wrong as well.

Our assessment is that US measures are still about the feud with Iran but that they are coming to be about the struggle for power within the US political system. These measures are also soon going to be a factor in the survival of the Atlantic Alliance if the US uses its remaining power to disenfranchise and manipulate its ‘allies’ into actions that are against their national interest - and only in the interest of a very peculiar American vision of what the world should be.

[This is the first of a two part posting on the geo-political background to the current Iranian crisis. It remains our view that the matter can be resolved through dialogue and co-operation but that no one should be complacent about the effect of domestic political considerations, in either the US or Iran, in creating the conditions for war.]