Ever since a German court, earlier this year, formally accused top Iranian leaders of ordering the 1992 killings of Kurdish dissidents, relations between the European Union and Iran took a nosedive.
With the sole exception of Greece, all EU countries withdrew their ambassadors from Teheran. Other
Western countries like Australia, Canada and Japan also followed suit and the Iranian government reacted angrily to the German courts ruling, saying that it was politically motivated and totally lacking in legal validity.
There were protest marches against the verdict in the streets of the Iranian capital, Tehran including one extremely energetic demonstration outside the German embassy but the Government refrained from taking any steps that could ratchet up the tension between Iran and the EU.
Of course European countries are keen to minimise the fall-out from the courts verdict and a severing of diplomatic relations has been ruled out. Countries like France and even Germany, also opined firmly against any economic boycotts. The truth is that Europe enjoys close and mutually beneficial economic relations with Iran.
Iran accounts for a substantial percentage of European oil imports and is a ready market for the continents exports. And despite the threat of US sanctions against any company investing more than $40 million in Irans oil and gas industry, European firms like Total have reportedly committed hundreds of millions of dollars.
Not surprisingly, Europe sees little wisdom in a rupture of relations at this point. Likewise, Iran knows nothing is to be gained by getting provoked.
Anxious at what it sees as European indecisiveness, the US has jumped into the fray with the demand that the EU take punitive steps against Iran. A high-powered delegation from Washington did the rounds of various European capitals trying to build up momentum for economic sanctions and in order to lend more weight to the as yet unproven allegation that Iran is a sponsor of terrorism, the US has repeated its accusation of Iranian complicity in the bombing of an American military base in Saudi Arabia last year. The blast near Dhahran led to the death of 22 US soldiers but all attempts to establish an Iranian connection have so far come to nought.
Seasoned Saudi Arabia watchers feel there is every possibility that the bombing might have been the work of internal opponents of the US military presence in the Kingdom; there is even speculation about factional divisions within the House of Saud being responsible for the growth of dissidence there.
What is most disturbing about the US approach to Iran is the reported increasing talk in Pentagon circles about the need for an all-out, Pearl Harbour-style attack on Iranian naval and missile stations. With Washingtons strategy of dual containment against Iran and Iraq failing to deliver the desired results, it is logical that they should feel discomfited.
But rather than toying with the idea of a military adventure, the US should stop treating the two countries as outcasts. The best way of resolving differences is through negotiation, not confrontation. The Europeans have wisely decided to play down the possibility of conflict and the US must do the same.
Iran now has a new President, Mohammad Khatami who assumes office in August this year following his victory in the May, 1997 Presidential elections. President Khatami is not expected to fundamentally change Iran's foreign policy but is reported to be conducive to constructive dialogue.
He is reported by the CNN to have temporarily ruled out improving ties with the United States, saying "this is not the right time for it." But that is a change from hard-liners who call the United States the "Great Satan" and say Tehran can never reconcile with Washington.
And surely, unless the United States handles this new opportunity of beginning a fresh dialogue with the new Iranian leader cordially, it would be futile to expect changes in Iran's foreign policy with regard to the USA and other countries.