This commentary was published in the Daily Star on December 5, 2006.

With no sign of Iran retreating on its nuclear program and growing acknowledgment of the risks and limitations of military options, the Bush administration appears to be gearing up for a suboptimal policy that it long rejected: Iran’s containment. Its strategy relies on international diplomacy and the threat of sanctions, as well as a combination of military interdiction, swaggering and intimidation, and shoring up the defense capabilities of America’s allies in the Persian Gulf.

Senior US officials who visit the Arab Gulf states to build momentum for this initiative return optimistic about their allies’ willingness to extend a helping hand. They note the palpable anxiety of Gulf rulers vis-à-vis a more assertive Iran surfing on a wave of Shia ascendancy, the general sense that Iranian influence should be rolled back, and the increased weapons procurement of the Arab Gulf states, which they encourage without subtlety. Saudi Arabia, the United Arab Emirates and Qatar, for example, are modernizing their aircraft fleets and have expressed interest in anti-ballistic missile systems.

Yet the United States is misinterpreting the significance of these signs. Consider weapons acquisition. Defense requisites are only part of the reasoning. Gulf states have always liked expensive hardware, and with recent oil revenue windfalls, they can afford to buy more. If this build-up pleases America, all the better. But it would be self-deception to believe that the Gulf states can or want to develop serious military capabilities to contain Iran. Arms procurement in the Gulf is mainly about purchasing an insurance policy from key nations in case of crisis: Gulf states want permanent members of the UN Security Council to have a stake in their continued existence and shield them from domestic and external threats. This calculation, along with energy and trade interests, also explains their growing political ties with China.

It isn’t that Gulf states are turning their back on the United States as often suggested. True, the Gulf states now worry about US ability and competence to provide for their security given its disastrous record in Iraq. But despite talk of a major strategic shift in the region following US blunders and the emergence of new players, the Gulf states still realize that the United States is their only capable and willing security guarantor. America’s position in the Middle East may have declined in relative terms, yet it will remain unmatched for the foreseeable future.

The United States should not press its Gulf allies into adopting a more aggressive military posture toward Iran. Doing so would risk hurting them by requiring that they lift the ambiguity of their policies toward Iran that serves their interests well. To be sure, there is little in Iran’s behavior and rhetoric to assuage its neighbors’ fears. Tehran proposed again last week to set up a security forum comprised of the Gulf states, Iran and Iraq to deal with regional issues. This proposal purposely excludes the United States, whom Iran portrays as the main factor of regional instability. Tehran disregards its neighbors’ legitimate concerns regarding Iran’s tendency to contribute to regional instability and adds insult to injury by refusing to acknowledge their environmental concerns vis-à-vis the nuclear program.

Nevertheless, the Gulf states tend to tread carefully when it comes to their Persian neighbor. In the face of Iran’s nuclear challenge, Gulf leaders have demonstrated an uneasy but calculated restraint. This caution, a source of puzzlement and frustration in the West, arises from the simple fact that, for the Gulf states, Iran will always be the powerful neighbor next door, and antagonizing this neighbor will create lasting bad blood. The reluctance to stand up to Iran and openly embrace the United States also comes from both widespread Arab suspicion about US motives and intentions and the failure of international diplomacy to portray the Iranian nuclear crisis as matter of global concern instead of a US-Iran clash.

For the moment, Iran has won the public diplomacy campaign in the Arab world, a reversible achievement in today’s tense, sectarian climate. But the United States is poorly positioned to effect this change; in the wake of the Iraq fiasco, the US must seriously, and humbly, consider whether it can wage an effective diplomatic and communications campaign to counter Iranian influence by playing on sectarian tensions.

Gulf states will only accept an effective containment strategy if it comes with a degree of international legitimacy that only a Security Council resolution can bestow. Given Russia and China’s aversion to even symbolic sanctions, this remains a remote possibility.

Another risk is that containment will only validate Iran’s fears and justify the need for a deterrent. Last week’s much-publicized Proliferation Security Initiative exercise in the Persian Gulf has already triggered an Iranian response in the form of military exercises and missile tests. In the current volatile atmosphere in the Gulf, any miscalculation or misinterpretation on either side could escalate into a conflict.

The administration is right to see containment as not good enough, but the military option is even worse. Coercive measures will only work as a prelude for engagement. As part of a negotiations strategy, the United States should push for limited and reversible sanctions and then offer a conditional security guarantee to Iran as a basis for direct talks. One can always hope.