In the wake of talks in Geneva last weekend, the Bush administration is increasing the pressure on Iran to agree to negotiations over an international incentives package in return for shutting down its uranium enrichment and other nuclear programs. US Secretary of State Condoleezza Rice bluntly warned on Monday that Tehran would face a new round of “punitive measures” in the UN Security Council if its formal response, for which a two-week deadline has been set, were not satisfactory.

The US made a small, but significant, diplomatic gesture by sending senior US diplomat Williams Burns to the Geneva meeting between Iran and the so-called P5+1 group (permanent members of the UN Security Council plus Germany). Washington had previously insisted that the US would not take part in discussions with Iran over the nuclear issue until Tehran shut down its uranium enrichment facilities.

Not surprisingly, the outcome of the meeting was inconclusive. The decision to send Burns to the meeting was only announced days before it took place and the US diplomat was under strict instructions to do nothing but restate Washington’s demands. From all accounts, the Iranian delegation led by chief nuclear negotiator Saeed Jalili, which had been due to respond to the package of incentives, failed to address the key issue of uranium enrichment. Tehran has insisted that its nuclear programs are for peaceful purposes and that it has the right under the Nuclear Non-Proliferation Treaty to enrich uranium.

Rice dismissed Jalali’s comments as a “meandering” monologue that demonstrated that Iran was not serious about negotiations. A copy of Tehran’s unofficial negotiating document leaked to the New York Times apparently contained proposals for extended talks, firstly with EU foreign affairs chief Javier Solana, then at the foreign ministerial level. As one senior European official dismissively told the Times, “The paper calls for a huge exercise in talking. If you were to try to implement it, it would take a minimum of several years.”

For Rice to demand that Iran “get serious” about negotiations smacks of hypocrisy, to say the least. Not only has the Bush administration previously refused to take part in talks with Iran, but repeatedly threatened to resort to military force. Over the past month, Israel, America’s closest ally in the Middle East, has made a series of menacing threats to bomb Iranian nuclear facilities—with few signs that Washington was making any effort to restrain an attack.

The decision to send Burns to Vienna does, however, indicate a certain shift in US policy as Washington seeks to stabilise the occupation of Iraq and refocus its attention on the escalating war in Afghanistan. Iran, which quietly assisted the US and Iraq military earlier this year to prevail over Shiite militias loyal to cleric Moqtada al Sadr in Baghdad and Basra, is also crucial to any consolidation of the US occupation of Iraq. By sending a top US diplomat to the P5+1 talks, Washington was signalling not only to Iran, but also to Britain, France, Russia, China and Germany, that it was looking for a deal to end the protracted confrontation over Iran’s nuclear programs.

Enlisting greater support from the other powers is clearly a major component in the calculations behind sending Burns to Geneva. Russia and China, while agreeing to three rounds of UN Security Council sanctions, have waged a rearguard action to block stronger measures and have publicly opposed any military action against Iran. Unlike the US which has had virtually no economic relations with Iran since the overthrow of Shah Reza Pahlavi in 1979, all the major European and Asian powers have substantial economic interests at stake in ending the confrontation with Iran.

As a result, there will undoubtedly be a concerted effort before the two-week deadline to press Iran to agree to the negotiating process. Echoing Rice’s blunt warning of further sanctions, British Prime Minister Gordon Brown told the Israeli parliament on Monday: “Iran now has a clear choice to make: suspend its nuclear program and accept our offer of negotiations or face growing isolation and the collective response of not just one nation but of all nations round the world.”

The French foreign ministry also issued a statement declaring that Iran “must choose between the path of cooperation and the prospect of growing isolation”. In his comments following last weekend’s meeting, EU foreign affairs chief Solana warned that the package of incentives would be taken off the table if Tehran did not provide a definite answer in two weeks. None of the major powers at the talks gave any credence to the Iranian proposals presented by Jalali.

US and European officials are already hinting at far more punitive sanctions, both inside and outside the UN Security Council, if Iran fails to agree. The Wall Street Journal reported on Monday that new penalties could target imports of refined petroleum, with the potential to provoke a sharp economic crisis. While Iran has large reserves of oil and is a major exporter of crude, it has limited refining capacity and relies on imports for around 40 percent of its petrol needs.

Divisions in Tehran

While the debate is taking place largely behind closed doors, there are sharp divisions in Tehran over whether to agree to the proposed negotiations. For all the anti-American bluster of figures like Iranian President Mahmoud Ahmadinejad, no one should be under any illusion that the clerical regime is waging any struggle against US imperialism or its predatory wars in the region. The differences between so-called hardliners, pragmatic conservatives and liberals are tactical disagreements as to how best to reach a new accommodation with the major powers and to advance the interests of Iranian capitalism, including to become a regional powerbroker.

Under Ahmadinejad’s predecessor, the so-called reformer President Mohammad Khatami, Iran tacitly supported the US invasions of Afghanistan and Iraq, playing a key role in encouraging Shiite factions in both countries to take part in the occupations. The Bush administration’s response to Khatami’s overtures for the reestablishment of relations was to slam the door shut and threaten Iran with military action. Shortly after the 2003 invasion of Iraq, Washington dismissed out of hand an Iranian proposal for comprehensive negotiations in which everything, including Iranian support for Hamas and Hezbollah and its refusal to recognise Israel, would be on the table.

US threats, along with the deepening social polarisation produced by Khatami’s economic restructuring, enabled the right-wing populist Ahmadinejad to win the presidency in 2005 with promises to help the poor and to take a tougher stance against Washington. Three years later, however, the regime confronts a mounting economic and social crisis at home, in part a product of tightening international sanctions on the country. Ahmadinejad has increasingly come under fire from conservative supporters for the failure of his economic policies and for unnecessarily antagonising the major powers with his empty anti-imperialist posturing.

The divisions were evident in parliamentary elections in March in which conservative critics won considerable support at the expense of Ahmadinejad’s own faction. Significantly, former top nuclear negotiator, Ali Larijani, who stepped aside from his position amid unspecified disagreements with Ahmadinejad, was easily elected and has since been installed into the powerful position of parliamentary speaker. Larijani has worked closely with the country’s supreme leader Ayatollah Ali Khamenei and is a possible challenger to Ahmadinejad in presidential elections due next year.

In recent weeks, visible differences have again emerged. Without naming Ahmadinejad, Ali Akbar Velayati, Khamenei’s foreign policy adviser, warned earlier this month against making “provocative” statements on the nuclear issue or issuing “illogical declarations and slogans” that undermine relations with the outside world. Last week, Khamenei, who has ultimate say over foreign policy, issued a statement backing Ahmadinejad, saying his comments were the “fruit of a consensus of all the country’s officials”. The statement, however, amounts to little more than a closing of ranks while the regime thrashes out what course of action to take in the next two weeks.

Certainly, Iran’s deepening economic crisis will be a major factor. The British-based Guardian this week pointed to the impact of the current sanctions: “Inflation has risen to 25 percent and Iranian businesses are carrying cash to pay for transactions, due to the difficulty opening foreign currency accounts with non-Iranian banks. Iranian importers are now having to pay in advance for commodities and are no longer able to receive revolving lines of credit, and their costs are up 20-30 percent. The Iranian banking community has been particularly hard hit by the sanctions and US pressure. Bank Sepah is on the brink of collapse and other Iranian banks are struggling as well. Bank Sadarat has seen its corresponding banking relationships—which are essential for a bank to operate effectively internationally—fall from 29 in August 2006 to eight in early 2008.”

At the same time, the Iranian regime has no certainty that the Bush administration’s gesture in sending a diplomat to Geneva signifies a real shift in policy. As Deputy Foreign Minister Alireza Sheikh-Attar told the press on Monday, the US government is “indecisive about whether to lean on diplomacy or the military option”. Certainly those sentiments will be reinforced by the sharp and sometimes bitter criticisms of Burns’s presence in Geneva from layers of the US political establishment that have previously backed an attack on Iran’s nuclear facilities.

Whatever the final outcome of the debate in Tehran and Washington, the two-week deadline is looming as a turning point in the protracted crisis.