Here are a couple of points Iran has made and maybe some points Iran has not said but that I figure Iran believes.
1 - The West's offer of technology and negotiations if Iran suspends enrichment is not a good deal.
First, there is almost no offer of technology. The technology Iran would get for suspending enrichment is civilian airline spare parts. Iran currently buys these used but would have access to new parts if it suspends enrichment.
The other technology, the power plants and the reduced restrictions on technology transfers would not come from suspension. If Iran suspends enrichment it would be entitled to enter talks about these other things. Would the terms be concessionary, market or above-market? Europe won't say. That means above market. If they were concessionary Iran would not consider that a fair trade for giving up domestic uranium enrichment. But an offer of talks about technology is not an offer of technology.
Second, once Iran suspends enrichment, Europe and the US have gotten what they want. There is no reason for talks to ever end at that point. If Iran suspends enrichment for talks, and talks cannot end until the US agrees, then the US has a permanent effective veto on Iranian enrichment.
The terms of the talks the UN is trying to impose on Iran explicitly give the US a permanent veto on Iranian enrichment. Even if they did not, if enrichment must be suspended for the duration of talks there is a de-facto veto anyway. As explained earlier, the compensation Iran gets for permanently allowing the US to prevent enrichment is spare parts for civilian aircraft.
Talks could then begin about other trades, but any further concessions from the West would not be compensation for giving up enrichment but for Iran accepting further demands from Europe and the US.
2 - Iran cannot trust foreign fuel suppliers.
The United States has pressured both Russia and China expand sanctions beyond enrichment. It has pressured Russia to stop construction at Bushehr and cancel fuel delivery. Other than fuel under Iran's control, there is no way Iran can have a guaranteed supply in the face of US pressure.
I think the most likely explanation is that Russia's fuel was tied to the missile defense system in Europe and cooperation with Korea was tied to Iran in China's case. Either way while there were no Iranian voices that advocated giving the US a veto over enrichment before, there are even fewer now.
3 - There is no silent anti-clerical majority in Iran.
The Iranian regime is relatively popular and relatively stable. You can find Iranian expatriots in the US who speak negatively about Ahmadinejad, you will even find them if you travel to Tehran. That is analogous to the Americans in Europe, or the Middle East who have nothing good to say about Bush - and you can even find them in Washington and New York.
According to the one poll I have seen that has addressed this question, more Iranians think their government is not religious enough than think it is too religious.
All of the foreign policies that the US dislikes in Iran are popular policies. The vast majority of Iranians believe Israel is not legitimate, and that Hamas and Hezbollah deserve support. The vast majority of Iranians believe Iran should have a military and economy that would make it at least a powerful as its neighbors. The majority of Iranians believe Iran should have a full domestic fuel cycle and even that Iran should be nuclear-weapons capable.
4 - Iran can win a confrontation with the West.
Iran sees its regime as infinitely more stable, and more structurally sound than Hussein's regime. Hussein's regime survived the most extensive bombing campaign ever launched and was only removed by a full scale invasion.
A full scale invasion of Iran is widely acknowledged to be impossible for the US to even consider. If Iraq had gone much better and was now able to play the role for the invasion of Iran that Kuwait played for the invasion of Iraq, a full scale invasion of Iran would still be beyond the capabilities of the US.
What is left is airstrikes, which will enrage Iran's population, and drive them to support their leaders, and sanctions which force the government to take a more central role in distribution of basic survival needs, thereby again strengthening the regime.
The cost of these is that Iran will retaliate against and destabilize US and European assets in the Middle East, at least.
Iran believes that Europe will decide that the cost of confrontation is greater than the gain of Iran giving up enrichment, given that Iran is willing to accept all of the safeguards Brazil, Taiwan, South Korea and Romania accept - each country named has been proven to have had an extensive nuclear weapons program, and is now theoretically nuclear capable, but now not pursuing nuclear weapons even though they all could if they were to perceive an emergency.
5 - Confrontation may be good for Iran.
Iran looks at the 8-year war with Iraq as a harsh test that Iran survived. Even if a new confrontation is harsher on Iran than the 8-year war was, Iran is stronger now than it was when the war started.
The war also radicalized Iran's population. It created the Ahmadinejad generation. Ahmadinejad is not a cleric, but an engineer who was radicalized in college and who stayed radical at least partly because of the war.
A confrontation will radicalize Iran's current young generation and keep them radical. A confrontation, though Iran's government must appear to be making at least token efforts to avoid it, is the best guarantee that there will be a new Ahmadinejad generation. This is as true for sanctions is it is for an invasion.
Hezbollah's survival of the summer war of 2006 is another source of pressure on Iran. Iran perceives itself as the parent of Hezbollah. If Hezbollah survived a month of bombing and a blockade and unlimited security council resolutions and sanctions, it would be a humiliation for Hezbollah's father, the regime of Iran, to succumb to those same tactics.
7 - In the end, Iran will be nuclear capable.
Iran will continue working on centrifuges and enrichment in protected parts of the country, still unknown to the West and will amass the knowledge of designing parts and coordinating their use over the next ten or fifteen years even after Natanz and Bushehr are bombed.
Iran is willing to hunker down and become a country whose only products are subsistance goods and services and its nuclear program. After it becomes nuclear capable, Iran will "surrender" and end any sanctions and confrontation as an irreversibly nuclear-capable power - the way North Korea can give up its weapons but can never again be nuclear-incapable. Then with its population, geography and resources it will catch up economically.
Regime change will be less likely then than it is now, Iran's government will be as stable and popular as it is now. Hussein's government did not become less popular because of the sanctions.
To conclude, stopping Iran from actually building a weapon is easy. Stopping Iran from becoming capable of building a weapon is hard. Slowing Iran's program by five years, pushing the day Iran reaches Brazil's level of nuclear capability to 15 years instead of 10 is possible, at a high cost to the US and to the Iranian people, but low cost to the Iranian regime.
The next generation of Iranian leaders - the generation that grows up through the confrontation that they will inevitably blame, correctly, on the US, Europe and Israel - will have nuclear capability, a decent economy and a major grudge whose consequences will have to be faced by the next generation of Americans, Europeans and Israelis.
