The most important specific change made in the 2007 NIE is that civilian enrichment, which can lead to the development of a nuclear weapons capability, is separate from a nuclear weapons program. Of course capability and weapons are different in real life, but the US foreign policy community, along with US allies and press advocates who follow the US line, has been blurring the distinction consistently until this dramatic reversal.
The new recognition of the difference between capability and weapons is not the result of new information. The 2005 report does not directly contradict the 2007 report. The projected time period where Iran will be able to produce weapons grade uranium has not changed at all. The difference is that the 2005 report describes Iranian efforts to develop uranium conversion and enrichment technologies as part of a weapons program - despite Iranian offers to conduct those activities under IAEA supervision. The 2007 report describes the same activities as separate from a weapons program.
The difference between the 2005 and 2007 reports is purely a political decision the describe the same activities using different language. This political decision has been approved by the White House and any objections by supposed hawks have been overcome.
This clears the way now for US policy to take the distinction into account and accept an arrangement in which Iran retains civilian fuel cycle technologies. It seems now that George W. Bush's "World War III" language if Iran gets the knowledge necessary to build nuclear weapons was a last gasp of a policy that was on the way out at the time the statement was made. That policy has now been publicly overturned.
I lean towards the idea that this change in public position is made with the expectation of, at some point, a concession from Iran. I'm not sure what concession the US expects and what parties in Iran are willing to deliver the concession.
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