Some Western analysts, especially those who advocate talks between the US and Iran suggest that once the parties come to the negotiating table, it may be possible to reach a grand bargain that not only addresses the nuclear issue but also the issue of Iranian support for Hamas and anti-Israel organizations.
If we think of the US and West-inspired sanctions in place before 2003 as aimed at punishing Iran's support for anti-Israel organizations and we think of those put in place after 2003 as aimed at punishing Iran's nuclear program, it should be clear that neither set of sanctions threatens Iran's regime enough that Iran is willing to change the targeted behavior.
It is not commonly appreciated in the West that in both cases, the nuclear issue and the support for adversaries of Zionism, Iran believes it is doing the right thing, and doing so with broad support from the leadership and the population of the country. The weak, dependent and unpopular dictatorships of Saudi Arabia, Jordan and others may confuse Western observers leading them to conclude that Iran could change from an abnormal foreign policy to a more normal one like that of Egypt.
If the framers of Egypt's foreign policy were subject to contested elections, Egypt's foreign policy would be nearly identical to that of Iran. In 2006, 92% of Egyptians considered Israel an enemy nation. Iran does not need a strategic reason to support opponents of Israel. Countries in the region that do not support opponents of Israel are the ones with abnormal foreign policies.
Iran is willing to bear the antagonism of the US in order to do the right thing with respect to the Palestinians. Most countries in the region, if they followed the directions of their populations, would be willing to do the same. Iran is also willing to bear the amount of sanctions we've seen in order to keep its nuclear program, and to gain the benefits it identifies from having nuclear technology, including that necessary, in an emergency, to make a weapon.
If the US is willing to accept Iran's support for anti-Israel organizations, a deal can be reached in which Iran continues its support with US acceptance. If Iran was willing to decrease its support for anti-Israel organizations in exchange for lifting an amount of sanctions that the US would agree to, then a deal could be reached independent of the nuclear issue.
The same for the nuclear issue, if there was a point of sanctions and behavior that was acceptable to both sides, a deal could be reached with or without an agreement on anti-Israel organizations. A grand bargain can only be reached if there are independently agreeable points on both issues. There is no reason to believe there is a point of sanctions and behavior that is acceptable to both the Iranians and Americans on either issue, much less both.
Right now the US and Israel are in the process of coming to terms with the idea that Iran cannot over the long term be prevented from acquiring a virtual nuclear weapon, or the ability to make a weapon in an emergency. Once that acceptance process is complete, the US likely will be able to find a level of Iranian nuclear activity that it accepts in exchange for decreasing the post-2003 sanctions. If not, Iran will enrich enough uranium that it feels comfortable suspending unilaterally. If Iran gets there before an agreement is made, it is possible Iran will never sign the Additional Protocols and will have a nuclear capability while only observing the bare minimum NPT requirements. Iran has a right to do that, but it is a sub-optimal outcome for the West.
Once the US is ready to reach an agreement over Iran's nuclear program, that will not create any common ground between the US and Iran on the issue of Israel's legitimacy.
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