As of today, even if the US had no vulnerabilities in Iraq, Afghanistan or the Persian Gulf, US military planners would not be able to discount the possibility of Iran building a nuclear weapon in less than a year. For now, Iran would have to put any weapon into a truck and smuggle it to a target that can be reached by land. Just that capability is certainly enough that the US would not be able to put troops onto Iranian soil, likely to be enough that the US would not be willing to mass troops in a neighboring country as a potential invasion force and quite possibly enough that the US could not use a neighboring country as a base for bombing Iran.
Years from now Iran will also have, in theory, the option of putting a weapon onto a missile. Having that option, even without ever actually making a weapon, would be enough to deter a wide range of US or Israeli actions or threats against either Iran or any country Iran commits to defending. A calculation of Iran's nuclear capabilities that is consistent with the US informed consensus can be found at IranWatch.org.
The fuel swap deal represented a last ditch effort to get Iran to voluntarily reduce its stock of low enriched uranium to significantly below the amount necessary to make one weapon. At that level, while there would not be certainty that Iran cannot build a weapon, the US, in a hypothetical emergency, could hope to destroy as many centrifuges as it could by bombing and be fairly confident that from there building a weapon would take more than one, and possibly several years of intense (and detectable) effort by the Iranians.
I can only guess the US was willing to get around the suspension requirement by allowing Iran to enrich as long as it does not stockpile its uranium, instead exporting it to another country to participate in a fuel bank. This situation would be a virtual suspension and while from the US point of view it would be inferior to an actual suspension, it would not directly increase Iran's nuclear capability. I base my guess that this was offered on three things. The first is that Ahmadinejad, while discussions about the fuel swap deal were still active, said Iran would be willing to participate in a fuel bank. The second is that a Swiss organization published a proposal along these lines as a way to meet the concerns of both the Iranians and the pro-Israel parties. The third is that US Defense Secretary Robert Gates insists that the US presented new and "creative" ideas to resolve the issue.
I'm also willing to guess that while acceptable details would have to be worked out, Iran was willing to entertain discussions of this idea, subject to agreement on the benefits Iran would get from voluntarily holding its nuclear stock at an agreed level and many other terms. Terms would include things like the duration of any Iranian commitment, the leverage that would be available to Iran to ensure that the pro-Israel parties would not be able to break their commitments as well as what the expectations would be from each side regarding behavior in the region unrelated to the nuclear issue, for example US policies in Iraq and Afghanistan and Iranian policies regarding Lebanon, Syria and Palestine. I base this guess again on Ahmadinejad's speaking positively of the fuel bank idea as well as a sense I remember in early October that Iran seemed optimistic that there was a chance that the issue was solvable.
Honestly, the pro-US stooge governments of Egypt, Jordan, Saudi Arabia, and others should be directly represented in US/Iranian discussions of the region. But the US, especially as it is discussing Iran's nuclear status prefers as little direct contact between its colonies and Iran as possible.
Another guess is that the US perceives Rafsanjani and members of his faction in Iranian politics, notably Mousavi, as generally more willing to negotiate than Ahmadinejad and the Revolutionary Guards faction of Iranian politics. Also that Rafsanjani and Mousavi know this, meaning the US has in some way successfully communicated its preference for them. My guess that there is a US preference for Rafsanjani comes from the current claims that his faction's losing power in Iran represents a Iran becoming military dictatorship, or junta. There is also the open collaboration between what is now known as the Green movement and the people in the US who are designing sanctions against Iran.
In recent weeks, senior Green Movement figures -- who have been speaking at major Washington think tanks -- have made up a list of IRGC-related companies they suggest targeting, which has been forwarded to the Obama administration by third parties.There also was the episode in 2005 when the West actually told the Iranians that it wanted to wait for the results of the elections, which at the time Rafsanjani was projected to win, before making its offer on Iran's nuclear program.
My guess that the Rafsanjani faction knows that the US favors it is based on the otherwise unexplainable urgency that was evidenced in Rafsanjani's and Mousavi's behavior after the election. Calling people to the street before he could present tangible evidence of fraud was a hugely irresponsible and desperate action on Mousavi's part. Rafsanjani's claim - a month later addressing the nation, that some people doubt the results, without being able to say he doubts the results himself, and, more importantly, what evidence leads him to doubt them - also was a desperate gamble. These gambles could only be justified by the prospect of huge gains if they had been successful.
I don't necessarily think the huge gains Rafsanjani and Mousavi expected if they could overturn the election results would have been personal gains. They likely believed there was a prospect of historically improved relations with the United States on a respectable basis which would be very valuable for Iran. On the other hand, Rafsanjani is infamous for his corruption. And corrupt leaders are exactly what the US looks for to develop into Mubarak-like stooge dictators.
My last speculation about the recent history of the nuclear issue is that the Balochistan bombing in October disrupted the consensus in Iran that Iran could benefit from efforts to make a deal with the pro-Israel countries over its nuclear program. I base this guess on the severity of the attack, which killed several high-ranking Revolutionary Guards commanders and the impact sudden major violent actions tend to have everywhere in the world of causing communities to lurch towards militancy.
That attack on October 18, combined with the unexpected inflexibility of the Western negotiators on the terms of the proposal presented on October 19 likely are what killed the deal. The public deal, that Iran just gives its stock of uranium for a promise of reactor fuel later, just like Russia's promise to start the Bushehr reactor in 2005 and the promise to deliver the S-300 air defense system years later, was clearly unacceptable from the beginning to any Iranian party. If the deal had a private component that Iran would agree to limit its stock of low enriched uranium, then the private deal would have been injured by the Balochistan attack and the inflexible Western negotiating position would only have reaffirmed Iranian opposition to the deal.
The December killing of an Iranian nuclear scientist in Tehran would have been a further blow. A possible impact may have been that the stock that was acceptable to Iran in the middle of October is no longer acceptable. But if Iran demands a domestic stock of more than a ton of low enriched uranium that is not acceptable to the pro-Israel parties in the negotiation.
If the Balochistan attack had foreign sponsorship, and that is somewhat likely - the US essentially admits it arms the Balochistan rebels through Pakistan - then the attackers knew they were attacking the idea of the US and Iran resolving the nuclear issue. While an Iran that continues to enrich but limits its stock in exchange for cooperation with the US is seen as beneficial to some factions of the pro-Israel coalition, it is likely seen negatively by others and particularly by Israel itself.
If the attack had a foreign sponsor it most likely was not mainstream US foreign policy apparatus, but possibly Israel's, France's, some subsection of the US' or some party's apparatus that considers itself more pro-Israel than the mainstream US. Possibly, I don't really consider it likely and it doesn't matter on the ground either way, but possibly the timing of the Balochistan attack was just a coincidence. If so, it was a very unfortunate coincidence for US/Iranian relations.
That gets us to where we are now.
The deal is dead. The US has absolutely no problems with Iranian cancer patients not getting treatment as a way to pressure Iran to give up enrichment. To people like myself who do not consider the security of Israel as a Jewish state as the most important, or even the only moral consideration in the Middle East, the US position is sick and repugnant. To most people in the US foreign policy establishment, the idea that there are moral issues that can compete with the security of Israel in the Middle East has uncomfortable, even if false, associations with anti-Semitism. That comes from the environment in which their careers have developed. Dying Iranian cancer patients are just as worth it as starving Iraqi children were to Madeline Albright. What is sick to me is reasonable to people who accept the exclusivity of Israel as moral issue in the Middle East.
If Iran wants medical fuel without giving up the theoretical capacity to defend itself from US attacks it is going to have to make the fuel itself. In the meantime, Iran will build its stock of uranium, not to build a weapon, but because a stock of uranium is itself a deterrent before it is even converted to a weapon. Iran's stock by the end of Obama's first term will be two or three tons of 3.5% low enriched uranium and possibly a hundred or two kilograms of 20% LEU.
Interestingly, the deal the US is so upset that Iran did not take in October 2009 could have easily been achieved in 2006 or 2007. As Iran's stock increases in size and Iran's nuclear capability becomes more flexible, if the trend continues, the deal the US will be willing to accept by the end of 2012 will be much more favorable than what the pro-Israel parties are willing to offer today.