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Israel has been losing by points its cold war with Iran over the last decade. Iran challenged Israel's strategic superiority, with its presumed nuclear capability and American support. The Iranians opposed the peace process, in which it saw Israel as a barrier to its influence in the region, and the process collapsed. They financed and equipped Hezbollah, which chased the IDF out of south Lebanon, and then positioned thousands of missiles and rockets aimed at Israel in the evacuated areas. The suicide bombings, which were invented by pro-Iranian terror groups, have become the main weapon used by the Palestinians. Iranian Shihab missiles have gone into active service, and Tehran's nuclear policy is advancing.

And what did Israel do? First it managed to foil an American rapprochement with Iran, convincing the West that reformist president Mohammed Khatami is a puppet of the conservatives. Then Israel tried to court Khatami, conducting talks with Iranian reformists. All these efforts didn't move Tehran's rulers by a single millimeter from their hostile calls for the elimination of Israel.

The National Security Council in the Prime Minister's Office is preparing a large study of Israeli policy toward Iran. The conventional assessment here is that there is no strategic rivalry between the two countries, which share common interests as non-Arab minorities in the Middle East, only ideological hostility. The main hope for change is pinned on the collapse of the ayatollah's regime. Khatami is perceived as a lost cause, but in two years, another president will be elected who might dare to challenge the conservatives.

The dispute in Israel is over the question of how to act: whether to seek cracks in the wall of Iranian hostility or to wait quietly for the ayatollahs to fall. Mossad Chief Ephraim Halevi is recommending gently paving ways to the reformers. The Foreign Ministry proposes helping Iran win a seat in the World Trade Organization. Everyone believes Israel must coordinate its moves with Washington.

But a hoped-for political change is no guarantee that Iran will back down from its strategic ambitions. During his last trip to Washington, Prime Minister Ariel Sharon predicted Iran will be a nuclear power by 2005 and will continue to seek the bomb even if its regime is replaced.

A nuclear-empowered Iran is perceived as the main strategic risk to Israel, because it would end its presumed monopoly in the region. Most elements in Israel believe that everything must be done, including, if necessary, using force, to prevent Tehran from achieving nuclear weapon capabilities. But there are also those who believe the process is inevitable, and the question is not whether the Iranians have the bomb, but whose finger will be on the trigger. As a result, it would be preferable to focus on changing the regime and renewing alliances with future rulers, as in the days of the shah.

The intelligence community believes the Iranian nuclear program has yet to reach the point of no return - when it will not require foreign help to advance its goals. The Bush administration upped its pressure on Russia to halt the technology "leakage" to Iran. In Israel, officials are pinning their hopes on the May meetings between U.S. President George W. Bush and Russian President Vladimir Putin, when the Russians realized the Americans were very determined on the issue. The Americans agreed to the construction of the nuclear power plant in the Persian Gulf city of Bushehr on condition that Moscow takes back the radiated fuel rods from the reactor, since they can be used to make plutonium. All other nuclear projects must cease. The Russians claim they have tightened their supervision on nuclear exports, and Israel also believes Moscow is cooperating. But it's still not clear if those understandings will be enough to keep Iran out of the nuclear club.