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A strange carnival of Holocaust-deniers, including ultra-Orthodox rabbis in long black coats, white supremacists and members of the Ku Klux Klan went almost unnoticed in the streets of Tehran this week. Internationally, the recent Holocaust-denial meeting has created a justifiable outrage. The meeting, organized by the Iranian Foreign Ministry's Institute for Political and International Studies (IPIS) in Tehran, evokes fear and anger, not least because it touches on Israel's existential anxiety about her own survival. How should such provocation be understood and, as is widely assumed, does it reflect a more aggressive Iranian policy toward Israel, or does the extreme rhetoric of this meeting require deeper understanding, taking into account the context of Iranian politics?

To try to understand what Iran's real relationship with Israel is, I recently spent a week in Iran speaking with the political elite. There is clearly a multiplicity of voices and anti-Israel rhetoric, not least the questioning of the Holocaust, which is disturbing to the West. It was explained to me as a recurring part of the Iranian political mindset that has existed since the Iranian revolution in 1979. It would, however, seem to be a trap to take it too literally.

It is certainly clear that there is a tradition of sloganeering in modern Iranian politics, and part of this involves Holocaust-denial. This rhetoric needs to be unpacked. It cannot be understood fully through a European lens. An Iranian analyst explained to me how things were viewed in Iran: "The Holocaust, and the anti-Semitism which led to it, is viewed in Iran as a specific Western event leading out of the centuries of Western Christian mistreatment of Jews - it is logical for Iranians that the Holocaust become the subject of review." In the West, this discussion is perceived as Holocaust denial. Europeans, he said, "now carry a deep scar and revulsion at their own behavior and a deep fear of any repetition. Iranians carry no such history."

The Muslim religion prides itself on being respectful to both Jews and Christians. Nevertheless, Jews at different times have been mistreated in the Middle East. But this is not to say that the rampant anti-Semitism, which has characterized European history for centuries finds its equivalent in the Muslim world.

Jews have a long history of uninterrupted presence in Iran dating back to the 8th century B.C.E. Iran still has the largest Jewish population in the Middle East outside of Israel; the synagogue in Tehran claims a membership of 25,000. According to the Iranian constitution, there must be Jewish members of parliament. Today Maurice Motamed sits in the Iranian parliament as a Jewish MP.

This conference has indeed upset the 25,000 strong Jewish community, and Motamed said, "by holding this conference, they are continuing to insult the Jewish community."

Iran has engaged in Israel-bashing for the past 25 years, including anti-American and anti-Israel slogans. Some Israeli analysts interpret these words as meant for Iran's domestic consumption, a kind of street politics for shoring up Ahmadinejad's power, frustrated by his inability to wrestle control away from Iran's theocratic power elites.

Much of the rhetoric could be seen in the context of cementing domestic political allegiance to the current regime, and not for foreign consumption. Therefore, to take the language literally could be to risk escalating the crisis. A more sanguine response would be to understand the chasm between rhetoric and official policy. President Ahmadinejad does not decide Iran's nuclear policy or foreign policy. His power is over economic and social issues. Foreign policy decisions are in the hands of Ayatollah Ali Khameni and the National Security Council.

Iran's official policy toward Israel is that whatever Israel and the Palestinians democratically agree on is acceptable to Iran. Political Islamists have made a number of statements recently, to the effect that they wish to have contact with Jews. What they oppose is Israel's policy of occupation of the Palestinian territories.

Almost immediately after the furor over the Iranian president's outburst last year, the Iranian minister of foreign affairs, Manouchehr Mottaki, issued a press statement reiterating Iran's official position, first enunciated by former president Rafsanjani 13 years earlier, that Iran respects the sovereignty of all United Nations countries and would not wage war against any UN member.

Iran has funded, supported and armed Hezbollah in its war with Israel, but this can be analyzed in part as a proxy war with the U.S. to create a balance of power in negotiations. To the Iranian psyche, Iran is a victim of other people's political exploitations, and its prime motivation is to garner respect and be seen as an equal player.

From a wider perspective and in the longer term, there are no profound reasons for hostility between Iran and Israel. Iran has never been invaded, threatened, nor has her population been expelled by the Israelis. The Iranians' real quarrel is with successive U.S. administrations over the last 27 years. Israel is used as a pawn, because of its very close relationship with the U.S.

The great void in the Iranian-American-Israel relationships is one of the most dangerous anomalies in international relations at present. Distorted megaphone diplomacy has done a great deal of damage, and what is currently needed is a conversation of equals behind closed doors to shift the current dangerous rhetoric to communication. Ultimately, there is much to talk about.

Little known is the fact that in 2003 Iran offered a "grand bargain" to the U.S. In exchange for supporting a two-state solution for Israel and Palestine, in which it would accept the "Beirut Declaration," the Iranian government wanted full diplomatic recognition from the U.S. and suspension of sanctions. The real question now is whether negotiations could be revitalized.

Gabrielle Rifkind is Human Security Consultant to Oxford Research Group and a specialist in conflict resolution. She also co-authored "Making Terrorism History."