Nasr, author of the recently published book The Shia Revival, says despite its defiant rhetoric Iran is really seeking open and wide-ranging normalisation talks with Washington.

Professor of Middle East and South Asia Politics at the Naval Postgraduate School in California, Nasr was one several Middle East experts recently invited by George Bush, the US president, to brief him on internal Iraqi religious and political dynamics.

The following excerpts are from his interview to Aljazeera.net.

Aljazeera.net: Saudi Arabia, Egypt and Jordan have voiced fears of a Shia revival in the wake of the invasion of Iraq. Will a sectarian war engulf this "new" Middle East?

Vali Nasr: I think in individual countries they do fear the Shia revival because, unfortunately, Iraq, which is the very first stage of transfer of power from Sunnis to Shia, has gone very badly for a variety of reasons.

There was an enormous amount of blood shed in Iraqi politics for a very long time ... Iraq after 1991 became far more of a sectarian state than it was before, and the Americans mishandled many things - they weren't as prepared, which aggravated the situation.

As did also the influx of foreign fighters with their own agenda who may have thought the best way to get the Americans out of Iraq was to provoke a civil war by generating sectarian violence, hitting the shrines …

Secondly, the Shia want to avoid what happened in Iraq as do the Sunnis. So we are in a period of calm where the sectarian violence in Iraq is impacting all the debates about political transition, democracy, opening, and power sharing in the region.

Many have blamed Washington's policies for putting a defiant Iran in command of the Islamic street. Do you agree?

Yes and no. Saddam Hussein was definitely a bulwark against Iran because the Baathist government in Iraq was extremely anti-Iranian. It goes back to the days of the Shah ever since 1958.

But now Iran will definitely have a greater say in any Iraqi government that comes to power and is friendlier to Iran - especially if that government is a Shia government.

Secondly, the US has become bogged down in Iraq in a major way militarily and that takes away from its capability to contain Iran. And Iran knows that.

"If you include oil sanctions on Iran then the price of oil is going to go up dramatically"

Part of Iran's power comes from the fact that it's very difficult to effectively contain it.

The public mood in America is not in favour of military activity abroad ... when Israel was not able to beat Hezbollah in a country of only 3.5 million people, when 130,000 US troops are bogged down in Iraq, obviously Iran feels it has a lot more room to manoeuvre and say "no" to the international community and to the nuclear issue.

Also, while the Iranian power was on the rise in the 1990s, nobody was watching, the economy was growing and the price of oil went up, it became very wealthy. It's a country of 70 million people.

There were many indicators that Iran was on the move during the [former Iranian President Mohammed] Khatami years. But the military edge of this, the more regional military edge of this, has only become evident now.

Iran's reading of the Arab street has been fairly good. At the time when the Palestinian-Israeli conflict was in a stalemate, there was frustration and anger on the streets because of the fact that the peace process was not going anywhere.

"Iran is not anywhere close to having a nuclear bomb"

There was increasing difficulty between Palestinians and Israelis and then Iraq was producing so much unhappiness in the region. The Iranians did not focus on winning support among the palaces of the Arab world.

They went directly for the kind of things that make them very unpopular in the West and very popular on the Arab streets. So Iranian President [Mahmoud] Ahmadinejad started to attack Israel and question the Holocaust.

That has damaged Iran greatly in terms of its diplomacy with the West. But these pictures were sold on the streets in Damascus and Beirut before the war between Israel and Hezbollah.

The recent conflict in Lebanon has boosted Hezbollah's popularity to an unprecedented level and has given the mullahs - Hezbollah's backers - greater leverage to use at the international bargaining table. What does Tehran really want?

There are big things that Tehran wants and there are little things that Tehran wants.  Iran wants to be recognised as a great power in the region. It wants to be like India is in South Asia. They basically want their position to be accepted and acknowledged. And the nuclear issue is part of that.

Iran wants to sit as an equal with the US and not be talked down to.

That should be an outcome of negotiations rather than a pre-condition for negotiations.

Also, you are right, as time has passed particularly after the Lebanon war, Iran feels increasingly more confident not that the overall goal has changed but that they would like to make any kind of negotiation from a position of strength.

I personally think they want to talk. That's why President Ahmadinejad gave an interview to CBS's Mike Wallace.

That's why in his interview he complained about the fact that President Bush did not answer his letter, it's the reason why again he called for a public debate with Bush a few days ago. And they do condescendingly say they want to talk but not the way in which the West wants to talk.

Why won't the US talk to them?

There are multiple reasons. This Bush administration began by putting Iran in the axis of evil. There are domestic considerations for engaging in talks, for both countries. You become ultimately a prisoner of your own rhetoric.

Secondly, the US believes that Iran is not serious. And the US has not really made up its mind yet about normalising relations with Iran. Or what that means. What the US wants is for Iran to stop doing specific things that the US is bothered by: namely their support for Hezbollah, support for terrorism, stop meddling in Iraq, and above all suspension of uranium enrichment and ending the nuclear programme in Iran.

"The cost of a military attack on Iran may be higher than it is a benefit"

But you know these are specific issues that the US would like Iran to deal with but it doesn't change the overall relation between the US and Iran.

The Iranians argue that if they were to do these things, they would still be in a position of difficulty. Once Ahmadinejad said in his own usual crude way, "If we gave up the nuclear programme, they will ask for human rights. If we gave up human rights they will ask for animal rights."

The US is refusing to engage directly with Iran, but will oil interests force US–Iran reconciliation?

I don't know if it will impose reconciliation but it is definitely a pressure factor. First of all, it's very difficult even if everybody at the UN agreed to punish Iran economically by imposing sanctions on Iran because ultimately those sanctions will include the oil sector.

If you include oil sanctions on Iran, then the price of oil is going to go up dramatically in such a way that will impact Western economies and Japan far more quickly than it will impact Iran itself. So oil is a limiting factor on the United Nations and the US.

Secondly, the easiest way in which Iran can always threaten any kind of counteraction is to attack oil tankers or to close off the Straits of Hormuz in the Persian Gulf. And you know Iran does not even have to succeed there, just the threat of it will already send the prices up.

As a result, Iran has the ability to impact oil markets in ways that would constrict US policymaking. I don't think it's necessarily a path to reconciliation so much as it is a path to preventing further escalation of tension.

With Iran remaining defiant and ignoring a deadline set by the UN Security Council to suspend enrichment of uranium, do you think it's more likely Israel will attack Iran before the US does?

I don't think it would be too likely for two reasons. One, Iran is not anywhere close to having a nuclear bomb. In fact, the very fact that the IAEA just said Iran has been going rather slow on the uranium enrichment indicated that they are having technical problems.

Before Iran gets to a bomb it has to master many technologies, not just enrichment. They have to master bomb making and many other things before they can actually be a threat.

Many estimates, including US intelligence agencies, have put a time-frame anywhere from five to eight years away if all is well. So there is no imminent threat that would require a sort of military pre-emptive strike.

We might actually be at a time-frame right now - despite the hard talk from both sides - that the cost of a military attack on Iran may be higher than the benefit. In other words, an attack won't achieve much; it will only push the nuclear programme back. But the political, military and security cost of attacking Iran will be higher than the gains you are going to get. 

What is the key to breaking up Iran's hegemony in the region?

There is no easy solution to this. In other words, there could always be a military solution, but I don't think there is a good military solution, and if there is a war, it's not going to even change the regime.

Like we saw in Lebanon, an attack will only stabilise the regime further, it will cause anger on the streets, and if Iran is attacked it won't have any incentives to play by the rules either. This will be tremendously destabilising to the Persian Gulf and to the whole region.

"Iran wants to sit as an equal with the US and not be talked down to"

Secondly, the countries in the region don't have the capability to contain Iran because they don't have the military capability to do so. Once upon a time Iraq and Iran balanced one another out. Saudi Arabia doesn't have that capability so they are going to look at the US to provide that military capability.

The question is, to what extent is the US committed to staying in the Persian Gulf. But ultimately I think for the Arab countries, particularly the Persian Gulf countries and the US, the best way is to find a way to engage Iran, give Iran an interest in stability and order in the region.

When you keep a power like Iran out in the cold, you give it an incentive to try to show that it exists and matters. And that is something the Arab countries in the Persian Gulf are better positioned to do with support from the West than the West on its own.