As the Obama administration prepares to resume multi-party talks with Iran, it should remember that a key test of the leadership of a great power is whether it can reach its foreign policy goals by diplomacy rather than war. The Bush administration failed that test twice. With American forces still tied down in Iraq and Afghanistan, and with the world economy still wobbly from the financial crisis, the Obama administration cannot afford to fail this test in the case of Iran.

The White House must not pursue a strategy that makes war with Iran more likely. Consider the dilemma: on one hand, the president is being pressured to take more aggressive action from a growing chorus of hawks who argue that the United States or Israel should act; either way, the consequences of war for US interests would be disastrous (for more on the hawks, see Robert Dreyfuss’s "The Hawks Call for War Against Iran," in this issue).

On the other hand, the strategy of coercive diplomacy, including an unconditional demand that Iran stop the enrichment of uranium, shows little promise, despite the administration’s success in gaining international support for strengthened sanctions. As the recent WikiLeaks material on Iran reveals, the administration never consistently pursued an engagement strategy; it did just enough to be able to argue that it tried before moving to a policy of sanctions and other pressures, which show little sign of working.

By issuing an ultimatum to Iran with no clear plan should Tehran call its bluff, Washington has not only committed a fundamental diplomatic blunder; it has boxed itself in politically, strengthening the hawks. At some point, the White House could find itself trapped between taking military action and coping with the far-ranging crisis that would result from an Israeli attack.

It is critical that the administration open up its policy to more constructive options, and the resumption of multi-party talks is a good occasion to do so. The administration is reportedly preparing a new version of its October 2009 fuel swap proposal, which was shelved last year. It would be a mistake to try to force Iran to accept a tougher version of that scheme. The goal of a more demanding approach would presumably be to portray Iran as the recalcitrant party, thereby building support for a new round of even tougher sanctions.

That could look like a shrewd maneuver to win international support for sanctions, but the value of more sanctions is dubious when considered in light of the implications for peace and stability in the Middle East. Sanctions may indeed be causing discomfort in Iran, but the idea that they will compel concessions underestimates the importance to the broad Iranian polity, including much of the opposition, of the country’s right to develop a nuclear program. That right—spelled out under the Non-Proliferation Treaty, of which Tehran is a signatory—is defined by Iran as the right to enrich uranium on its own soil.

Worse, a hardline strategy could backfire, solidifying Iranian public opinion behind the nuclear program or, more serious, pushing Iran one step closer to a decision to weaponize (a step most experts agree Iran has not yet taken). It could also constrict the operating space of Iran’s moderate political forces and push the government to make trouble for the United States in Iraq and Afghanistan.

There are two ways the administration could work its way out of this dead end. One is to put its weight behind the Turkish-Brazilian initiative that resulted in the May 17 Tehran Declaration, which outlined a fuel swap with Iran. That declaration was noteworthy because it included an acknowledgment that the Islamic Republic has the right to "develop research, production and use of nuclear energy (as well as nuclear fuel cycle including enrichment activities) for peaceful purposes without discrimination." The Turkish-Brazilian initiative could be a face-saving deal for all and would allow internationally safeguarded uranium enrichment in Iran. As they worked out the fuel swap, Turkey and Brazil developed good relations with an array of players in Iran. Given the enormous stakes, the Obama administration should use this third-party diplomacy to test how far various power centers in Iran are willing to go.

At the same time, the administration should widen its contacts with Iran and expand the talks to other topics critical to US and Iranian interests. As important as the nuclear question is, the future of US-Iranian relations—indeed, the future of peace in the Persian Gulf—should not be held hostage to the uranium enrichment question, especially since enrichment will not be the only factor determining whether Iran pursues nuclear weapons. The United States needs Iran’s cooperation on Iraq, Afghanistan and other issues. In the past Tehran has worked with Washington on Afghanistan, and it has an interest in curbing the drug trade there and promoting stability in Iraq, even if US and Iranian interests in that country don’t converge. If Washington and Tehran can cooperate on these issues, hawks will lose much of their argument for attacking Iran, and Washington will have greater leverage to constrain Israel. More important, it could open the way for a broader dialogue on regional security. Such an approach would get us back to a strategy of engagement that was too quickly abandoned and that would offer a much better prospect for the peaceful evolution of US-Iranian relations.