Rarely has the Bush administration seemed so confused and defensive about its policy of seeking to isolate Iran as it responds to mounting public and international pressure to find a way out of Iraq, even if that involves making a U-turn and engaging Tehran. On Nov. 13, in reply to a question about

the US opening a dialogue with Iran over Iraq, President Bush made a direct link with the nuclear issue, demanding that Tehran first verifiably suspend its uranium enrichment. Since then senior officials have had to row back from those comments on the nuclear link. A US offer, extended earlier this year to Tehran to discuss Iraq, can be "reactivated", officials said. "If, in the future, we want to avail ourselves of that channel, then it certainly is a possibility", State Department spokesman Sean McCormack said. But he added that he did not think it was under consideration.

However, David Satterfield, the state department co-ordinator for Iraq, contradicted this assertion. He told a Senate committee on Nov. 15 the US was reviewing the timing of a "direct dialogue" with Iran on the subject of Iraq. He added: "We are prepared in principle to discuss Iranian activities in Iraq". Analysts say that as the US scrambles to find an honourable exit from Iraq, opening a new channel to Iran is very much under consideration.

Bringing Iran and Syria into the equation is expected to form one of the main proposals of the Iraq Study Group (ISG) led by former secretary of state James Baker and former Democratic congressman Lee Hamilton. The imminent departure of Donald Rumsfeld as defence secretary also removes one of the main forces opposed to engagement with Iran. His nominated successor, Robert Gates, is closer to the Baker school of foreign policy "realists" and two years ago co-authored a think-tank report that recommended the US "deal with the current regime rather than wait for it to fall".

"The idea of talking to Iran is now the consensus position", commented Ray Takeyh, an analyst with the Council on Foreign Relations think-tank who took part in the 2004 report on Iran. "The question is not whether to talk to Iran but how and what to talk about". Although the US military budget is several times bigger than Iran's entire economic output, Takeyh says the US will find itself negotiating from a position of weakness, adding: "This has got to be the most incompetent administration in history".

James Jeffrey, a senior state department official, echoed the concern about negotiating from a position of weakness and admitted that the US had missed opportunities in the past to deal with Iran. The most recent occasion was in the spring of 2003 when Iran - rocked by the quick defeat of the Iraqi military and the fall of Baghdad - offered a broad dialogue with the US. It was quickly rebuffed. Now there was a danger, Jeffrey said, that showing a willingness to talk would lead certain regimes - meaning Iran and Syria - to "conclude that, ah-ha, this is out of weakness. 'If these guys were strong, they wouldn't want to talk to us. Because they are weak, we need to simply expand our demands'".

Trita Parsi, an Iranian analyst who advocates engagement, says the US cannot conceal its weakness but has limited alternatives. He says that for Iran to be drawn into a dialogue it needs a clear indication that the US is looking to discuss all issues and address a strategic transformation of the relationship, not just a tactical quick fix of the Iraq crisis.

Iran is wary of its last experience of co-operating with the US, when it helped oust the Taliban from Afghanistan in 2001 and install the Karzai government, only to be denounced by Bush weeks later as a member of the "axis of evil" in a State of the Union address that amounted to a call for regime change. A three-hour meeting last month between Baker and Javad Zarif, Iranian envoy to the UN, was seen as helpful by both sides, says Parsi. Baker was told that Iran would consider helping the US in Iraq if "Washington first changed its attitude towards Iran" - a euphemism for the Bush administration's unwillingness to deal with Iran in a strategic manner.