On New Year’s Day, Iranian Foreign Minister Manouchehr Mottaki issued an ultimatum to the West: Accept a swap of part of our 2 ton stockpile of low-enriched uranium for your higher-enriched uranium for our U.S.-built reactor, or we start enriching to 20 percent ourselves.

Though the White House is on the defensive for its initial nonchalant response to al-Qaida’s attempted bombing of a Detroit-bound airliner on Christmas Day and has a need to show toughness, to dismiss Iran’s proposal out of hand may be a mistake.

For, bluster aside, this deal appears consistent with the twin U.S. goals: no nuclear-armed Iran, no war with Iran. Moreover, Iran’s take-it-or-leave-it deal is a variant on an idea first hatched by the White House—to offer Iran uranium that cannot be used for a bomb for the uranium Iran has been producing.

What would Iran give up? Part of its stockpile of low-enriched uranium (LEU), which if raised to weapons grade, would be sufficient for one or two nuclear devices.

What would Iran get? Fuel for a reactor that has been operating under U.N. safeguard and produces medical isotopes for the treatment of cancer and thyroid conditions. The rector’s fuel runs out in 2010.

What would America gain? First, a reduction in Iran’s uranium stockpile. Second, we would confirm that when we say we have no wish to prevent Iran’s peaceful use of nuclear power, we mean it. Third, we would deal cards to those in Tehran who argue, “We can do business with Obama.” Finally, the deal might put the United States and Iran on one of the last exit ramps before crippling sanctions lead to war.

Indeed, why change a policy that appears to be working?

Consider. Iran is today approaching regime crisis. Scores of thousands, unintimidated by the Basiji militia, have returned to the streets. Their demands have escalated from protesting a corrupt re-election of President Ahmadinejad to calls for the ouster of the Ayatollah and the overthrow of the Islamic regime.

While responding with brutality and threats of trials and death sentences, the regime has yet to go all-out for a Tiananmen Square solution.

Tehran knows that would destroy any lingering credibility it has. The Ayatollah Khamenei seems to be hesitant, uncertain as to whether to appease the resistance or crush it. For the demonstrators not only represent a huge slice of Iran’s educated young, they are likely to be Iran’s future, if Iran is to have a future as a modern nation.

While Obama has been savaged for not daily declaring solidarity with the resistance, his reticence may be the right stance.

White House declamations would be redundant. No one doubts whose side America is on.

Second, for President Obama to hail the demonstrators and denounce the regime would more likely contaminate the cause of the resistance than advance it.

It would be taken as confirmation of the regime’s charge that what is going on in the streets of Iran’s cities is a replay of the CIA rent-a-mob coup d’etat that took down nationalist Premier Mohammed Mossadegh in 1953 and put the Shah on the throne.

And other developments are breaking our way.

According to Sunday’s New York Times, Iran’s production of low-enriched uranium at Natanz is running into problems. The number of operating centrifuges has fallen by 20 percent, to below 4,000. The centrifuges, based on first-generation technology, are breaking down. Others appear defective or sabotaged. There are reports that the low-enriched uranium at Natanz lacks the purity to be highly enriched.

Also, the U.S. revelation that Iran was constructing a secret nuclear-enrichment facility at a Revolutionary Guard base near the holy city of Qum has complicated Iran’s problems. Ahmadinejad opened it to U.N. inspectors, who found that it was months if not a year away from completion and capable of housing only 3,000 centrifuges.

Thus, it is either a small fallback production plant in case Natanz is bombed, or it was designed to convert the low-enriched uranium at Natanz into highly enriched weapons-grade uranium.

Iran’s problem now, if it is as hell-bent on building a bomb as U.S and Israeli politicians insist, is this. Its major nuclear facilities—the U.S.-built reactor at Arak, the uranium production plant at Natanz, the unfinished Russian nuclear power plant at Bushehr and the unfinished facility at Qum—are under U.N. safeguards and inspections.

If Tehran is as close to a bomb as some insist, it would have to have an undiscovered uranium-production plant the size of Natanz and an undiscovered but operational plant like the one being built in Qum to produce the highly enriched uranium needed.

If Iran has such facilities, U.S. intelligence agencies would not be standing by their joint assessment of 2007 that Iran ended its active program for a nuclear weapon back in 2003.

Right now, the cards are falling our way in Iran. Why toss in our hand for sanctions that lead—to where?

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